Why Bitwise Thinks BTC Will Rally in 2026 Despite the Usual Cycle Crash
What Is Driving Bitwise’s Call for a Break From BTC’s Historical Pattern?
Bitwise Chief Investment Officer Matt Hougan says BTC could set new all-time highs in 2026 despite the asset’s long-running four-year cycle suggesting the opposite. In a note to clients, Hougan pointed to fragileening halving effects, expectations for lower interest rates and expanding institutional participation as reasons the cycle may not repeat.
BTC is down more than 30% from its October peak near $126,000, and most altcoins have slid further. Under past patterns, a down year would be expected later than three strong years. Hougan argues that the old model has lost relevance. He did not specify a price target but said structural factors are changing how BTC trades.
One shift, he wrote, is the reduced influence of halvings. Earlier cycles were heavily shaped by supply cuts, but their impact has faded as the market grew. Hougan also highlighted the contrast between 2026’s expected rate cuts and the tightening cycles of 2018 and 2022. He added that blowups driven by leverage have eased later than mass liquidations in October and tighter oversight.
Investor Takeaway
Why Does Bitwise Expect Lower Volatility and Falling Correlations?
Hougan said has been declining and is likely to remain lower in 2026. He noted that through much of 2025, pushing back against the view that BTC remains unsuitable for traditional portfolios. He tied the trend to the rise of ETFs and broader investor participation, which he said has steadied flows.
Hougan also expects BTC’s correlation with equities to fall. While many investors still assume BTC moves in lockstep with stocks, he said rolling correlation readings rarely reach levels that carry statistical weight. As he views it, regulatory progress and institutional inflows will provide crypto-specific drivers even if equity markets cool due to valuation concerns or sluggishing growth.
Together, he wrote, these trends could create “strong returns, less volatility, and lower correlations,” which he described as an appealing mix for portfolio construction. Bitwise expects these conditions to attract tens of billions of dollars in new institutional allocations.
Which Institutions Could Drive the Next Wave of Flows?
Hougan said platforms including Morgan Stanley, Wells Fargo and Merrill Lynch are expected to begin allocating in 2026. The broader shift follows a friendlier U.S. regulatory stance under the Trump administration, which has encouraged both Wall Street firms and fintech platforms to add digital-asset access.
Bitwise has long argued that institutional adoption depends on rule clarity, custody improvements and simple investment vehicles. With ETFs widely available and pricing benchmarks more mature, Hougan expects large firms to add BTC positions through standard portfolio frameworks rather than experimental allocations.
Investor Takeaway
How Did Bitwise’s 2025 Predictions Hold Up?
Bitwise’s 2025 outlook proved mixed. The firm correctly anticipated rising regulatory momentum and broader institutional engagement. Coinbase did join the S&P 500, Strategy entered the Nasdaq-100 and the U.S. Department of Labor softened its 2022 stance on . , matching Bitwise’s expectations for policy movement.
Price forecasts were far less accurate. While BTC, ETH and Solana all set new highs in 2025, none approached the firm’s targets of $200,000, $7,000 and $750. Bitwise also expected to exceed 2024’s totals, which now looks unlikely.
Still, Bitwise’s broader thesis on structural improvement — deeper liquidity, better regulation and expanding institutional access — played out. Hougan’s 2026 outlook builds on that identical groundwork while arguing that the next cycle may break from the past entirely.
