The cryptocurrency market showed a strong start in 2026, but whether this rally can continue remains uncertain. Bitwise CIO Matt Hougan pointed out that for the market to break out into a sustained bullish trend, it must first overcome three key challenges: market stability, regulatory legislation progress, and the overall financial environment.

(Previous context: Arthur Hayes’ article: Elections, oil prices, and money printing machines—why Bitcoin only looks at Trump’s face)

(Additional background: Fidelity’s 2026 Crypto Market Outlook Report: More countries may establish Bitcoin reserves, and long-term holding of BTC remains profitable)

Table of Contents

• 1. Systemic risk cooling down, the market has already passed the first hurdle
• 2. U.S. legislative progress, a key variable affecting mid-term trends
• 3. Stock market trends remain an external factor that cannot be ignored for crypto assets
• Long-term foundation taking shape, the key remains whether all three hurdles can be fully cleared

The cryptocurrency market performed well at the start of 2026, but whether this rebound is just a short-term trend is still debated. In response, Bitwise CIO Matt Hougan stated that for the crypto market to achieve a sustainable bull trend this year, it must successfully overcome three critical tests related to market stability, regulatory legislative progress, and the overall financial market environment.

1. Systemic risk cooling down, the market has already passed the first hurdle

Hougan believes that the first and most urgent hurdle has been successfully crossed at the beginning of the year—that is, avoiding large-scale liquidations or market disorder events again. He pointed out that in October last year, there was a single-day crypto perpetual contract liquidation event reaching as high as $20 billion, causing concerns that major market makers or hedge funds might be forced to exit, triggering a chain reaction.

However, since no major institutional withdrawals or defaults occurred before the end of the year, concerns over systemic risk have significantly eased. Hougan stated that if such an event were truly imminent, it would have already happened, which is one of the reasons investors are willing to re-enter the market at the start of the new year.

2. U.S. legislative progress, a key variable affecting mid-term trends

The second challenge comes from policy, specifically whether the U.S. Congress can successfully push forward the Clarity Act, a bill aimed at structuring the crypto market. Hougan noted that the bill is currently advancing in the Senate. While the direction is clear, disagreements still exist on issues such as DeFi regulation, stablecoin yield design, and political conflicts of interest.

Since the bill involves two major regulatory frameworks—securities and commodities—it must first pass through hearings in the Senate Banking Committee and the Agriculture Committee before going to a full Senate vote. Hougan believes that successfully completing these hearings would mark a critical step in legislation. Even if political winds shift in the future, the principles favoring crypto regulation could be more firmly embedded into law, providing a long-term institutional foundation for the industry.

3. Stock market trends remain an external factor that cannot be ignored for crypto assets

The third challenge stems from the overall financial environment, especially the performance of the U.S. stock market. Hougan emphasized that while the crypto market does not necessarily need a stock market rally to rise, a sharp correction in equities could, in the short term, drag down all risk assets, including cryptocurrencies.

Current market expectations suggest that the probability of an economic recession in 2026 remains relatively low, and the likelihood of continued U.S. stock gains is higher. However, Hougan also warned that macro variables are numerous, and these will be key uncertainties to monitor closely in the coming months.

Long-term foundations are taking shape, but success depends on passing all three hurdles

Overall, Hougan remains cautiously optimistic about the long-term prospects of the crypto market. He pointed out that institutional inflows, the rapid expansion of stablecoins and asset tokenization, along with the gradually forming pro-crypto regulatory atmosphere since 2025, have laid structural support for the market.

However, he also emphasized that only if the three major hurdles—market stability, regulatory clarity, and the external financial environment—are all successfully overcome, can the early 2026 rebound truly evolve into a sustainable long-term trend.