The End of Bitcoin’s Four-Year Cycle: A New Era of Growth?

In a recent investor note dated January 29, 2025, Matt Hougan, the Chief Investment Officer at Bitwise, raised an intriguing question about the traditional four-year market cycle of Bitcoin possibly reaching its conclusion. This speculation stems from significant shifts in US policy towards cryptocurrencies, notably highlighted by a recent executive order issued by President Trump aimed at solidifying the country’s dominance in the digital asset space.

Is 2026 the Year to Break the Bitcoin Bear Trend?

Hougan’s analysis delves into the concept of the “four-year cycle,” where Bitcoin typically experiences three years of substantial growth followed by a corrective phase. He draws parallels between this cycle and broader boom-bust patterns observed in traditional financial markets, stating, “The four-year cycle in crypto is driven by the same forces that propel cycles of expansion and contraction in the broader economy.”

Emergence of the Mainstream Cycle

Describing the ongoing crypto upswing as the “Mainstream Cycle,” Hougan traces its origins back to the significant deleveraging witnessed in 2022 due to failures like FTX and Three Arrows Capital. According to him, the current bullish phase gained momentum in March 2023 when Grayscale successfully challenged the SEC in a legal battle over a spot Bitcoin ETF.

“Bitcoin was trading at $22,218 when Grayscale made its case. Today, it stands at $102,674. The mainstream era has officially arrived.” With the approval and launch of a spot Bitcoin ETF in January 2024, institutional and retail investor interest in Bitcoin surged, solidifying its position as a legitimate investment asset.

Impact of Trump’s Executive Order

A pivotal aspect of Hougan’s analysis revolves around President Trump’s recent executive order, which not only prioritized the development of the US digital asset ecosystem but also laid the groundwork for a more defined regulatory framework for cryptocurrencies.

“President Trump’s executive order last week was incredibly bullish for the industry, prompting me to ponder,” wrote Hougan, highlighting the order’s emphasis on establishing a potential “national crypto stockpile” and encouraging financial institutions to accelerate their adoption of digital assets.

Potential Shift in Market Dynamics

With a more favorable regulatory environment and increasing institutional involvement, Hougan speculates that the crypto market may deviate from its historical pattern of sharp corrections after prolonged bull runs. He questions the likelihood of a traditional market downturn in 2026, especially with major Wall Street players and banks gearing up to embrace cryptocurrencies at a broader scale.

A New Chapter for Crypto Investments

While Hougan acknowledges the rising levels of leverage in the crypto ecosystem, he also points out the diversification of investor profiles within the market. This diversified investor base could potentially mitigate the severity of market downturns, leading to shorter and milder corrections compared to previous cycles.

As the industry’s infrastructure continues to mature and mainstream acceptance of crypto grows, the prospects of a significant bear market akin to those in the past appear less daunting. Hougan concludes optimistically, stating, “For now, it’s full steam ahead. The crypto train is set to depart.” At the time of writing, BTC was trading at $105,275.

Featured image created with DALL.E, chart from TradingView.com