Institutional fund validation CIO forecast: The three conditions for the crypto market to rise in 2026 are coming true

Bitwise Chief Investment Officer Matt Hougan recently stated that whether the bullish momentum in the crypto market can continue into 2026 depends on three key conditions: avoiding major market crashes, progress in U.S. legislation, and stability in the stock market. Currently, these conditions are gradually being met, with institutional capital inflow data serving as the strongest evidence.

The Three Conditions Proposed by the CIO and Their Progress

Specific Manifestations of Institutional Capital Inflows

Bitcoin ETF Continues to Attract Funds

According to the latest news, on January 2nd, the net inflow into Bitcoin ETFs reached approximately $500 million in a single day, setting a new record for daily inflows. This indicates that the allocation needs of large Wall Street asset managers are accelerating. Since early January, U.S. banks have allowed Merrill, U.S. Bank Private Bank, and Merrill Edge advisors to recommend spot Bitcoin ETFs to clients, with suggested allocation ratios of 1-4% of the portfolio. Meanwhile, Morgan Stanley has launched its own branded Bitcoin ETF, marking its first direct operation of a crypto asset ETF under the “Morgan Stanley” brand.

Altcoin Capital Flows Accelerate

• Solana spot ETF saw a single-day net inflow of $16.8 million, the largest on record, with total net inflows reaching $791 million since listing
• XRP spot ETF saw a weekly net inflow of $43.16 million, including Franklin XRP ETF with $21.76 million and Bitwise XRP ETF with $17.27 million
• Chainlink (LINK) whale holdings increased by 58% within 30 days, approximately 680,000 tokens worth $8.5 million

Why These Conditions Are Being Met

Improved Regulatory Environment

According to the latest news, the U.S. “Clear Act” will enter Senate revision on January 15, with market expectations for implementation before February. This clears compliance hurdles for tokens like SOL and XRP, activating institutional demand for trillions of dollars. After the global 48-country crypto asset reporting framework is implemented, compliant projects and high-risk tokens are accelerating differentiation, with capital concentrating on high-quality assets.

Increased Institutional Participation

From the actions of traditional financial giants like U.S. Bank, Morgan Stanley, and Wells Fargo, crypto assets have shifted from an “option” to a “standard component.” This is reflected not only in the launch of ETF products but also in their inclusion in wealth management advice. When large institutional advisory teams begin actively recommending Bitcoin ETFs, it indicates that crypto assets have established their position in institutional asset allocation.

Risk Appetite Rebounds

Both BTC and ETH have risen about 7% so far this year, with more speculative assets like DOGE experiencing even larger gains. This structural market trend indicates that investor risk appetite is recovering, with the market gradually shifting from risk-averse sentiment to proactive investment. The spillover effect of institutional capital is becoming evident, flowing from Bitcoin into altcoins.

Risks Worth Watching

The CIO’s perspective is essentially a conditional judgment; all three conditions must be met. While current progress is positive, ongoing observation is necessary: changes in Federal Reserve policies, geopolitical risks, and the specific progress of regulatory policies. Any significant change in these factors could alter market trends.

Summary

Bitwise CIO’s views are not unfounded. From the continuous inflow of institutional capital, participation of financial giants like U.S. Bank and Morgan Stanley, to the advancement of clear legislation, the three conditions he mentioned are gradually being fulfilled. The fulfillment of these conditions reflects the transformation of crypto assets from niche investments to mainstream asset allocations. However, the sustainability of this bullish momentum still depends on whether these conditions can be maintained steadily; any breakdown could change the market rhythm.