Bitwise Outlines Three Key Tests for Crypto’s 2026 Rally
Bitcoin and ether are off to a strong start in 2026, but sustaining the rally will depend on market stability, U.S. legislation, and calm equity markets, according to crypto asset manager Bitwise.
In a blog post Tuesday, Bitwise noted that bitcoin (BTC $91,452) and ether (ETH $3,170) have both gained roughly 7% year-to-date, just six days into the new year, while speculative tokens have surged even more. Dogecoin (DOGE $0.146) is up about 29%, signaling a renewed appetite for risk in parts of the market.
Bitwise CIO Matt Hougan highlighted three conditions that must hold for crypto to push toward new all-time highs in 2026. The first, he said, may already be behind the market. This is the avoidance of another major shock like the October 10, 2025 liquidation event, when roughly $19 billion in crypto futures positions were wiped out in a single day. Hougan noted that fears of large-scale unwindings by market makers or hedge funds appear to have eased, with early 2026 strength suggesting investors have moved past that overhang.
The second test is U.S. legislation. Proposed crypto market structure legislation is advancing in Congress, with a Senate Banking Committee markup tentatively set for mid-January. Key debates remain over decentralized finance regulation, stablecoin rewards, and broader political conflicts. Hougan said passage of the bill would be a major milestone, while failure to advance legislation could leave today’s relatively pro-crypto regulatory environment vulnerable to reversal under a future administration.
The third factor is the equity market backdrop. While digital assets are not perfectly correlated with stocks, a sharp selloff—such as a 20% drop in the S&P 500—would likely pressure all risk assets. Current market expectations suggest a low probability of recession and strong chances of equity gains, though external shocks remain a potential risk.
Overall, Bitwise described the outlook as constructive, citing growing institutional adoption, increased use of stablecoins, tokenization, and the delayed benefits of a more supportive regulatory environment that began in early 2025. If policy progress continues and broader markets cooperate, the firm believes crypto’s early momentum in 2026 could prove durable.
