Bitcoin (CRYPTO: BTC) is in the process of forming a market bottom, according to Bitwise Chief Investment Officer Matt Hougan, who expects the next crypto bull market to be driven less by speculation and more by tokenization, decentralized finance and institutional adoption.

Why BTC Is Bottoming

Speaking on The Wolf of All Streets podcast on Sunday, Hougan described the current market as a “Great Reset.”

“I think we’re in the process of bottoming right now,” Hougan said and pointed to several indicators supporting that view, such as the collapse in leverage across crypto markets, declining funding rates, normalization in ETF flows and Bitcoin’s resilience despite negative headlines.

“The most telling signal is when markets stop reacting to bad news,” he said, noting that Bitcoin remained stable after Strategy Inc. (NASDAQ:MSTR) sold Bitcoin and as odds of the CLARITY Act passing declined.

If the CLARITY Act fails, Hougan expects crypto, particularly smaller-cap tokens, to face a period of volatility lasting one to two months before longer-term adoption trends reassert themselves.

Unlike previous crypto cycles, Hougan expects the next bull market to be driven by institutional capital entering digital assets through wealth management platforms rather than retail speculation.

He said firms including Wells Fargo, UBS and Merrill Lynch are steadily expanding crypto offerings, a trend he expects to accelerate during the second half of the year.

Hougan highlighted projects including Hyperliquid, Uniswap (CRYPTO: UNI), Morpho, Aerodrome and Lighter, saying DeFi protocols with improving tokenomics and growing revenue could outperform as tokenization adoption expands.

What’s Awaiting Next Cycle

Looking beyond the current cycle, Hougan projected Bitcoin could reach $250,000 to $400,000 during the next bull market.

He cited growing allocations from financial advisors, family offices and institutional investors as key factors.

He added that BTC remains on a long-term path toward $1 million, although percentage gains are likely to moderate as the asset matures.

Asked which blockchain stands to benefit more from the tokenization trend, Hougan gave a slight edge to Solana (CRYPTO: SOL), though Ethereum (CRYPTO: ETH) continues to dominate institutional adoption.

Image: Shutterstock