The greatest threats to the leading cryptocurrency in the current market cycle are a potential bubble in the AI sector and US digital asset regulation, according to top executives at Bitwise, reports DL News.
André Dragoș, head of research at the European division, highlighted during an investor meeting the largely inflated valuations of AI companies. In his view, stock prices are detached from fundamental indicators.
“Some may be justified, but purely from a quantitative assessment, they are too high,” concluded the expert.
An AI sector bubble could trigger a macroeconomic shock, prompting a flight from risky assets like cryptocurrencies. Bitcoin’s historical correlation with tech companies could amplify the potential effect.
Bitwise’s Chief Investment Officer Matt Hougan expressed primary concern over possible changes in US regulatory policy.
In July, President Donald Trump signed the GENIUS Act, establishing rules for stablecoins. The Senate is considering a market structure act aimed at defining a broader set of industry norms.
Hougan believes the document is likely to stall if not signed before the 2026 midterm elections. After a presumed Republican loss of majority, even achieved “regulatory successes could be undone,” he added.
However, Hougan assessed the likelihood of such a scenario at 20%.
Concerns Are Justified
Bitwise’s investment director’s concerns were echoed by renowned industry lawyer Jake Chervinsky. Disagreements in the Senate are so significant that no amendments are expected to be approved by the end of the year, he believes.
1/ Market structure bill, December update
The Senate is working very hard to get this done, but the closer they get, the more complex it becomes. I’m not betting on a markup this month.
Three issues are holding up the bill: stablecoin yield, conflicts of interest, and DeFi 🧵
— Jake Chervinsky (@jchervinsky) December 4, 2025
“Three issues are holding up the bill: stablecoin yield, conflicts of interest, and DeFi,” Chervinsky clarified.
Republicans and Democrats have significantly different approaches to some regulatory proposals in these areas.
He described the market structure legislation as “the most important period for implementing cryptocurrency policy goals.” Therefore, it is crucial to “get it right.”
“We won’t get a second chance,” acknowledged the lawyer.
Bitwise Remains Optimistic
According to Hougan, Bitcoin is currently in an “unpleasant bear market,” but near the bottom of a six-month correction, with “not much room” for further decline.
He reaffirmed Bitwise’s previous forecast for the cryptocurrency at $200,000. However, this target will not be reached by the end of the year.
The company misjudged the timing, underestimating the volume of sell-offs after the price fell to $100,000, as well as investors’ belief in four-year cycles associated with halvings, Hougan explained.
The expert identified two new factors that could push prices up:
- The $11 trillion asset manager Vanguard approved the placement of ETF and mutual funds based on cryptocurrencies on its platform;
- One of the largest US banks, Bank of America, recommended its institutional clients allocate 1% to 4% of their portfolio to digital assets.
“The end of the year could be very good,” said Hougan.
Analysts at JPMorgan linked Bitcoin’s prospects to Strategy’s financial stability.