Bitcoin likely to see steady long-term returns, but outsized gains are unlikely: Bitwise CIO

Bitwise CIO Matt Hougan said the Bitcoin four-year cycle is being replaced by a “10-year grind” characterized by steady returns rather than spectacular gains.

Speaking on CNBC’s Crypto World, Hougan argued that institutional adoption, regulatory progress, and stablecoin growth are stronger forces than the historical halving-driven cycle.

“I do think the four-year cycle is less important now than it was in the past,” Hougan stated. “I expect the market to be up next year. I think we’re in a 10-year grind upward of strong returns, not spectacular returns, strong returns, lower volatility, some up and down.”

Institutional buying dampens Bitcoin volatility

Hougan pointed to dropping Bitcoin (BTC) volatility as evidence of structural market changes. The cryptocurrency now exhibits lower volatility than NVIDIA over the past year, he noted.

Institutional investors rebalance portfolios mechanically rather than chasing momentum, creating a stabilizing force absent in retail-dominated markets.

“Retail investors historically are very much momentum based. If it’s up, they’re buying. If it’s down, they’re selling,” Bea explained. "Institutions in their plan documents actually have the opposite built in.

The distribution shift from retail to institutional ownership is ongoing. Harvard’s endowment is buying while retail sells, creating what Hougan described as a “staircase up and then an elevator down” pattern.

The reason Bitcoin is down 30% rather than 60% from October highs is “persistent, slow-moving institutional buying that’s keeping the market up,” he stated.

Regulatory clarity provided one-time boost

Hougan characterized the Trump administration’s impact as a one-time effect that cleared regulatory concerns.

“If you asked institutional investors in previous years why they weren’t investing in Bitcoin, the number one reason wasn’t volatility or valuation. It was actually regulatory concerns,” he said.

Both executives identified clarity legislation as critical for crypto rallies. “If clarity doesn’t pass, it’s going to be hard for crypto to rally,” Hougan warned. “I think if you do see it pass, that’s probably something like the all-clear signal on this pullback.”