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Matt Hougan, Chief Investment Officer of Bitwise Asset Management, believes the traditional four-year cycle in crypto may be changing. In a series of posts on X, he explained why the market might not follow its usual pattern of three strong years followed by a pullback.
“Bitcoin has historically moved in a four-year cycle, with three big up years followed by a pullback,” he wrote. “But we have something different this cycle: the change in Washington’s attitude toward crypto.”
Bitwise, where Hougan serves as CIO, is one of the firms behind the recently launched Bitcoin ETFs. These ETFs have already attracted billions of dollars in inflows, bringing new institutional investors into the market. Hougan believes this shift could reshape how crypto cycles play out.
We’ve entered a new era in crypto. It’s going to be an interesting few years.
Crypto markets have traditionally followed a pattern where a major event sparks investor interest, leading to rising prices and eventually excessive speculation. The cycle ends with a sharp correction before starting again.
Hougan pointed to the last major downturn in 2022, when firms like FTX, Three Arrows Capital, and others collapsed. The market rebounded after Grayscale’s early legal win against the SEC in March 2023, which signaled that a Bitcoin ETF was likely coming. When ETFs launched in January 2024, they set new records for inflows.
“In a classic four-year cycle, we’d be gearing up for a pullback in 2026,” he noted. “And to be fair, I do see the early signs of leverage building up.” However, he believes regulatory changes and institutional involvement could shift the timeline.
Government actions, including a crypto-related executive order, have made expansion a national priority and laid the groundwork for clearer regulations. Institutions operate on longer timeframes than crypto traders, meaning their involvement could extend growth phases beyond what has been seen before.
“The ETFs brought hundreds of billions of new investor capital into crypto. The change in DC will bring trillions,” he wrote. “We’ve entered a new era in crypto. It’s going to be an interesting few years.”
While volatility is still possible, Hougan expects any future pullback to be shorter and shallower than in past cycles. If his view proves correct, crypto’s market structure could be evolving beyond its historical patterns.