Following a rather explosive Q4 2024, the crypto bull run has entered a consolidation phase as seen over the past two months. As investors remain watchful of the market’s next move, Bitwise Chief Investment Officer Matt Hougan has boldly postulated that the traditional crypto four-year cycle may be over, suggesting the nascent industry is on the brink of a new era.
Can Trump Administration Make The Difference?
In a recent post on X, Matt Hougan provided a deep insight into the crypto market cycle highlighting a certain factor that might potentially positively improve this rhythm. For context, the digital asset market has historically operated on a four-year cycle consisting of three consecutive years of significant gains followed by a major price pullback.
In studying recent years, Hougan explains the cycle is always ignited by a positive catalyst that attracts investors to the market. As the bull run proceeds with soaring prices across assets, investors become greedy leading to leveraging overaccumulation eventually forcing a major market downturn.
Certain times, this downturn can be due to black swan events such as the fall of the Mt. Gox exchange in 2014. However, following this painful, deleveraging experience, there is usually another bullish event to kick-start a new cycle.
The current bull cycle comes off the back of substantial deleveraging due to the collapse of several crypto firms in 2022 including Three Arrows Capital, BlockFi, Celsius, and the popular FTX exchange among others. The Bitwise CIO further postulates that Grayscale’s historic legal victory over the SEC served as the market catalyst signaling the eventual introduction of the Bitcoin Spot ETFs.
Going by previous bull cycles, investors should be gearing up for a major price pullback in 2026 i.e. the crypto winter. However, Hougan believes the recent change in US government policy on crypto can have a strong influence over market cycles moving forward.
Following Donald Trump’s inauguration two weeks ago, the Republican has swiftly moved to push his pro-crypto agenda. This is indicated by the Crypto Executive Order which refers to these assets as “national priority” while directing inquisition into a potential “national stockpile”.
Hougan states the US government’s new embrace of crypto will be copied by mainstream companies and traditional financial institutions, most of which don’t operate based on the conventional market cycle. Furthermore, the government will likely take a year to create an efficient regulatory crypto framework, while industry giants also prepare a market entry strategy.
Therefore, mainstream digital asset adoption may begin in 2026 reducing the potential of a crypto winter. The Bitwise CIO warns that while classic deleveraging may still occur due to investors’ greed or market bad actors, this projected institutional demand will likely prevent the significant downturns seen in previous cycles.
Crypto Market Overview
The total digital asset market cap is currently valued at $3.42 trillion following a 2.39% in the past day.
