Bitwise: Four crypto catalysts not yet priced in by the market

By Matt Hougan, Chief Investment Officer, Bitwise; Translated by Golden Finance

The reasons for optimism about cryptocurrencies are clear. But the market is still overlooking something.

There's a lot of excitement going on in the cryptocurrency space right now. Regulation and legislation are moving in a positive direction; stablecoins are booming; corporate buying of cryptocurrencies is surging; institutions are slowly but steadily adding cryptocurrencies to their portfolios through ETFs; and Ethereum has seen a resurgence, injecting some much-needed altcoin energy into the broader cryptocurrency market.

The problem—if there is one—is that all of this is well known. I generally think the market underestimates the scale of these developments, but they haven't gone unnoticed. The media is abuzz with reports of a cryptocurrency bull run.

Despite this, I believe the market will still see significant surprises by the end of the year, enough to drive prices higher. Here are four major developments that I believe the market hasn't yet priced in.

1. More governments will buy Bitcoin this year. At the beginning of 2025, it was widely believed that Bitcoin demand this year would primarily come from three sources: ETFs, corporations, and governments. We call these the "Three Horsemen of Bitcoin Demand." So far, two of these giants have delivered on their promises: ETFs have purchased 183,126 BTC, while publicly traded companies have absorbed 354,744 BTC. Considering that the Bitcoin network currently only has 100,697 BTC in production, this is enough to drive its price up 27.1%. However, the Third Horseman has yet to materialize. While the United States has established a strategic Bitcoin reserve, it only holds Bitcoin seized through criminal forfeiture. Pakistan has announced its own Bitcoin reserve, and Abu Dhabi has invested in a Bitcoin ETF. However, these purchases are a drop in the bucket compared to the rapid pace of purchases by ETFs and corporations. The common perception is that the possibility of sovereign nations adopting Bitcoin as a reserve asset is over. I suspect this is wrong. Countries and central banks have been slow to act, but based on our discussions at Bitwise, they are moving. To be clear: I don't think there will be a flood of national-level announcements before the end of the year, but I do suspect there will be more—enough to make it a major potential catalyst for 2026. That alone could significantly push prices higher. 2. Weaker Dollar + Lower Interest Rates = Higher Bitcoin A unique aspect of the current situation is that Bitcoin is trading at an all-time high while interest rates are hovering near their highest levels since Bitcoin's inception in 2009. This shouldn't be happening. High interest rates pose a challenge to non-yielding assets like Bitcoin (and gold) because they set a high hurdle rate for holding them. The market is anticipating multiple rate cuts before the end of the year, which should support Bitcoin. But I think the market is overlooking a more important story. The Trump administration strongly desires a weaker dollar, and the Federal Reserve has become more dovish. From direct criticism of Fed Chairman Jerome Powell to the appointment of weak-dollar advocate Stephen Milan to the Fed Board of Governors, the Trump administration has strongly hinted that it wants to significantly lower interest rates and weaken the dollar. Not three rate cuts, but six, or maybe eight. Milan's appointment is particularly noteworthy. Milan is best known for his paper arguing that the dollar's status as the world's reserve currency imposes a significant burden on the United States. He has called for a new "Mar-a-Lago Accord" to weaken the dollar against other global currencies and suggested the Fed could achieve this goal by printing massive amounts of money. If interest rates fall significantly and the dollar depreciates significantly due to money printing, Bitcoin's trading price could surge. 3. Lower Volatility, Higher Allocation One of the most unnoticed trends in the cryptocurrency space is the sharp decline in Bitcoin's volatility. Since the launch of the spot Bitcoin ETF in January 2024, both Bitcoin's volatility and the rate of change in its volatility have declined significantly. Bitcoin 30-Day Rolling Volatility Source: Bitwise Asset Management, data from Coin Metrics. Data range is December 31, 2012, to August 10, 2025.

Note: Green shading indicates the period since the launch of the spot Bitcoin ETF.

This decline in volatility makes sense. The growth of ETFs and corporate buying has introduced new types of buyers to the cryptocurrency market, and regulatory and legislative advances have significantly reduced market risk. I suspect this will become the 'new normal' for Bitcoin. Right now, Bitcoin's volatility is roughly comparable to that of high-volatility tech stocks like Nvidia. Volatility: BTC vs. Tesla, Nvidia, and Meta 1-Year Rolling Annualized Volatility Source: Bitwise Asset Management, data from Bloomberg. Data range: December 31, 2019, to June 30, 2025. In my conversations with institutional investors, this lower volatility is translating into higher levels of portfolio allocation considerations than in the past. Before ETFs, a 1% allocation was the primary starting point discussed, but now I often hear talk of starting at 5% or even higher. This largely explains the acceleration in inflows into Bitcoin ETFs (net inflows of $5.6 billion since July 1st, and nearly $50 billion for the year). The fact that summer is typically a slow season for ETF inflows suggests this trend is likely to accelerate further in the fall. 4. ICO 2.0: The Rebirth of Crypto Fundraising Initial Coin Offerings (ICOs) have a bad reputation. In 2018, fraudulent ICOs—paper projects that raised billions of dollars from investors only to abscond with the funds and never officially launch—were a major factor in the abrupt end of the 2017 cryptocurrency bull run. The SEC has cracked down on this, and investors are tired of these scams. I think most investors and observers agree that ICOs are damaged products. But SEC Chairman Paul Atkins, in his recent "Crypto Project" speech, laid out a vision for the rebirth of ICOs: "I have asked the staff to propose fit-for-purpose disclosures, exemptions, and safe harbors for so-called 'initial coin offerings,' 'airdrops,' and network rewards... I believe that if we stick to this course, we could see a Cambrian explosion of innovation." If this happens, I believe it could be a significant upside catalyst. Cryptocurrency investors have historically been eager to invest in cryptocurrency projects—both during and after the ICO boom. The launch of the new ICO Market 2.0 could attract a significant amount of new capital into the cryptocurrency market. Conclusion: Markets don't rise on good news. They rise on good news that isn't priced in.

I think the market is generally underestimating the scale of the cryptocurrency bull run. But I also think the market is overlooking some specific catalysts that will play out in the months and years ahead.

Be prepared for higher prices ahead.