Can Trump Administration Make The Difference?

Following a rather explosive Q4 2024, the crypto bull run has entered a consolidation phase as seen over the past two months.

The crypto bull run has entered a consolidation phase after a rather explosive Q4 2024. As investors keep a close watch on the market’s next move, Bitwise Chief Investment Officer Matt Hougan has boldly suggested that the traditional crypto four-year cycle may be coming to an end, indicating the dawn of a new era for the nascent industry.

In a recent post on Axios, Hougan provides a deep dive into the crypto market cycle, highlighting a particular factor that could potentially improve this rhythm in a positive way. To provide some context, the digital asset market has historically operated on a four-year cycle, जिसमें तीन लगातार वर्ष महत्वपूर्ण लाभ होते हैं, followed by a major price pullback.

Hougan explains that by studying recent years, the cycle is always ignited by a positive catalyst that attracts investors to the market. As the bull run progresses with soaring prices across assets, investors become greedy, leading to overleveraging and accumulation, which eventually forces a major market downturn.

At certain times, this downturn can be caused by black swan events like the fall of the Mt. Gox exchange in 2014. However, following this painful deleveraging experience, there is usually another bullish event to kick-start a new cycle.

The present bull cycle is coming off the back of substantial deleveraging caused by the collapse of several crypto firms in 2022, including Three Arrows Capital, BlockFi, Celsius, and the popular FTX exchange, among others. The Bitwise CIO goes on to postulate that Grayscale’s historic legal victory over the SEC served as the market catalyst, ultimately signaling the eventual introduction of the Bitcoin Spot ETFs.

If we go by previous bull cycles, investors should be preparing for a major price pullback in 2026 — the crypto winter. However, Hougan believes that the recent shift in U.S. government policy on crypto can have a strong influence over market cycles moving forward.

Following Donald Trump’s inauguration two weeks ago, the Republican has been quick to push his pro-crypto agenda. This is evident in the Crypto Executive Order, which defines these assets as a “national priority” and mandates an investigation into the potential of a “national stockpile.”

Hougan states that the U.S. government’s newfound embrace of crypto will be mirrored by mainstream companies and traditional financial institutions, most of which don’t operate based on the conventional market cycle. Additionally, it will likely take a year for the government to establish an effective regulatory crypto framework, while industry giants are also preparing their market entry strategies.

As a result, mainstream digital asset adoption may begin in 2026, reducing the chances of a crypto winter. The Bitwise CIO warns that while classic deleveraging may still occur due to investors’ greed or market bad actors, this projected institutional demand will likely prevent the significant downturns seen in previous cycles.

Crypto Market Overview

The total digital asset market cap is currently valued at $3.42 trillion following a 2.39% uptick in the past day.