Bitwise Chief Investment Officer Matt Hougan believes Bitcoin may no longer follow its traditional four-year market cycle, arguing that structural changes in macroeconomic conditions and market composition are altering the asset’s behavior. In a client note released Monday, Hougan said the forces that historically drove sharp post-peak drawdowns appear to be weakening, even as Bitcoin has pulled back significantly from its October highs.
Bitcoin has typically experienced three years of gains followed by a steep correction, a pattern closely associated with its halving cycle. With Bitcoin down more than 30% from its recent peak and many altcoins underperforming, a bearish outlook for 2026 remains widely held. Hougan, however, said that view may overstate the relevance of past cycles in a market that now includes regulated investment products and deeper institutional participation.
Shifting Macro and Market Structure
Hougan pointed to several macro and structural factors that he believes are reshaping Bitcoin’s risk profile. The impact of successive Bitcoin halvings has diminished over time as new supply becomes less significant relative to total circulating supply. He also cited expectations for lower interest rates in 2026, contrasting with tightening cycles that coincided with prior market downturns.
Another factor is the reduced role of leverage-driven dislocations. Bitwise CIO noted that large liquidations earlier this year contributed to a market reset, potentially limiting the scale of forced selling going forward. He also referenced gradual regulatory progress, which has reduced uncertainty for some institutional participants, particularly in the United States.
Institutional adoption remains central to Bitwise’s thesis. Hougan said large wealth management platforms and financial institutions are increasingly allocating to digital assets, supported by the growth of exchange-traded funds and custody infrastructure. He characterized this shift as incremental rather than speculative, with longer investment horizons than previous retail-driven cycles.
Volatility and Correlation Trends
Hougan also highlighted declining volatility as a notable trend. He said Bitcoin’s price fluctuations have moderated over time and were lower than some high-growth equities during parts of 2025. According to Hougan, broader ownership and the rise of regulated investment vehicles have contributed to more stable trading behavior.
In addition, he argued that Bitcoin’s correlation with equities could weaken further. While Bitcoin has often moved alongside risk assets, Hougan said rolling correlation data suggests the relationship has been inconsistent and often overstated. He expects crypto-specific factors, including regulation and capital flows, to play a larger role in performance.
Hougan framed these dynamics as relevant for portfolio construction rather than short-term trading. While he acknowledged that forecasts remain uncertain, his comments reflect a broader reassessment among asset managers of how Bitcoin fits within institutional portfolios as the market matures.