The cryptocurrency market has long operated according to what most seasoned investors consider an almost sacred pattern: a predictable four-year cycle consisting of three positive years followed by a major market reset. This cyclical behavior has served as a cornerstone of investment strategy and market analysis for over a decade, providing a framework that has helped investors navigate the volatile world of digital assets. However, mounting evidence suggests that this well-established pattern may be on the verge of a significant deviation, potentially reshaping how we understand cryptocurrency market dynamics.
The Foundation of Crypto’s Four-Year Cycle
For those who have participated in the cryptocurrency market for any substantial period, the four-year cycle has become almost an article of faith. This pattern has proven remarkably consistent, providing a reliable framework for understanding market behavior across multiple cycles. The cycle typically features three years of generally positive performance followed by a major correction or “crypto winter” that resets valuations and clears out speculative excess.
The driving forces behind this cyclical behavior have been subject to ongoing debate among market participants and analysts. Some attribute the pattern primarily to Bitcoin halving events, which occur approximately every four years and reduce the rate at which new bitcoins are created. These halving events theoretically create supply constraints that contribute to price appreciation, followed by eventual corrections as markets adjust to new equilibrium levels.
Others point to broader economic factors as the primary drivers, arguing that cryptocurrency markets have become increasingly correlated with traditional financial cycles, monetary policy changes, and macroeconomic trends. Regardless of the underlying causes, the four-year pattern has proven remarkably durable, surviving multiple market cycles and providing a foundation for long-term investment strategies.
Following this established pattern, the cryptocurrency market experienced positive performance in 2023 and 2024, with what appears to be a continuation of this trend into 2025. According to traditional cycle analysis, this progression should position the market for a reset in 2026, completing another four-year cycle and preparing the foundation for the next period of growth.
Challenging Conventional Wisdom
However, Matt Hougan, investment chief at Bitwise, has emerged as a prominent voice challenging this conventional wisdom. In a statement posted Thursday on X (formerly Twitter), Hougan declared that “this crypto cycle will be bigger and last longer than most people think.” This assertion represents a significant departure from traditional cycle analysis and suggests fundamental changes in the cryptocurrency market’s structure and dynamics.
Hougan’s perspective is not based on wishful thinking or speculative optimism, but rather on a detailed analysis of regulatory and structural changes that have occurred within the cryptocurrency ecosystem. His argument centers on the hypothesis that the previous cycle was artificially constrained by regulatory headwinds that prevented the market from reaching its natural potential.
The Regulatory Suppression Theory
Central to Hougan’s analysis is his assessment of the regulatory environment that characterized the Biden administration’s approach to cryptocurrency. He argues that while the hostile regulatory climate suppressed the development and adoption of cryptocurrency applications and use cases, the underlying technological infrastructure continued to advance and improve during this period.
This regulatory suppression created what Hougan describes as a “coiled spring” effect, where technological progress and market demand continued to build pressure even as surface-level adoption and application development faced significant obstacles. The result, according to this theory, is a market positioned for explosive growth once regulatory barriers are removed.
“As we remove the regulatory road blocks, the speed at which things like stablecoins, tokenization, DeFi and DePin will scale will surprise people,” Hougan explained. “It’s a coiled spring.”
This perspective suggests that the cryptocurrency market has been operating below its natural potential, constrained not by technological limitations or market demand, but by regulatory uncertainty and active government hostility toward digital asset innovation.
The Trump Administration’s Paradigm Shift
Hougan’s confidence in a deviation from traditional market cycles is not based solely on theoretical analysis but also on concrete policy changes implemented by the Trump administration. This is not the first time Hougan has suggested that the four-year cycle may be ending; he made similar arguments in January, following President Donald Trump’s first cryptocurrency executive order.
The executive order represented a dramatic shift in the federal government’s approach to digital assets, characterizing the cryptocurrency ecosystem as “a national priority.” This designation alone represents a fundamental change from the previous administration’s approach, which often treated cryptocurrency as a potential threat to be contained rather than an innovation to be fostered.
The order went beyond symbolic gestures, pushing for concrete steps toward establishing a clear regulatory framework for digital assets. This regulatory clarity has long been identified as one of the primary obstacles to institutional adoption and mainstream integration of cryptocurrency technologies. By providing a pathway toward comprehensive regulation, the administration addressed one of the market’s most significant structural constraints.
Perhaps most significantly, the executive order teased the possibility of establishing “a national crypto stockpile,” suggesting that the federal government might become a strategic holder of digital assets. This prospect represents a paradigm shift in how governments view cryptocurrency, moving from skeptical regulation to potential strategic accumulation.
Market Structure and Institutional Changes
Hougan’s analysis extends beyond regulatory changes to encompass broader structural shifts in the cryptocurrency market. He noted that the executive order, combined with the U.S. Securities and Exchange Commission’s more favorable attitude toward the industry, has opened the door for trillions of dollars to potentially enter the market.
This potential influx of institutional capital represents a fundamental change in market dynamics. Unlike previous cycles, which were driven primarily by retail investor enthusiasm and speculative activity, the current environment suggests the possibility of sustained institutional participation. This shift could provide a more stable foundation for market growth and reduce the severity of traditional cyclical corrections.
However, Hougan acknowledged that significant policy changes require time to translate into market impact. He noted that it would likely take at least a year for any substantial changes to be felt throughout the cryptocurrency ecosystem. This timeline consideration is crucial for understanding when and how traditional cycle patterns might be disrupted.
Questioning the 2026 Reset
The timing implications of regulatory and institutional changes raise fundamental questions about the traditional cycle’s continuation. “If it’s not until next year that we feel those impacts, will we really have a new ‘crypto winter’ in 2026?” Hougan questioned. “Will investors go into hibernation even though they know we’ve entered a new crypto-enabled world?”
These questions highlight the potential disconnect between traditional cyclical analysis and the current market environment. If institutional adoption and regulatory clarity create sustained demand for cryptocurrency assets, the typical boom-bust pattern may no longer apply in the same way it has historically.
The concept of investors entering “hibernation” during a traditional crypto winter becomes less plausible when institutional participants have strategic, long-term allocation mandates rather than speculative, short-term trading objectives. Institutional investors typically maintain positions through market cycles, providing a stabilizing influence that could dampen traditional volatility patterns.
Acknowledging Continued Risks
Despite his optimistic outlook regarding cycle deviation, Hougan maintains a nuanced perspective on market risks and potential corrections. Even in January, when he first articulated his thesis about the end of four-year cycles, he acknowledged that the cryptocurrency market had not yet fully overcome traditional cyclical pressures.
Citing the growing prevalence of leveraged plays and speculative activity, Hougan suggested that some form of market correction or “wipeout” would likely occur at some point. However, he emphasized a crucial distinction: unlike previous cycles, any major pullbacks would likely be “shorter and shallower” than traditional crypto winters.
This prediction reflects his assessment of fundamental changes in market structure and participant composition. “The crypto space has matured; there’s a greater variety of buyers and more value-oriented investors than ever before,” he observed. “I expect volatility, but I’m not sure I’d bet against crypto in 2026.”
Market Maturation and Diversification
The maturation Hougan references encompasses several important developments that distinguish the current market environment from previous cycles. The cryptocurrency space now includes a broader range of institutional participants, from corporate treasuries holding Bitcoin to traditional asset managers offering cryptocurrency products to retail and institutional clients.
This diversification in market participants has created multiple sources of demand that operate according to different investment timelines and risk tolerances. While retail speculation may still contribute to short-term volatility, institutional participation provides a foundation of demand that is less likely to disappear during market downturns.
Furthermore, the development of regulatory frameworks and compliance infrastructure has made cryptocurrency more accessible to traditional institutional investors who were previously excluded by regulatory uncertainty or operational constraints. This expanded access could provide sustained demand even during periods of market stress.
Technological Infrastructure Development
Supporting Hougan’s “coiled spring” theory is the continued development of cryptocurrency technological infrastructure during the regulatory suppression period. While application development and user adoption may have been constrained by regulatory uncertainty, the underlying blockchain networks, development tools, and technical capabilities continued to advance.
The technologies Hougan specifically mentions—stablecoins, tokenization, decentralized finance (DeFi), and decentralized physical infrastructure networks (DePin)—represent mature technological capabilities that are positioned for rapid scaling once regulatory barriers are removed. This suggests that adoption could accelerate quickly once favorable regulatory conditions are established.
Stablecoins, in particular, have demonstrated their utility as both trading tools and practical payment mechanisms, even under adverse regulatory conditions. With clearer regulatory frameworks, these digital dollars could see widespread adoption in traditional commerce and cross-border payments.
Investment Implications
The potential deviation from traditional four-year cycles carries significant implications for cryptocurrency investment strategies. Investors who have relied on cyclical patterns to time market entries and exits may need to reconsider their approaches if the traditional pattern no longer applies.
However, Hougan’s analysis suggests that while the timing and severity of corrections may change, volatility will likely remain a characteristic feature of cryptocurrency markets. The challenge for investors will be distinguishing between temporary volatility and the beginning of a traditional crypto winter.
The emphasis on market maturation and institutional participation suggests that fundamental analysis may become more important relative to technical or cyclical analysis. As the market increasingly reflects underlying value creation rather than purely speculative dynamics, traditional investment research methods may become more applicable to cryptocurrency assets.
Looking Forward
As the cryptocurrency market continues to evolve, the question of whether traditional cycles will persist represents more than academic interest. The answer will influence investment strategies, regulatory approaches, and the broader integration of digital assets into the global financial system.
Hougan’s analysis provides a compelling framework for understanding how regulatory and structural changes might disrupt traditional patterns. However, the ultimate test will come through market performance over the next several years, as the cryptocurrency ecosystem navigates the transition from regulatory hostility to potential government support.
Whether or not the four-year cycle ultimately proves to be broken, the factors Hougan identifies—regulatory clarity, institutional adoption, and technological maturation—represent fundamental improvements in the cryptocurrency market’s foundation that could support more sustainable long-term growth regardless of short-term cyclical behavior.
Acknowledgment: This article was written with the help of AI, which also assisted in research, drafting, editing, and formatting this current version.
