Key Insights
- US President Donald Trump signed a new executive order, which promises a crypto-friendly environment for Bitcoin in the US.
- According to Bitwise official, Matt Hougan, this order could have even broader implications for crypto.
- To start with, more institutional investments will come from Wall Street, bringing trillions into the market and overshadowing the ETF performance.
- The order will also affect Bitcoin’s halving cycles and lead to less harsh crashes along with stronger highs.
Bitcoin’s 4-year cycles have been relatively predictable since its invention in 2009.
The cryptocurrency typically experiences boom/bust periods before and after its halving events, which traders typically use to time positions.
However, according to Bitwise’s chief Investment officer Matt Hougan, all of this might be about to change…
And the recently signed Trump executive order might have a huge role to play.
The Role of Trump’s Executive Order in Crypto’s Evolution
As a refresher, US President Donald Trump signed an executive order on 23 January, as promised during the presidential campaigns.
This order is designed to push the mainstream adoption of crypto.
According to details from David Sacks, the Trump administration’s “AI and Crypto Czar”, the order favors stablecoin development over a CBDC.
It is also designed to limit the harsh regulatory response to crypto in the US, and even explore whether or not a national Bitcoin reserve would be feasible.
However, according to Hougan in a recent note, these changes the order promises to bring, could bring some massive changes to the crypto space.
The CEO noted that the shift in regulations will allow banks and other major investors to enter the crypto market en masse.
According to Hougan, this could bring trillions of dollars into the crypto space.
More importantly, this inflow could easily dwarf the performance of the ETFs, which are currently sitting on billions of dollars worth of AUM.
The Real Effects This Could Have On Bitcoin
One thing to keep in mind is that for the past 16 years, Bitcoin has largely followed four-year cycles.
This phenomenon came into full view in years like 2014, 2018, and 2022, where Bitcoin crashed heavily.
The cryptocurrency also hit new peaks in the three years between the aforementioned “bearish years”.
Based on this pattern, experts expect 2026 to be a bearish year for crypto.
However, while this might sound scary, Hougan expects that the traditional cycle might become disrupted soon.
Why? And What Does This Mean?
To start with, Hougan doesn’t believe that the Bitcoin cycle will completely vanish.
However, he does believe that future downturns will be less severe than they were in the past.
“The crypto space has matured; there’s a greater variety of buyers and more value-oriented investors than ever before,” he noted.
Hougan believes that compared to the 2022 bear market when Bitcoin crashed from nearly $70,000 to $15,500, the 2026 bear market might not be a repeat event.
In the past, bear markets were triggered by major industry collapses:
The fall of FTX, the crash of Mt. Gox, and so on.
However, as the market grows and regulation becomes clearer, these catastrophes might become less frequent.
Bitcoin could crash as expected between 2025 and 2026, but there might be less of a bloodbath than before.
What Next For Crypto Regulation and Institutional Adoption?
Hougan notes that the effects of the Trump order aren’t expected to take effect immediately.
However, the order has laid an important groundwork for a regulatory environment that favors crypto.
The appointment of crypto-friendly figures like David Sacks, Bo Hines and Paul Atkins could lead the way towards a crypto-friendly environment.
The SEC also made a recent decision to cancel its controversial Staff Accounting Bulletin 121 rule, which forced financial firms to classify crypto holdings as liabilities.
With this law now removed, Wall Street firms can jump in and hold digital assets more easily.
More and more institutional investors will become invested in Bitcoin, and prices should remain relatively stable.
A $200,000 Bitcoin by 2025?
Despite the ongoing fears of an incoming Bitcoin bear market, Bitwise is still highly bullish on the cryptocurrency.
Hougan reiterated Bitwise’s December 2024 belief in Bitcoin’s ability to hit the $200,000 price target by the end of the year.
He believes that this price is achievable, whether or not the US government follows through with the proposed national Bitcoin reserve.
Bitcoin’s 4-year cycles will always be in full effect.
However, the new combination of crypto-friendly factors could create a new era for crypto.
Milder downturns and stronger peaks could only be the beginning.
