Crypto markets kicked off 2026 with strong momentum, and according to Bitwise’s Chief Investment Officer, Matt Hougan, the next big move for digital assets like Bitcoin, Ethereum, and Dogecoin depends on three major factors — and they have little to do with technical charts. Instead, it’s about market stability, government regulation, and the overall economic environment.

As of January 5, Bitcoin and Ethereum had each gained 7% since the start of the year, while Dogecoin surged by 29%. These gains have sparked optimism, but the big question is whether this growth can last or if it’s just a short-lived January boost.

**Three Big Factors That Could Shape Crypto in 2026**

**1. Market Stability After a Major Crash**

Hougan pointed to a major event from late 2025 — October 10 saw the largest liquidation in crypto history. Around $19 billion in crypto futures were wiped out in one day. This massive crash not only damaged prices but also scared investors, who feared that big players like hedge funds or market makers might collapse and be forced to sell off more assets.

But Hougan believes that fear has mostly passed. If any major firm were going to shut down because of that crash, they likely would’ve done it by the end of 2025. The fact that the market has bounced back in early 2026 shows investors are moving on. He called this a “Green Light,” meaning it’s no longer a big concern holding crypto back.

**2. U.S. Crypto Regulation: The CLARITY Act**

The second key factor is progress on U.S. crypto regulation — specifically, a bill called the CLARITY Act. This legislation aims to set clearer rules for how crypto is handled in the U.S., including how decentralized finance (DeFi), stablecoins, and rewards are regulated.

The bill is currently making its way through Congress. There are still debates and disagreements, but if it passes a key stage called “markup” around January 15, it could be a big step toward approval.

Hougan says passing this bill is crucial for crypto’s long-term success in the U.S. Without it, future political changes could undo the recent progress made by pro-crypto regulators. If the CLARITY Act becomes law, it will create a solid legal foundation for continued growth in the industry.

There’s growing optimism about its chances. Government officials are saying it’s closer than ever to passing, and prediction markets estimate a nearly 50% chance of approval by May and over 80% by the end of 2026. Hougan considers this factor a “Yellow Light” — progress is being made, but it’s not guaranteed yet.

**3. Stock Market Stability**

The third factor is broader economic stability — especially in the stock market. While crypto doesn’t always move in sync with stocks, a major drop in markets like the S&P 500 could hurt all risk assets, including cryptocurrencies.

Hougan doesn’t claim to be an expert on stocks but notes that while some investors worry about an AI-driven bubble, most predictions show low chances of a recession and high chances of stock market gains in 2026. Still, if there’s a sudden 20% drop in stocks, crypto could take a hit too.

For now, he labels this another “Yellow Light” — things are looking fine, but caution is still needed.

**A Positive Outlook If These Hurdles Are Cleared**

Despite these challenges, Hougan sees strong potential for crypto growth this year. He highlighted several bullish trends: more institutions getting involved with crypto, increasing use of stablecoins and blockchain-based assets (tokenization), and benefits from recent regulatory support starting to take effect.

If these three key issues — avoiding another market crash, passing the CLARITY Act, and maintaining economic stability — are resolved or move in a positive direction, Hougan believes crypto’s early 2026 momentum could turn into a long-lasting bull run.

At the time of writing, Bitcoin was trading at $91,717.