Bitcoin’s long-standing four-year market cycle may be coming to an end. According to Bitwise Chief Investment Officer Matt Hougan, structural shifts across macroeconomics, regulation, and institutional adoption could push Bitcoin to new all-time highs in 2026, defying historical patterns that have previously dictated boom-and-bust cycles.
Hougan shared his outlook ahead of Bitwise’s upcoming “10 Predictions for 2026” report, highlighting three key themes shaping the future of Bitcoin: higher prices, lower volatility, and declining correlation with traditional financial markets.
Why Bitcoin’s four-year cycle may no longer apply
Historically, Bitcoin has followed a predictable rhythm of three strong years followed by a deep correction, largely driven by the impact of Bitcoin halving events. Based on that model, many investors believe 2026 should be a bearish year.
That assumption has gained traction recently, with Bitcoin down more than 30% from its October 6 peak near $126,000 and most altcoins posting even steeper declines. Still, Hougan believes this time is different.
In a note to clients, he argued that the forces powering Bitcoin’s four-year cycle are weakening. Each halving now has a smaller supply shock than previous ones, reducing its ability to trigger extreme boom-and-bust price action.
At the same time, macro conditions are shifting. Unlike 2018 and 2022, which were marked by rising interest rates, expectations for 2026 point toward falling rates. Hougan also noted that the market has already absorbed major leverage-driven liquidations, particularly following record liquidations in October, leaving the ecosystem more resilient.
Institutional adoption accelerates in 2026
The most important factor, according to Hougan, is accelerating institutional adoption. He expects major financial platforms such as Morgan Stanley, Wells Fargo, and Merrill Lynch to begin allocating to Bitcoin and other digital assets.
Wall Street banks, fintech firms, and asset managers are increasingly integrating crypto into their offerings, a trend Hougan believes will intensify under the pro-crypto regulatory shift seen during the Trump administration. Improving regulatory clarity is reducing perceived risk, making Bitcoin more accessible to traditional investors.
This institutional momentum, Hougan said, could fundamentally reshape Bitcoin’s market behavior and support higher prices even in years that were historically bearish.
Lower volatility reshapes Bitcoin’s risk profile
Hougan also expects Bitcoin volatility to continue declining in 2026. While Bitcoin is still often viewed as excessively volatile, he pointed out that during 2025, Bitcoin was less volatile than Nvidia stock, challenging long-held assumptions about crypto risk.
This trend reflects a broader derisking of the asset, driven by a more diversified investor base and the growth of regulated investment vehicles such as spot Bitcoin ETFs. Bitwise believes these dynamics will persist, contributing to more stable price action over time.
Bitcoin’s correlation with stocks is expected to fall
Another major shift Hougan highlighted is Bitcoin’s correlation with equities. While Bitcoin is frequently described as moving in lockstep with the stock market, he noted that rolling correlation data shows it has rarely reached statistically meaningful levels.
Looking ahead to 2026, Bitwise expects crypto-specific drivers, including institutional inflows and regulatory progress, to play a larger role in price movements. This could allow Bitcoin and other digital assets to perform independently, even if equities face pressure from high valuations or slower economic growth.
A favorable setup for investors
Taken together, Hougan described the outlook as a compelling combination of strong returns, reduced volatility, and lower correlation with traditional assets. He called this setup particularly attractive for portfolio construction and expects it could unlock tens of billions of dollars in new institutional investment flowing into Bitcoin and the broader crypto market.
Looking back at Bitwise’s 2025 predictions
Reflecting on the past year, Hougan acknowledged that Bitwise’s 2025 predictions were directionally correct but overly ambitious on price targets. Bitcoin, Ethereum, and Solana all reached new all-time highs, validating the firm’s bullish thesis, but fell short of projected levels of $200,000, $7,000, and $750, respectively.
U.S. Bitcoin ETF inflows also came in below expectations and are unlikely to exceed 2024 levels.
Still, several high-conviction market-structure predictions played out. Coinbase joined the S&P 500, Strategy entered the Nasdaq-100, the U.S. Department of Labor softened its 2022 anti-crypto 401(k) guidance, and U.S. stablecoin legislation passed as anticipated.
As Bitwise looks ahead to 2026, Hougan believes Bitcoin is entering a new phase, one defined less by rigid cycles and more by institutional maturity, regulatory clarity, and long-term capital allocation.
