The traditional four-year cycle that has long dictated the rhythm of Bitcoin’s price swings may be nearing its end, according to Matt Hougan, chief investment officer at Bitwise Asset Management. While a recent dip has prompted investors to seek alternatives, Hougan argues that a confluence of factors – notably, growing institutional investment and the rise of crypto ETFs – are reshaping the market and diminishing the influence of past patterns.
Hougan pinpointed as a pivotal year, suggesting that the forces driving previous cycles, such as demand shocks from Bitcoin “halving” events, are weakening. “People are looking for one thing to blame for the current retracement in bitcoin. But there is not any one thing to blame,” Hougan told CNBC’s “ETF Edge” on .
The ETF Effect and Institutional Adoption
The shift, Hougan contends, is largely attributable to the increasing participation of institutional investors and the impact of exchange-traded funds (ETFs). These capital flows, he believes, are now the primary drivers of long-term growth, eclipsing the cyclical influence of halvings. This represents a structural evolution in the crypto markets, moving away from retail-driven volatility towards more sustained, institutional participation.
Bitwise is itself heavily involved in the ETF space, having launched the Bitwise Solana Staking ETF in , which tracks the price of Solana. While the fund has experienced a significant decline – down approximately 57% since launch – Hougan remains optimistic about the broader trend. He suggests that the financialization of Bitcoin, through ETFs, doesn’t fundamentally alter its scarcity, despite potentially influencing short-term trading dynamics.
“It may change some intraday movements or short-term trading dynamics, but it doesn’t change the sort of fundamental fact We find only 21 million bitcoin. All that derivative demand has to pass through eventually to the spot market,” Hougan explained.
Beyond Bitcoin: Broader Market Forces
The changing dynamics aren’t solely attributable to ETF inflows. Hougan also highlighted a more favorable regulatory environment and increasing investment from Wall Street firms as key catalysts. He noted that regulatory progress, beginning in with the passage of the GENIUS Act, is fostering market maturation and stability. He pointed to billions of dollars in investment from Wall Street firms building out crypto infrastructure as a sign of growing confidence and long-term commitment.
These “bigger forces,” Hougan argues, don’t synchronize with the traditional four-year cycle. Specifically, he identified several trends expected to continue for years: the ongoing growth of assets in ETFs, broader institutional adoption (including approval on national account platforms and consideration by pension funds and endowments), continued regulatory progress, and sustained investment in crypto infrastructure by Wall Street.
Navigating Near-Term Volatility
Despite his long-term optimism, Hougan acknowledged the potential for near-term volatility. He cautioned against overconcentration in corporate Bitcoin holdings and noted that bear markets tend to amplify various risks, including concerns about “quantum risk” and the potential impact of Federal Reserve nominee Kevin Warsh. Bitcoin had already fallen below $61,000 on , its lowest level in roughly 16 months, after reaching a record high of $126,279 in , and previously falling below $90,000 in .
However, Hougan believes that these short-term fluctuations shouldn’t derail the overall trajectory of crypto ETFs. He suggests a “self-fulfilling prophecy” is at play, where the underlying positive fundamentals will eventually outweigh temporary setbacks. Bitwise, which manages over $15 billion in assets, is positioned to benefit from this anticipated shift, as institutional portfolios continue to allocate capital to the crypto asset class.
The prediction of a break from the four-year cycle suggests a more stable and predictable future for Bitcoin and the broader cryptocurrency market, one less reliant on the boom-and-bust patterns of the past and more driven by the sustained growth of institutional investment and regulatory clarity. While volatility remains a factor, Hougan’s analysis points towards as a year where Bitcoin could potentially establish new all-time highs, marking a significant turning point in its evolution.
