> At a Glance
> – Bitcoin, Ethereum and Dogecoin have jumped to start 2026
> – October’s $19B futures wipeout still shadows the market
> – Why it matters: Congress and regulators will decide whether the crypto surge keeps momentum or stalls again
Bitcoin and Ethereum are marching higher to kick off 2026, but the rally’s durability hinges on Washington rather than charts alone. Bitwise CIO Matt Hougan warns that three policy roadblocks stand in the way of continued gains.
October Hangover Still Looms
The first obstacle is psychological. A record $19 billion liquidation on October 10, 2025, sparked fears that wounded market makers might dump inventory into year-end. With no major unwind yet visible, Hougan believes investors have moved past the event.
> “If forced selling was going to happen, it probably would have occurred by now,” Hougan noted.
CLARITY Act Holds Market’s Future
The second hurdle is legislative. The Senate aims to mark up the CLARITY Act-a sweeping crypto market-structure bill-by January 15. Key sticking points include:
- Rules for decentralized finance platforms
- Stablecoin reward oversight
- Conflict-of-interest provisions
Passage would codify current pro-crypto agency stances and lower the odds of a policy reversal under a future administration. Prediction market Kalshi prices an 82% chance of enactment by December 2026.
Broader Market Stability Needed
The third condition is macro. Hougan says crypto can advance without a raging bull market, but a 20% S&P 500 plunge could drag down risk assets. Kalshi currently assigns an 80% probability to a positive year for the index and a low chance of recession.
Diverging Views
Not everyone is convinced. Analyst Doctor Profit argues Bitcoin remains in a bear phase that began in September and still targets sub-$70,000 levels, despite allowing for a short-term spike toward $97,000-$107,000.
Key Takeaways
- Crypto’s early-2026 surge rests on three Washington-centric hurdles
- The October 2025 liquidation is viewed as resolved by Hougan
- Senate markup of the CLARITY Act on January 15 is the next critical date
- Macro tailwinds are favorable, with low recession odds and expected equity gains
- A notable analyst still sees a deeper Bitcoin low ahead
Whether digital assets extend their climb or falter may be determined more on Capitol Hill than the trading floor.
