CLARITY Act Could Ignite Bitcoin’s Next Rally as Four-Year Cycle Fades, Says Bitwise CIO

The long-awaited CLARITY Act is quickly becoming one of the most talked-about catalysts in the crypto industry, with some market leaders suggesting it could spark the next major surge in Bitcoin and digital assets. Among them is Matt Hougan, chief investment officer at Bitwise Asset Management, who believes the legislation could mark a turning point for the market—and that Bitcoin’s traditional four-year cycle may no longer apply in 2026.

Hougan recently shared his optimism on X, likening the CLARITY Act to the famous groundhog that signals the end of winter.

“The CLARITY Act is the Punxsutawney Phil of this crypto winter,” he wrote, suggesting the bill could herald a new bullish phase for the market.

That optimism appears to be shared by traders. On Polymarket, participants are assigning an 80% probability that the CLARITY Act will be signed into law this year, reflecting growing confidence in its passage.

Introduced in May 2025 by a bipartisan group of House lawmakers, the CLARITY Act is designed to address one of the biggest challenges facing the U.S. crypto market: regulatory uncertainty.

According to the CCN Education Team, the legislation seeks to clearly define when digital assets should be classified as securities under the Securities and Exchange Commission (SEC) and when they should be treated as commodities overseen by the Commodity Futures Trading Commission (CFTC).

The bill cleared the House last year and is now moving through the Senate, with markups expected this week. If enacted, it would give the CFTC primary oversight of digital commodities, including spot markets, exchanges, brokers, and dealers. The SEC would retain authority over securities-related activities and certain fundraising mechanisms in primary markets.

Supporters argue that this clear division of responsibility could provide long-overdue clarity for investors, developers, and institutions that have been hesitant to engage fully with the sector.

Industry leaders increasingly believe that regulatory clarity could unlock significant capital inflows. With clear rules in place, the argument goes, institutional adoption could accelerate, pushing Bitcoin and other cryptocurrencies toward new all-time highs.

Hougan has gone a step further, suggesting that the market is entering a new phase where long-term fundamentals are more influential than historical price patterns.

In an interview on the Investopedia podcast, Hougan challenged the long-held belief in Bitcoin’s four-year cycle, which typically features three strong years followed by a downturn.

“Historically, Bitcoin has moved in this four-year cycle… the next would be 2026, so according to the four-year cycle, this would be a negative year for Bitcoin,” he explained.

However, Hougan argued that the conditions supporting that cycle have changed.

“The halving is no longer very important. There’s just not that much more Bitcoin being produced,” he said, pointing to the diminishing impact of supply shocks.

Instead, Hougan emphasized powerful structural trends such as institutional adoption and regulatory progress.

“Institutional adoption… regulatory progress… Those are decade-long trends, and I think the bullish trends are just more powerful than the historical four-year cycle,” he added.

If Hougan’s assessment proves correct, Bitcoin may be entering a new era—one driven less by predictable cycles and more by macro adoption and regulatory maturity. With the CLARITY Act advancing through Congress, many in the industry see it as a potential catalyst that could reshape the crypto landscape and set the stage for sustained growth in the years ahead.