According to Bitwise Chief Investment Officer Matt Hougan, Bitcoin faces an uncertain market cycle because of former President Donald Trump’s recent executive directive.
Hougan’s research note, issued on January 29, analyzes this executive mandate as an optimistic sign for the crypto space, predicting it will propel the industry into a transformational growth phase.
Growing Leverage and Market Risks
According to Hougan, the crypto market displayed growing leverage as different firms entered Bitcoin investments through debt capital. The strategy generates no inherent difficulties, yet it brings new challenges to manage. During past operating periods, Bitcoin has shown regular cycling between boom periods and busts that occur every four years. The analysis demonstrates that leverage exists within the crypto market despite its unclear effects on predicted Bitcoin cycles following potential policy changes introduced by Trump.
Mainstream Adoption Gains Momentum
Through the January 23 executive order, digital assets emerged as a national key priority for the administration. Hougan sees this step as an essential moment that transforms the crypto industry. Politics at the Securities and Exchange Commission has commenced parallel changes in the digital asset space. After SEC Chair Gary Gensler’s exit on Jan. 20, new regulatory policies have begun to take effect. Financial institutions that hold crypto can now operate under less rigid accounting rules due to the revocation of Staff Accounting Bulletin 121.
Once these limitations are removed, banks and major Wall Street firms will encounter minimal barriers to entering the crypto industry. According to Hougan, the proposed removal of crypto restrictions would attract significant institutional investment, bringing in trillions of dollars. These regulatory changes will disrupt Bitcoin’s historical market cycles by triggering a prolonged growth period.
Bitcoin’s Future and Institutional Influence
Bitcoin has faced substantial downward shifts across three primary market collapses in 2014 as well as 2018 and 2022. Periodic market downturns in Bitcoin eventually reverted into new all-time highs while supporting a four-year cycle. Bitcoin demonstrates a normal four-year cycle, so investors should expect the next market crash sometime in 2026. According to Hougan, the market’s toughness could decrease in prospective downturns when institutions take on more significant responsibilities and regulations become easier to understand. He expressed confidence about Bitcoin’s long-term prospects despite acknowledging future volatility could happen.
The head of Efficient Exchange still believes Bitcoin will reach a price target of $200,000 by 2025’s end. The market may change direction when former PayPal COO David Sacks becomes White House crypto and AI czar with transparent regulations. Regulatory adaptions occur at according to what could be a gradual rhythm. Transformed regulatory rules enable central financial institutions to streamline their integration with Bitcoin leading to faster acceptance within the broader financial sector.