Crypto Market: Can 2026 Continue to Reach New Highs? Bitwise Reveals "Three Major Challenges" to Overcome

Cryptocurrency Market: 2026 Starts with Steady Performance, Bitcoin and Ethereum Show Weekly Gains of 4.7% and 10% respectively, while Dogecoin (DOGE), the market sentiment indicator, surges over 20%. Strong buying momentum indicates that investors’ risk appetite has fully returned. However, is this rally a fleeting moment or the beginning of a comeback? Digital asset management firm Bitwise released a report on Tuesday stating that whether the market can regain glory or even hit new all-time highs this year depends on passing the “3 Major Tests.” Bitwise Chief Investment Officer Matt Hougan analyzed in the report that although the start has been impressive, the cryptocurrency market still needs to meet 3 core conditions to sustain this trend in the long term. The good news is that the first hurdle seems to have been successfully cleared. First Hurdle: Will there be a “Systemic Shock” again? The first major test pointed out by Matt Hougan is whether there are still unexploded bombs in the market. Looking back to October 2025, the crypto market experienced an epic liquidation wave, with futures contracts worth up to $19 billion wiped out in a single day. After the event, concerns arose that large market makers and hedge funds might be forced to sell assets to realize gains, creating ongoing selling pressure. However, Hougan believes these concerns have eased. If there had been significant liquidation pressure, it would have likely erupted before the end of last year. Based on the market performance in early 2026, investors have evidently been gradually digesting this shadow. Second Hurdle: Will Cryptocurrency Legislation Pass? The second test comes from the US political and regulatory environment. Hougan pointed out that the US cryptocurrency market structure bill is currently under review in Congress. The Senate Banking Committee is expected to examine the bill in mid-January, which will be a critical battle for its passage. Although there are still disagreements between parties on issues like DeFi regulation and stablecoin reward mechanisms, and political struggles are unpredictable, Hougan emphasized that passing the bill would be a historic milestone. Conversely, if legislation is delayed, the currently relatively friendly regulatory environment could reverse with a change in administration. Bitwise describes this as “cautiously optimistic, but no definitive conclusion yet.” Third Hurdle: Can the US Stock Market “Hold Steady”? The final hurdle relates to the overall risk asset environment. Hougan stated plainly that cryptocurrencies need a “relatively stable” stock market backdrop. Although the correlation between cryptocurrencies and stocks is less tight than before, a 20% correction in the S&P 500 index would likely drag down all risk assets in the short term. Current market forecasts suggest that the probability of a US recession this year is low, and the chances of stock market gains are higher, but external variables beyond control still exist. Conclusion: Structural Bullish Support, Optimistic Outlook Overall, Bitwise believes that the development prospects of the cryptocurrency market remain solid. With continued institutional entry, expanding stablecoin and tokenization applications, and the gradual fermentation of a more friendly regulatory environment starting in early 2025, these factors provide long-term support for the market.