Bitcoin Cycle May Change Following Trump’s Executive Order on Cryptocurrency
Bitcoin has traditionally followed a four-year cycle of three years of growth followed by a significant crash. Recent comments from Matt Hougan, Chief Investment Officer at Bitwise, suggest this pattern may be changing due to President Trump's new executive order on cryptocurrency.
Key Developments
- The executive order creates a task force to explore a U.S. digital asset reserve and prioritizes crypto.
- Hougan predicts institutional investments could reshape the market, potentially doubling Bitcoin's price to over $200,000 this year.
- Companies like MicroStrategy are borrowing to buy Bitcoin, indicating increased demand.
- Lending programs allow investors to leverage their Bitcoin without selling, enhancing its long-term value.
- The rise of leveraged ETFs and complex financial products signals a more aggressive market approach.
- The executive order could lead to clearer regulations, integrating Bitcoin into mainstream finance.
- Approval of Bitcoin ETFs in early 2024 could attract trillions in investments.
Future Outlook
Historically, Bitcoin has experienced a crash after three years of growth, prompting concerns of another crash in 2026. However, Hougan argues that the market has matured since the collapses of firms like FTX and Celsius Network, with institutional backing providing more stability. BlackRock's CEO predicts Bitcoin could reach $700,000, challenging the likelihood of a major crash.
While corrections may still happen, they are expected to be less severe and shorter in duration.