Bitcoin, ETH, Dogecoin Rally Faces 3 Key Checkpoints: Bitwise CIO

Crypto entered 2026 with a pointy bid, and Bitwise CIO Matt Hougan says the following leg greater hinges on three checkpoints which have much less to do with chart patterns and extra to do with market plumbing, Washington, and the broader threat backdrop.

In a January 6 memo, Hougan wrote that Bitcoin and Ethereum had been every up 7% year-to-date as of Monday, January 5, whereas higher-beta names had moved sooner, Dogecoin was up 29% over the identical window. The query, he argued, is whether or not that early power can flip into one thing sustained somewhat than a fleeting January pop.

Three Hurdles To Overcome For Bitcoin, ETH And Dogecoin

Hougan’s framework begins with a reminiscence the market would somewhat bury: October 10, 2025, when crypto noticed what he known as “the biggest liquidation occasion in its historical past,” with “$19 billion in futures positions worn out in a single day.” The mechanical harm mattered, however the psychological overhang could have mattered extra. In the weeks that adopted, he wrote, traders frightened the cascade had “impaired main market makers and/or hedge funds—maybe fatally,” elevating the specter of compelled promoting as massive gamers unwound.

“One of the explanations crypto struggled to rally in This autumn was that traders frightened one in all these huge gamers might need to wind down operations, a course of that usually requires the compelled sale of belongings,” Hougan wrote. “These potential gross sales hung over the market like a heavy fog.”

His first hurdle, then, is solely the absence of one other blow-up with comparable systemic implications. On that entrance, he struck a notably assured tone. “The excellent news: If it had been going to occur, it most likely would have occurred by now,” he wrote, including that whereas “there’s no assure,” a agency shutting down would doubtless have tried “to wrap up by 12 months’s finish.” In his learn, a part of the early-2026 rally displays a market that has “put October 10 within the rearview.” He labeled that hurdle a “Green Light.”

The second checkpoint is legislative, and much much less throughout the market’s management: passage of the crypto market construction invoice often called the CLARITY Act. Hougan wrote the invoice is “winding its means by Congress,” with the Senate “focusing on January 15 for markup,” the stage the place committees align drafts and attempt to transfer a ultimate invoice towards a vote.

He didn’t current it as a clear glide path. “Hurdles stay,” he wrote, citing “competing visions of tips on how to regulate DeFi, stablecoin rewards, and political conflicts of curiosity.” Still, he framed markup as a pivotal gate: if CLARITY clears that course of, it could be “an enormous step towards approval.”

Hougan’s core argument is about sturdiness. “Passage of the CLARITY Act is vital to the long-term way forward for crypto within the U.S.,” he wrote. “Without laws, the present pro-crypto regulatory tilt at the SEC, CFTC, and different companies may reverse underneath a brand new administration. Passage of the Act would enshrine core ideas into regulation and supply a powerful basis for future progress.”

He pointed to indicators from each politics and prediction markets. White House crypto czar David Sacks, Hougan wrote, says “we’re nearer than ever” to passing the invoice. Kalshi, he added, places the chances at 46% by May and 82% by 12 months’s finish. Hougan’s personal takeaway: “I’m cautiously optimistic.” He tagged this hurdle “Yellow Light.”

The third checkpoint is the one crypto merchants usually choose to dismiss, till it issues: equity-market stability. Hougan argued the market doesn’t want a roaring inventory rally to help crypto, noting “crypto shouldn’t be extremely correlated with shares.” But he drew a tough line round drawdowns that pressure broad deleveraging and risk-off positioning. “A pointy collapse—say, a 20% pullback within the S&P 500—would take the shine off of all threat belongings within the brief time period, crypto included,” he wrote.

Here, he was express about limits: “I can’t declare any particular experience on the fairness markets.” While he famous some traders are frightened about an AI bubble, he pointed to prediction markets that “see a comparatively low likelihood of a recession in 2026 and a roughly 80% likelihood of S&P 500 positive aspects.” Like the CLARITY Act, he labeled the fairness backdrop a “Yellow Light.”

Hougan closed by arguing the setup is constructive if these remaining yellows flip inexperienced. “There is rather a lot to love within the crypto market proper now,” he wrote, pointing to rising institutional adoption, surging real-world use instances “like stablecoins and tokenization,” and the market “beginning to really feel the advantages of the pro-crypto regulatory push that began in January 2025.” If the three milestones fall into place, he added, “2026’s early momentum could have some critical legs.”

At press time, Bitcoin traded at $91,717.