Bitwise CIO flags three hurdles crypto must clear for a sustained 2026 rally

Crypto markets opened 2026 with early gains, but sustaining the rally will depend on clearing three key hurdles, according to Bitwise Chief Investment Officer Matt Hougan.

In a note to clients late Tuesday, Hougan said bitcoin and ether were each up around 7% year-to-date, with more speculative assets like dogecoin posting larger gains. However, prices have since pulled back on Wednesday, prompting questions over whether the new year rally can continue.

Hougan argued that the first and most immediate hurdle has already been cleared: avoiding another large-scale market dislocation like the Oct. 10 liquidation event that wiped out at least $20 billion in crypto futures positions in a single day. Fears that major market makers or hedge funds might be forced to unwind positions weighed on prices late last year, he said, but those concerns have faded as no major wind-downs materialized by year-end.

“If it were going to happen, it probably would have happened by now,” Hougan wrote. “While there’s no guarantee, any firm winding down operations would most likely have tried to wrap up by year’s end. One of the reasons I think we’ve rallied to start this year is that investors have put Oct. 10 in the rearview.”

The second hurdle, in Hougan’s view, centers on U.S. legislation, specifically the passage of the crypto market structure bill known as the Clarity Act. The bill is moving through Congress, with a Senate markup targeted for Jan. 15, though disagreements remain around issues such as DeFi oversight, stablecoin rewards, and political conflicts of interest.

In the Senate, the Banking Committee is responsible for the securities-law half of the bill, while the Agriculture Committee works on the commodities-law half, with both publishing drafts in the fall. Before the legislation can advance, both committees must hold a markup — a formal session where lawmakers vote on amendments and decide whether to send the bill for a full Senate vote.

Hougan said clearing markup would mark a major step toward approval, adding that passage would lock pro-crypto regulatory principles into law rather than leaving them vulnerable to future political shifts, providing a “strong foundation for future growth.”

Last month, White House crypto czar David Sacks said the legislation is “closer than ever” to passage, while prediction market platform Kalshi currently prices the odds of approval at 46% by May and 82% by the end of the year, Hougan noted.

The final factor is the broader equity market, the Bitwise CIO outlined. While Hougan said crypto does not require a booming stock market to perform well, he cautioned that a sharp equity selloff could drag on all risk assets in the short term. Prediction markets currently imply a relatively low probability of a 2026 recession and strong odds of gains for U.S. equities, he noted, while cautioning that this remains an area of uncertainty in the months ahead.

Market outlook

Hougan placed the current outlook within a broader backdrop of growing institutional participation and expanding real-world crypto use cases, including stablecoins and tokenization. He said the market is also beginning to feel the effects of a pro-crypto regulatory shift that started in early 2025, which has improved sentiment even as legislative risks remain unresolved.

If all three hurdles are cleared, Hougan said, crypto’s early-2026 gains could develop “some serious legs” over the rest of the year.

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