Bitwise Chief Investment Officer Matt Hougan believes the long-standing four-year cycle in Bitcoin (BTC) and crypto market has ended. In a detailed post on X, Hougan explained why he expects a shift away from the historical pattern of three strong years followed by a downturn.
Bitwise CIO On Bitcoin, Crypto Market’s Future Cycle
“The traditional four-year cycle is over in crypto,” he wrote, laying out his argument in a 20-post thread. According to Hougan, past market cycles followed a familiar pattern. Growth was typically triggered by a catalyst, drawing in fresh capital and investors. Momentum then took over, leading to increased speculation, leverage, and, eventually, market excesses.
This buildup would ultimately result in a major setback, causing rapid deleveraging and significant price drops before a new catalyst sparked the next cycle. He pointed to previous cycles where the crash was caused by major events, such as Mt. Gox’s collapse in 2014 and the SEC’s crackdown on ICOs in 2018. The current cycle, he said, was shaped by the fallout from the 2022 crypto scandals involving FTX, Three Arrows Capital, Genesis, BlockFi, and Celsius.
“The catalyst that jump-started this cycle occurred on March 10, 2023, when Grayscale convincingly won the opening argument in its legal case against the SEC regarding the Bitcoin ETF,” Hougan noted. Though the final ruling came later, he argued that this marked the point when market participants became confident a spot BTC ETF would be approved.
1/The traditional four-year cycle is over in crypto.
A thread on what’s changing.????
— Matt Hougan (@Matt_Hougan) January 31, 2025
The launch of Bitcoin ETFs in January 2024 confirmed those expectations, drawing record inflows and pushing prices higher. Under the usual four-year cycle, Hougan said, the market would now be heading toward a decline in 2026. However, he suggested that institutional adoption and regulatory changes could prevent a major downturn.
What’s Different This Cycle?
“We have something different this cycle: the change in Washington’s attitude toward crypto,” he said. He cited a U.S. executive order that identified cryptocurrency as a “national priority” and suggested the creation of a “national crypto stockpile.”
According to Hougan, this shift in policy is allowing large institutions to enter the market, but unlike crypto-native investors, these firms operate on much longer timeframes. “Wall Street and mainstream institutions are like giant tankers, not speedboats,” he wrote, suggesting that any downturn could be absorbed by the broader trend of institutional participation.
While he acknowledged the possibility of market excesses and increased leverage, Hougan argued that any downturn would likely be “significantly shorter and shallower” than past cycles. “We’ve entered a new era in crypto,” he concluded. “It’s going to be an exciting few years.”
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