Crypto’s 2026 Rally Hinges on Three Hurdles, Says BitWise CIO

Crypto markets opened 2026 with momentum. Bitcoin and Ethereum are each up 7% year‑to‑date, while Dogecoin surged 29%. The question now is whether the rally can last. Bitwise CIO Matt Hougan outlined three hurdles that will determine if the sector can push toward new highs.

The first hurdle has already been cleared. On October 10, 2025, crypto endured its largest liquidation event ever, with $19 billion in futures wiped out in a single day. Investors feared that major market makers or hedge funds might collapse, forcing asset sales that would weigh on prices. Hougan argues that if such wind‑downs were coming, they would have happened before year‑end. With that risk fading, markets have rallied.

The second hurdle is regulatory. The “CLARITY Act,” a market structure bill, is moving through Congress. The Senate is targeting January 15 for markup, with committees working to align drafts. The bill addresses DeFi oversight, stablecoin rewards, and conflicts of interest. Hougan says the passage would lock in pro‑crypto policies and provide a foundation for growth. White House crypto czar David Sacks has said progress is closer than ever. Prediction market Kalshi puts the odds of passage at 46% by May and 82% by year‑end.

The third hurdle lies outside crypto. Equity markets need to remain stable. Hougan notes that while crypto isn’t tightly correlated with stocks, a sharp pullback in the S&P 500 would dampen risk appetite. Concerns about an AI bubble linger, but prediction markets currently assign a low probability to recession and an 80% chance of S&P gains in 2026.

Hougan’s takeaway: institutional adoption is rising, tokenization and stablecoin use cases are expanding, and regulatory momentum is building. If the CLARITY Act passes and equities hold steady, crypto’s early 2026 rally could have staying power.