As the market rally continues, Bitwise’s CIO has outlined some of the bullish catalysts that he believes the market is overlooking and could send the crypto market prices substantially higher in the coming months and years.
Governments, Central Banks To Push Crypto Prices Higher
In a Wednesday memo to clients, Bitwise CIO Matt Hougan outlined some developments he believes the crypto market has not yet priced in despite the people’s bullish sentiment on the industry.
Hougan highlighted that there’s “a lot to be excited about” now, including crypto regulation and legislation moving in a positive direction, stablecoins gaining momentum, corporate crypto purchases soaring, exchange-traded funds (ETFs) experiencing remarkable adoption, and the “much-needed altcoin energy” being injected into the broader crypto market by Ethereum’s (ETH) rally.
Nonetheless, he asserted that the “problem (…) is all these are well-known,” which could suggest that the market is “underestimating the scale of each of these developments.” To Bitwise CIO, there are “significant upside surprises in store for the market through the end of the year,” which could push prices substantially higher in the coming months and the start of 2026.
Hougan listed governments potentially purchasing Bitcoin (BTC) as the first key catalyst not priced in. He explained that “The Three Horsemen of Bitcoin Demand” for this year were ETFs, corporations, and governments, but only the first two have delivered.
Notably, ETFs have purchased 183,126 BTC, according to Bitwise’s CIO, while public corporations have acquired 354,744 BTC. Meanwhile, governments have failed to show up despite some “dribs and drabs” from some jurisdictions like Pakistan, Abu Dhabi, and even the US. He emphasized that the US Strategic Bitcoin Reserve (SBR), established by President Donald Trump in March, only holds assets seized through criminal forfeiture.
In the memo, Hougan affirmed that, based on the conversations he is having at Bitwise, countries and central banks “are moving,” albeit slowly, clarifying that he doesn’t believe “there will be a rush of national announcements by year-end,” but suspects there will be enough to “establish this as a major potential catalyst for 2026. That realization alone could push prices substantially higher.”
It’s worth noting that US Treasury Secretary Scott Bessent revealed on Thursday morning that the government will not be purchasing additional Bitcoin for its SBR. Instead, the US will stop selling these assets and continue to build up the reserve’s stash through confiscated BTC
What Else Has Not Been Priced In?
Bitcoin trading near all-time highs while interest rates hover near historical highs is unusual, the Bitwise CIO said when discussing the second factor. Despite investors having priced in multiple rate cuts by year’s end, he asserted that the market is missing a much bigger story.
Notably, the Trump administration “has a strong desire” for a weaker dollar and a more dovish Federal Reserve. The administration is “strongly signaling that it wants much lower rates and a much weaker dollar.” To him, Bitcoin could trade significantly higher with much lower rates and a much weaker dollar due to money printing.
Hougan also underscored the diminishing volatility trend as a third potential catalyst, as both BTC’s volatility and the rate at which its volatility is changing have fallen dramatically since the launch of spot Bitcoin ETFs in January 2024.
The growth of ETFs and corporate purchases injected new types of buyers into the crypto market, and advances on the regulatory and legislative side dramatically reduced risk in the market. I suspect this is the “new normal” for bitcoin. It is now roughly as volatile as high-volatility tech stocks, like Nvidia.
Lastly, he suggested that a comeback of Initial Coin Offerings (ICOs) could be around the corner, bringing a wave of new capital. Hougan argued that ICOs have had a terrible reputation since 2018, which led most investors and observers to write them off “as damaged goods.”
However, Securities and Exchange Commission’s (SEC) Chairman, Paul Atkins, recently “laid out a vision for a rebirth of ICOs” with his Project Crypto speech. “Unleashing a new ICO Market 2.0 could draw in significant new capital to the crypto market,” Hougan affirmed.
“Markets don’t rise on good news. They rise on good news that is not priced in,” he affirmed, concluding that “the market in general underappreciates the scale of the bull market taking place in crypto. But I also think it’s overlooking some specific catalysts that will play out in the months and years to come.”
