Bitwise CIO Matt Hougan on the Signals Behind Crypto’s August Slowdown

August’s Dip in Context

August’s crypto pullback mirrors broader risk asset weakness, following historical seasonal patterns. Hougan notes that this isn’t out of character – historically, August tends to be a soft month for crypto markets. However, Hougan emphasizes that underlying fundamentals remain intact – institutional adoption continues accelerating while large-scale interest shows no signs of waning.

If we do get the typical August dip. I’d treat that as an opportunity,

Hougan said

A Quarter of Exceptional Shifts

Bitwise characterized Q2 as ‘exceptional,’ citing three pivotal developments – Coinbase’s S&P 500 inclusion, Circle’s landmark IPO, and crypto advocate Paul Atkins’ SEC chair confirmation. Each story in isolation would have been notable — their convergence is what Hougan sees as important.

Hougan views these events not as isolated wins but as a broader signal that the industry is shifting from hype cycles to real infrastructure.

Ethereum Moves to the Fore

Ethereum’s spectacular 50% July rally outpaced Bitcoin, driven by three catalysts – ETH ETF inflows, corporate treasury accumulation, and landmark U.S. stablecoin legislation.

The Genius Act, enacted this summer, established a comprehensive legal framework for dollar-backed stablecoins. Since Ethereum is the primary settlement layer for these assets, it directly benefits. Hougan expects this to remain a key narrative through the second half of the year.

Stablecoins and Payment Infrastructure

Hougan envisions stablecoins will expand well beyond crypto-native markets. A U.S. government forecast puts the sector at $3 trillion by 2030 — representing more than tenfold growth. He thinks that estimate might be conservative.

He draws parallels to email’s communication revolution, which made information both instant and borderless.

Stablecoins make money programmable and portable.

While legacy firms may enter, Hougan expects native players like Circle to maintain an advantage. Innovation, in his view, doesn’t automatically reward incumbents.

A New Regulatory Baseline

The SEC’s Project Crypto initiative represents another structural shift, modernizing regulation for tokenized assets and round-the-clock trading infrastructure. Hougan called it the most meaningful market infrastructure shift since the move to electronic trading.

He sees the policy shift as both economic and strategic. If successful, it could keep innovation in the U.S. and reframe crypto not as an outlier, but as part of the country’s financial core.

Where the Long-Term Momentum Points

Hougan isn’t issuing forecasts. But he notes that seasonal weakness often precedes stronger performance in the fall. He’s more focused on what he sees as confirmation of a long-term shift: stablecoin volume, institutional inflows, and regulatory support.

While markets remain volatile, Hougan cautions against confusing short-term price swings with fundamental weakness. The structural transformation of digital assets, he contends, continues gaining momentum regardless of daily fluctuations.