Crypto markets have opened 2026 on a strong footing. Top assets such as Bitcoin and Ethereum, as well as speculative tokens such as Dogecoin, have posted even sharper gains, according to a report by Bitwise Chief Investment Officer Matt Hougan.
For the 2026 rally to continue, the market needs to cross three hurdles.
Factors Influencing 2026 Outlook
In a market outlook published this week, Hougan said the rally could extend further this year if three key conditions are met. The first hurdle was the lingering fallout from October 10, 2025, when crypto assets suffered the largest liquidation event on record and wiped out almost $19 billion in futures positions in a single day.
Following that event, concerns emerged that major market makers or hedge funds may have been severely damaged, potentially forcing them to wind down operations and sell assets, a scenario that typically weighs on prices. Hougan said these fears contributed to crypto’s inability to rally in the fourth quarter, as the possibility of forced selling “hung over the market like a heavy fog.”
However, he noted that if such wind-downs were going to occur, they would most likely have taken place by the end of the year. As such, the absence of visible fallout into early 2026 means that investors have put the October event behind them. The Bitwise exec said that two hurdles remain.
The second centers on regulation, specifically the crypto market structure bill known as the CLARITY Act, which is currently moving through Congress. The Senate is targeting January 15 for markup, a process that involves aligning drafts in the Senate banking and agriculture committees before pushing the final bill toward a vote. Hougan said challenges such as differing views on how to regulate decentralized finance, stablecoin rewards, and issues around political conflicts of interest persist, but added that clearing the markup stage would represent a major step forward.
He stated that passage of the bill is critical for the long-term future of crypto in the United States, as it would “enshrine” core regulatory principles into law and reduce the risk that the current pro-crypto stance at agencies such as the SEC and CFTC could reverse under a future administration.
White House crypto czar David Sacks has said the industry is “closer than ever” to passing the bill. Meanwhile, prediction market Kalshi places the odds at 46% by May and 82% by year’s end, which Hougan characterized as a reason for cautious optimism.
The third hurdle involves the broader equity market, which the exec said does not need to be in a raging bull phase for crypto to perform well. But it must avoid a sharp decline, such as a 20% pullback in the S&P 500, that could hurt all risk assets in the short term.
He noted that prediction markets currently see a low probability of a recession in 2026 and roughly an 80% chance of gains for the S&P 500.
Rocky Months Ahead?
Despite Hougan’s hopeful outlook, some industry experts feel a little differently on BTC’s near- to medium-term trajectory. Pseudonymous analyst Doctor Profit has repeatedly said Bitcoin is still in a bear market that began in September and has not completed its bottoming process.
While he expects no major crash in early 2026 and sees room for a short-term rally toward the $97,000-$107,000 range, the analyst asserted that he remains fully bearish on BTC overall and continues to target prices below $70,000 in the coming months.
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