Gold Rally Signals Fiat Distrust as Crypto Risks “Show Me” Phase: Bitwise CIO

Gold’s surge past $5,000 an ounce and mounting uncertainty around U.S. crypto legislation are shaping a critical moment for digital asset markets, according to Bitwise Chief Investment Officer Matt Hougan.

In a note to clients on Monday, Hougan said the combination of rising demand for assets outside government control and fading confidence in near-term regulatory clarity could influence both crypto adoption and price action in the months ahead.

Gold has climbed sharply, gaining 65% in 2025 and another 16% so far in 2026, marking the first time it has traded above $5,000 per troy ounce.

Gold’s Surge Reflects Mounting Concerns Over Fiat Currencies

Hougan pointed out that roughly half of gold’s dollar-denominated value has been created in just the past 20 months, despite its thousands-of-years-long history as a store of value.

He argued the move reflects the long-term effects of expansive monetary policy, rising debt levels, and currency debasement, but also a deeper shift in investor behavior.

“It shows that people no longer want to keep all of their wealth in a format that relies on the good graces of others,” Hougan wrote.

Hougan linked the rally to a broader erosion of trust in institutions, accelerated by geopolitical events.

After the US froze Russia’s treasury assets in 2022 following the invasion of Ukraine, central banks doubled their annual gold purchases, he said, seeking reserves less exposed to external control.

More recently, German economists have urged the repatriation of gold held at the New York Federal Reserve, while a Norwegian government panel warned that sovereign wealth could face higher taxation, regulatory intervention, or confiscation.

The spiraling price of gold reflects two things:

1) Concerns about debt and debasement
2) The desire to self-custody wealth

Not enough people talk about the second force. It's really strong right now at the sovereign level.

— Matt Hougan (@Matt_Hougan) January 26, 2026

Against that backdrop, Hougan said crypto’s core characteristics are becoming more relevant. Assets such as bitcoin allow ownership without reliance on centralized intermediaries, while networks like Ethereum and Solana operate under rules that no single authority can alter.

Features often dismissed as jargon, including self-custody and censorship resistance, may take on greater importance as confidence in traditional systems weakens.

Odds of US Crypto Clarity Act Passage Slip to Around 50%

At the same time, Hougan flagged growing uncertainty around the Clarity Act, legislation aimed at cementing a pro-crypto regulatory framework in the US.

Prediction markets earlier this year placed the odds of passage near 80%, but those estimates have slipped closer to 50% following recent setbacks, including criticism from Coinbase CEO Brian Armstrong.

If the bill fails, Hougan warned that crypto could enter a multi-year “show me” period, where prices and adoption hinge on tangible, real-world use rather than expectations.

Passage, by contrast, could trigger a sharp rally as investors price in clearer growth paths for stablecoins and tokenized assets.

Hougan said he remains optimistic the legislation will pass, but cautioned that without it, the market should prepare for a slower, evidence-driven phase of growth.