Bitcoin, ETH, Dogecoin Rally Faces 3 Key | Crypto News
Crypto entered 2026 with a sharp bid, and Bitwise CIO Matt Hougan says the next leg larger hinges on three checkpoints that have less to do with chart patterns and more to do with market plumbing, Washington, and the broader risk backdrop.
In a January 6 memo, Hougan wrote that Bitcoin and Ethereum had been each up 7% year-to-date as of Monday, January 5, while higher-beta names had moved quicker, Dogecoin was up 29% over the same window. The query, he argued, is whether or not that early strength can flip into one thing sustained moderately than a fleeting January pop.
Three Hurdles To Overcome For Bitcoin, ETH And Dogecoin
Hougan’s framework begins with a reminiscence the market would moderately bury: October 10, 2025, when crypto noticed what he called “the largest liquidation event in its history,” with “$19 billion in futures positions wiped out in a single day.” The mechanical injury mattered, but the psychological overhang might have mattered more. In the weeks that adopted, he wrote, buyers apprehensive the cascade had “impaired major market makers and/or hedge funds—perhaps fatally,” raising the specter of pressured promoting as large gamers unwound.
“One of the reasons crypto struggled to rally in Q4 was that investors worried one of these big players might have to wind down operations, a process that typically requires the forced sale of assets,” Hougan wrote. “These potential sales hung over the market like a heavy fog.”
His first hurdle, then, is just the absence of another blow-up with comparable systemic implications. On that entrance, he struck a notably assured tone. “The good news: If it were going to happen, it probably would have happened by now,” he wrote, including that while “there’s no guarantee,” a firm shutting down would doubtless have tried “to wrap up by year’s end.” In his read, half of the early-2026 rally displays a market that has “put October 10 in the rearview.” He labeled that hurdle a “Green Light.”
The second checkpoint is legislative, and far less within the market’s control: passage of the crypto market construction invoice recognized as the CLARITY Act. Hougan wrote the invoice is “winding its way through Congress,” with the Senate “targeting January 15 for markup,” the stage where committees align drafts and strive to transfer a ultimate invoice toward a vote.
He didn’t current it as a clean glide path. “Hurdles remain,” he wrote, citing “competing visions of how to regulate DeFi, stablecoin rewards, and political conflicts of interest.” Still, he framed markup as a pivotal gate: if CLARITY clears that course of, it could be “a huge step toward approval.”
Hougan’s core argument is about sturdiness. “Passage of the CLARITY Act is key to the long-term future of crypto in the U.S.,” he wrote. “Without legislation, the current pro-crypto regulatory tilt at the SEC, CFTC, and other agencies could reverse under a new administration. Passage of the Act would enshrine core principles into law and provide a strong foundation for future growth.”
He pointed to indicators from both politics and prediction markets. White House crypto czar David Sacks, Hougan wrote, says “we are closer than ever” to passing the invoice. Kalshi, he added, places the percentages at 46% by May and 82% by yr’s end. Hougan’s own takeaway: “I’m cautiously optimistic.” He tagged this hurdle “Yellow Light.”
The third checkpoint is the one crypto merchants often favor to dismiss, until it issues: equity-market stability. Hougan argued the market doesn’t need a roaring stock rally to help crypto, noting “crypto is not highly correlated with stocks.” But he drew a arduous line around drawdowns that power broad deleveraging and risk-off positioning. (*3*) he wrote.
Here, he was specific about limits: “I can’t claim any special expertise on the equity markets.” While he famous some buyers are apprehensive about an AI bubble, he pointed to prediction markets that “see a relatively low probability of a recession in 2026 and a roughly 80% probability of S&P 500 gains.” Like the CLARITY Act, he labeled the equity backdrop a “Yellow Light.”
Hougan closed by arguing the setup is constructive if those remaining yellows flip inexperienced. “There is a lot to like in the crypto market right now,” he wrote, pointing to growing institutional adoption, surging real-world use circumstances “like stablecoins and tokenization,” and the market “starting to feel the benefits of the pro-crypto regulatory push that started in January 2025.” If the three milestones fall into place, he added, “2026’s early momentum will have some serious legs.”
At press time, Bitcoin traded at $91,717.
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