A muted end to 2025 may be laying the groundwork for a stronger crypto breakout in 2026. Bitwise chief investment officer Matt Hougan says the absence of a late-year rally strengthens his view that next year will bring the next major upswing for digital assets.
In brief
- •A subdued end to 2025 boosts confidence in a stronger 2026 crypto cycle, according to Bitwise CIO Matt Hougan.
- •Analysts expect rate cuts and halted quantitative tightening to act as major liquidity tailwinds for crypto.
- •Growing stablecoin use, tokenization projects, and renewed DeFi interest could help fuel market momentum.
- •New retail investors continue accumulating through ETFs, even as long-time market participants take profits.
Subdued Finish to 2025 Could Give Crypto an Edge in 2026, Says Hougan
At The Bridge conference in New York City, Hougan said a sharp rise at the end of 2025 would have aligned with the typical four-year cycle and might have pointed to a downturn in 2026. Instead, the slower finish gives him greater confidence that the next expansion phase is still ahead.
He said the main threat to his outlook had been the possibility of a sudden year-end surge. Without that scenario, he believes the backdrop looks far more stable. “I’m actually more confident in that view,” he mentioned, noting that a late-2025 spike followed by a pullback would have raised more concerns.
Analysts Eye Rate Cuts and Liquidity Shifts as Key Crypto Tailwinds for 2026
Beyond Hougan’s outlook, other analysts are watching broader economic shifts that could support crypto markets. Ben Lilly of JLabs Digital and Browns Research expects several developments to act as tailwinds if they unfold as projected.
Lilly notes that current forecasts assign a high chance of a 25-basis-point interest rate cut by the Federal Reserve. He also expects the Fed to halt quantitative tightening as early as December. At the same time, the return of regular government operations may lift liquidity once Treasury General Account flows resume.
Bitget CEO Gracy Chen said the reopening of government activity brought a measure of stability back to markets after weeks of uncertainty.
As sentiment resets, observers are watching several forces that could guide crypto’s direction in 2026:
- •Rising interest in Bitcoin as a hedge against currency debasement.
- •Rapid adoption of stablecoins across major markets.
- •Growth of tokenization projects backed by major institutions.
- •Renewed attention on decentralized finance tools.
- •A shift in investor behavior as confidence returns.
Hougan believes these trends remain firmly in place. He pointed to Uniswap’s new fee switch proposal, introduced this week, saying it could renew interest in decentralized finance protocols through 2026. He added that institutional inflows, regulatory progress, and new digital-asset applications appear strong enough to maintain momentum.
Even so, Hougan’s expectations for price levels remain more restrained than some of the market’s boldest forecasts. Maelstrom Fund CIO Arthur Hayes and Fundstrat’s Tom Lee previously projected that Bitcoin could reach $250,000 and Ether $15,000 by year-end. At today’s prices—$101,762 for Bitcoin and $3,416 for Ether—those targets would require gains of 145% and 340%.
Market Dip Driven by Long-Time Investors, Newcomers Keep Accumulating
Hougan also addressed the recent weakness in digital assets, pointing to fatigue among early retail investors. Many who were active during the previous cycle have stepped back after losses tied to exchange failures, weak altcoin performance, and liquidations. He described this group as discouraged, noting they had hoped for a repeat of the 2020–2021 rally.
Crypto native retail is depressed, they were beaten down by FTX, they were beaten down by the memecoin debacle. They were beaten down by the altcoin season not arriving. They got hurt on the 10/10 liquidation, and I think they’re just sitting this one out.
Matt Hougan
Recent selling by long-time market participants has also limited near-term upside, he said. Some investors who had large gains chose to sell heavily during the latest bouts of volatility.
In contrast, interest from mainstream retail investors remains steady. Hougan pointed to consistent inflows into spot crypto exchange-traded funds over the past two years as evidence of widening adoption. He said many newcomers, including those with no prior experience in digital assets, continue to build positions even as veteran crypto users remain cautious.