The 3 Conditions To Extend The Bitcoin, Ethereum, XRP Rally: Bitwise

Matt Hougan, chief investment officer at Bitwise Invest, outlined three key conditions that must be met for cryptocurrency markets to extend their early 2026 rally and transition from a bounce into a sustained uptrend.

What Happened: Crypto markets have started 2026 strong, with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) both up roughly 7% year-to-date, while higher-beta altcoins have significantly outperformed.

Hougan said the rally can continue if three major boxes are checked:

No major market blowups

The biggest near-term risk has been another forced liquidation event similar to the Oct. 10, 2025 deleveraging that erased nearly $19 billion.

Hougan noted that this risk has largely faded.

Fears around large market makers or hedge funds being forced to unwind positions have eased, removing a major overhang that had previously capped upside.

Regulatory clarity via the CLARITY Act

Hougan emphasized that passing the CLARITY Act would be a structural game-changer, embedding pro-crypto rules into U.S. law and significantly reducing the risk of future regulatory reversals.

While momentum around the bill is building, political and procedural hurdles mean this remains unresolved for now, with clearer progress more likely later in 2026.

A stable equity market

Crypto still needs a relatively calm equity backdrop.

While Hougan does not expect a full-scale stock market crash, a sharp equity drawdown would likely pressure all risk assets, including digital assets.

With recession risks viewed as low and institutional adoption continuing, equities remain a key variable to watch.

What's Next: Crypto chart analyst Ali Martinez noted that after correctly flagging a local top near $94,000, Bitcoin's TD Sequential indicator is now flashing a buy signal, suggesting downside momentum may be exhausted and a local bottom could be forming.

Titan of Crypto added that while a deeper pullback earlier would have been healthier for bullish continuation, Bitcoin instead swept upside liquidity, increasing the odds of a temporary downside move.

For now, BTC remains range-bound, with no clear directional bias until a decisive breakout occurs.

Overall, Hougan's outlook for 2026 remains cautiously bullish, contingent on regulatory progress, macro stability, and the market avoiding another major deleveraging shock.

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