The Chief Investment Officer of Bitwise, Matt Hougan has caught the imagination of the market with a startling analysis which shows bear markets might be a thing of the past. Hougan published a new investor note yesterday, January 29, 2025 where he suggested that the traditional four-year cycle with a Bitcoin bear market is gradually dying.
The Bitwise CIO attributed this to Donald Trump’s pro-crypto announcements which will drive institutional adoption of Bitcoin. Setting up a task force to form a Strategic Bitcoin Reserve and pro-crypto changes in the SEC shows a major shift in US policy which is changing the global crypto market dynamics.
From Boom-Bust to Sustainable Growth: A New Paradigm?
The crypto market has historically followed a predictable pattern: three years of explosive growth followed by a brutal bear market. However, Hougan's analysis suggests we're entering uncharted territory. "The four-year cycle in crypto is driven by the same forces that drive broader cycles of growth and recession in the general economy," he explains, while noting that this pattern might be on the verge of transformation.
The Numbers Don't Lie: Bitcoin's Meteoric Rise
The statistics paint a compelling picture of the market's evolution. From a modest $22,218 when Grayscale began its legal battle with the SEC, Bitcoin has skyrocketed to $102,674. This 362% increase isn't just another pump-and-dump cycle – it represents what Hougan calls the "Mainstream Cycle," emerging from the ashes of 2022's massive deleveraging events.
Trump's Executive Order: A Game-Changer for Crypto
Perhaps the most significant catalyst for this potential paradigm shift is President Trump's recent executive order. The directive, which designates crypto development as a "national priority," has sent shockwaves through the financial sector. The unprecedented move includes plans for a "national crypto stockpile" and actively encourages traditional financial institutions to embrace digital assets.
Wall Street's Trillion-Dollar Tsunami
The institutional adoption wave isn't just coming – it's here. With BlackRock CEO Larry Fink projecting Bitcoin at $700,000, Hougan poses a thought-provoking question: "Are we really going to see a 70% pullback?" The answer might lie in the trillions of dollars poised to enter the market through newly established institutional channels.
Why This Time Could Actually Be Different?
While acknowledging the presence of leverage in the system through Bitcoin-backed lending and derivatives, Hougan points to a crucial difference in today's market: investor diversity. "My guess is that we haven't fully overcome the four-year cycle," he admits, "but any future market correction will be shorter and shallower than previous cycles."
The Data Behind the Optimism
The transformation is backed by solid numbers:
- A 362% increase in Bitcoin's value since March 2023
- Institutional inflows reaching record highs following ETF approval
- Decreased market volatility metrics compared to previous cycles
- Broader institutional participation across multiple sectors
The Crypto Market Is Maturing?
While Hougan remains cautiously optimistic, his analysis suggests that the days of 80-90% drawdowns might be behind us. The combination of regulatory clarity, institutional adoption, and market maturity could create a more stable environment for crypto assets.
"As for now, it's full steam ahead," Hougan concludes. "The crypto train is leaving the station." With traditional financial giants now fully aboard and government support strengthening, the next few years could rewrite everything we thought we knew about cryptocurrency market cycles. For investors and market participants, the implications are clear: while volatility remains an inherent characteristic of crypto markets, the extreme boom-bust cycles of the past might give way to more measured market movements, supported by deeper liquidity and broader institutional participation.