Bitwise's Perspective on Bitcoin's Potential Surge in 2026 Amid Typical Market Downturns

Bitwise's Outlook on Bitcoin: Bitwise's CIO, Matt Hougan, suggests that bitcoin may reach new all-time highs in 2026, challenging the traditional four-year cycle due to factors like reduced halving effects, lower interest rates, and increased institutional participation.

Lower Volatility and Correlation Expectations: Hougan anticipates that bitcoin's volatility will continue to decline, with its correlation to equities decreasing, driven by regulatory progress and institutional inflows, which could lead to strong returns and attract significant new investments.

Institutional Adoption Trends: Major financial institutions such as Morgan Stanley and Wells Fargo are expected to start allocating to bitcoin in 2026, influenced by a more favorable regulatory environment and the availability of ETFs, which could reshape demand dynamics.

Mixed Results from 2025 Predictions: While Bitwise's predictions for regulatory momentum and institutional engagement in 2025 were accurate, their price forecasts fell short, indicating that while structural improvements are occurring, the market's price behavior may not align with past expectations.