Bitwise: Crypto Must Prove Its Value by 2029 – Is It Possible?

Crypto markets are presented with a crucial three-year timeframe to showcase their practicality in everyday life, as regulatory uncertainties threaten to impede the progress of the industry, according to Matt Hougan, Chief Investment Officer at Bitwise.

Key Takeaways

The crypto market has until 2029 to establish its real-world value amid regulatory challenges.
Without legislation, digital assets may face increased scrutiny and restrictions.
Historical successes of disruptive technologies could influence crypto regulations.
Rising gold prices reflect diminishing trust in centralized institutions, suggesting a potential shift toward alternative assets like crypto.
Market fundamentals show signs of resilience, even amidst significant legislative uncertainty.

The path forward for cryptocurrencies appears fraught with challenges, but the industry has a critical window to prove its relevance and secure its future.

Bitwise Says Crypto Has Until 2029 to Prove Its Worth

The urgency for such demonstration has grown as the chances of the CLARITY Act being passed declined from 80% to about 50%, particularly following recent setbacks like Coinbase CEO Brian Armstrong's public criticism, where he labeled aspects of the draft as "catastrophic."

Hougan cautioned that if comprehensive regulation fails to materialize, digital currencies could enter a “show me” phase, requiring crypto to prove its essential role to average Americans and traditional finance by the year 2029. Failing to do so could result in stricter penalties under future policy changes.

The Three-Year Challenge for Crypto’s Practical Use

The need for urgency arises from the current fragile regulatory framework surrounding cryptocurrency. Hougan emphasized that without protective legislation, this framework could easily disintegrate.

He highlighted historical instances where disruptive technologies gained acceptance and forced regulation through widespread use, citing companies like Uber and Airbnb as examples that became so ingrained that lawmakers found it difficult to restrict them.

“If, after three years, we’re all utilizing stablecoins and trading tokenized stocks, we will see favorable legislation for crypto, no matter who is in power,” Hougan stated in a note to clients. “However, if crypto continues to linger in the background, any political change in Washington could be detrimental.”

This warning is significant as action in Congress has stalled across various committees. The Senate Banking Committee has indefinitely postponed its markup of the CLARITY Act after Armstrong withdrew Coinbase's support, shifting focus toward housing legislation influenced by President Trump’s push for affordability.

On the other hand, the Senate Agriculture Committee is advancing alternative legislation, albeit without bipartisan backing. They are planning a markup that may face complications due to Washington's impending government shutdown.

Senator Roger Marshall decided against proposing a controversial amendment on credit card swipe fees during the Senate Agriculture Committee's markup, which eliminated a threat that could have undermined Republican support for the underlying crypto legislation.

Despite challenges, White House officials intervened to ensure this amendment does not come up for discussion, noting that it would threaten the passage of legislation the administration favors.

Rising Gold Prices Highlight Institutional Trust Issues

Hougan connected the regulatory hurdles facing crypto to the significant spike in gold prices, which recently exceeded $5,000 per ounce. He argued that both phenomena indicate a shrinking confidence in centralized institutions.

Gold experienced a 65% increase in 2025 and an additional 16% in 2026, with roughly half of its total dollar value created over a mere 20 months, despite its long-standing role as a stable asset.

Bitwise Crypto 2029 - Daily Gold Prices

“It illustrates a growing reluctance among individuals to store their wealth in assets dependent on the goodwill of others,” Hougan remarked, highlighting that central banks have doubled their annual gold buys following the freezing of Russian treasury assets by the US in 2022.

Economists in Germany have recently advised bringing back gold reserves held at the New York Federal Reserve, while a Norwegian panel warned that sovereign wealth funds may face increased taxes, regulatory controls, and even asset confiscation due to the present geopolitical climate.

As confidence in institutions declines, the fundamental qualities of crypto could become increasingly significant. Assets like Bitcoin facilitate ownership without intermediaries, while networks like Ethereum and Solana operate under immutable rules.

Should the CLARITY Act succeed, Hougan anticipates a significant market uptick, as investors would begin to factor in assured expansion for stablecoins and tokenization.

Bitwise Crypto 2029 - Clarity’s Inflection Point: Potential Market Paths

Conversely, if it fails, it could lead to a “wait and see” market atmosphere, where positive sentiment contends with extended regulatory ambiguity.

Similarly, investment bank TD Cowen has indicated that any legislative progress might be delayed until 2027, as lawmakers prepare for midterm elections, with full implementation potentially pushed back until 2029.

Despite the legislative uncertainty, market fundamentals continue to look promising. Bitwise’s Q4 2025 report suggested signs of a bear market bottom, citing record-high Ethereum transaction volumes, a stablecoin market capitalization exceeding $300 billion, and Uniswap processing higher volumes than Coinbase.

Moreover, a survey by Coinbase and Glassnode reported that 70% of institutional investors consider Bitcoin to be undervalued, even after a fourth-quarter downturn that erased nearly one-third of its value from peaks above $125,000.