Crypto entered 2026 with a sharp bid, and Bitwise CIO Matt Hougan says the next leg higher hinges on three checkpoints that have less to do with chart patterns and more to do with market plumbing, Washington, and the broader risk backdrop.<\/p>\n
In a January 6 memo, Hougan wrote<\/a> that Bitcoin and Ethereum were each up 7% year-to-date as of Monday, January 5, while higher-beta names had moved faster, Dogecoin was up 29% over the same window. The question, he argued, is whether that early strength can turn into something sustained rather than a fleeting January pop.<\/p>\n Hougan\u2019s framework starts with a memory the market would rather bury: October 10, 2025<\/a>, when crypto saw what he called \u201cthe largest liquidation event in its history,\u201d with \u201c$19 billion in futures positions wiped out in a single day.\u201d The mechanical damage mattered, but the psychological overhang may have mattered more. In the weeks that followed, he wrote, investors worried the cascade had \u201cimpaired major market makers and\/or hedge funds\u2014perhaps fatally,\u201d raising the specter of forced selling as large players unwound.<\/p>\n \u201cOne of the reasons crypto struggled to rally in Q4 was that investors worried one of these big players might have to wind down operations, a process that typically requires the forced sale of assets,\u201d Hougan wrote. \u201cThese potential sales hung over the market like a heavy fog.\u201d<\/p>\n His first hurdle, then, is simply the absence of another blow-up with similar systemic implications. On that front, he struck a notably confident tone. \u201cThe good news: If it were going to happen, it probably would have happened by now,\u201d he wrote, adding that while \u201cthere\u2019s no guarantee,\u201d a firm shutting down would likely have tried \u201cto wrap up by year\u2019s end.\u201d In his read, part of the early-2026 rally reflects a market that has \u201cput October 10 in the rearview.\u201d He labeled that hurdle a \u201cGreen Light.\u201d<\/p>\n The second checkpoint is legislative, and far less within the market\u2019s control: passage of the crypto market structure bill known as the CLARITY Act. Hougan wrote the bill is \u201cwinding its way through Congress,\u201d with the Senate \u201ctargeting January 15 for markup,\u201d the stage where committees align drafts and try to move a final bill toward a vote.<\/p>\n He did not present it as a clean glide path. \u201cHurdles remain,\u201d he wrote, citing \u201ccompeting visions of how to regulate DeFi, stablecoin rewards, and political conflicts of interest.\u201d Still, he framed markup as a pivotal gate: if CLARITY clears that process, it would be \u201ca huge step toward approval.\u201d<\/p>\n Hougan\u2019s core argument is about durability. \u201cPassage of the CLARITY Act is key to the long-term future of crypto in the U.S.,\u201d he wrote. \u201cWithout legislation, the current pro-crypto regulatory tilt at the SEC<\/a>, CFTC, and other agencies could reverse under a new administration. Passage of the Act would enshrine core principles into law and provide a strong foundation for future growth.\u201d<\/p>\nThree Hurdles To Overcome For Bitcoin, ETH And Dogecoin<\/h2>\n