Bitcoin has posted nearly 50% gains since a recent slump a few months ago, leading some to believe that this year’s so-called crypto winter might be thawing.
The flagship cryptocurrency, which has enjoyed growing institutional acceptance over the past few years, particularly under the Trump administration, has had a challenging year. But in recent months, the asset has increased quite a bit, leading investors to hope that more gains are still to come.
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Josip Rupena, CEO and founder of crypto-lender Milo, said his firm is in the camp that winter is thawing.
“When we were looking at sort of like where we were through most of this year and last year, we thought there would probably be a move closer to September, October, and you know, here we are,” Rupena told the Washington Examiner. “It does feel like we’ve come up off the bottom.”
“I would expect this is probably the beginning of a, I would say, broader market upturn as opposed to just a bounce,” the CEO added.
Bitcoin eclipsed $87,000 this week, which is up from a low of around $58,000 notched in June. Bitcoin is up more than 13% in just the past few days alone, and, while still slightly in the red since the start of the year, its value has risen just about 25% in the past six months, driving some optimism among investors.
Matt Hougan, chief investment officer at Bitwise, said on CNBC this week that he thinks “crypto winter” has come to a close.
“I do think it’s over, it’s crypto spring, the crocuses are blooming,” Hougan said on Monday. “I think this will actually be the strongest and longest-running bull market in crypto’s history.”
Still, others in the crypto space have pushed back on the notion of a “crypto winter.”
Zack Shapiro, head of policy at the Bitcoin Policy Institute, told the Washington Examiner that the notion of a crypto winter comes from the idea that bitcoin and other cryptocurrencies are on a four-year cycle, allowing for the prediction of bear and bull cycles based on timing.
“I don’t think that in 2026 there’s a lot of reason to think that that is true or will continue,” he explained. “A lot of that stemmed from the early days, where a pretty big portion of the supply of bitcoin was created each year with miners, you know, issuing new bitcoin they got from the block reward, and that amount gets cut in half every four years, and so that should lead to a supply shock.”
To “mine” for bitcoin, high-powered computers are used to verify virtual coin transactions. Bitcoin operates on what is known as a blockchain, essentially a public ledger, that contains the history of every transaction. The miners’ computers solve complex mathematical problems to add new blocks to the chain and, in turn, are rewarded with the digital token, making the endeavor profitable.
However, about every four years, the block rewards for bitcoin miners are slashed in half, reducing the supply of new bitcoins by 50%. That makes the product a scarcer commodity and tends to raise its price in the following months.
But Shapiro said that today such a small percentage of bitcoin on the market is coming from new issuance.
“What drives the market is much more sort of institutional players, whether those are treasury companies or ETFs or hedge funds,” he said.
Shapiro said that Treasury Secretary Scott Bessent has signaled loose money conditions, and that bitcoin is intended as a “hard-money hedge” against monetary debasement.
“I think probably the bigger thing riding the bull case for bitcoin is expectations of continued monetary debasement, which has been a story since 1970, but especially since 2008,” he said.
He also pointed out that the Digital Asset Market Clarity Act, which would have established a regulatory framework for digital commodities, failed a procedural vote in the Senate.
Shapiro said that while the CLARITY Act dealt with other crypto assets, some people were using speculation of it passing or failing as a proxy to trade bitcoin and other cryptocurrencies.
“I think just removing that uncertainty is probably a secondary reason the price went up,” Shapiro said of bitcoin.
Other macroeconomic structural factors might also be at play. Inflation is still far too high, with the Federal Reserve recently hiking interest rates in order to drive it down. The national debt also recently hit the milestone of $40 trillion, and bond yields are up.
“It’s inflation concerns, concerns about the debt — when people are worried about how much value, or whether a fiat currency is losing value, they’ll gravitate both to things where there is a fixed supply and you can’t inflate like gold and like cryptocurrencies,” John Berlau, a senior fellow and director of finance policy at the Competitive Enterprise Institute and an expert on the crypto space, recently told the Washington Examiner.
But the big question everyone in the crypto space is asking is whether the upward trend for bitcoin and other digital assets will continue.
David Sacco, an instructor in finance and economics at the University of New Haven’s Pompea College of Business, pointed out the growth of institutional acceptance for bitcoin and cryptocurrencies.
Sacco said that over the long term — for instance, five, 10, or 20 years — the general trend will be one of growth as it becomes more accepted as a global currency, but he said it is not at that point yet.
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“In the short term to intermediate term, I’d say we’re more likely to go back down to $70,000 again before we are to go up to $100,000,” Sacco told the Washington Examiner.
Rupena said bitcoin’s growth “won’t be a straight line up,” but thinks that on a medium-term basis, a quarter out, bitcoin is more likely to be higher than it is now rather than lower.
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[ H/T Washington Examiner ]
