Matt Hougan, Chief Investment Officer at Bitwise, argues that the market is overlooking the significance of Washington's evolving stance on cryptocurrencies. In a memo dated June 4, he highlighted a recent shift towards a more positive regulatory environment in the US, suggesting that if this impact had been fully priced in, the market would already be at a new all-time high.

Hougan emphasized that these changing dynamics in Washington could unlock substantial "alpha," indicating the potential for investment strategies to outperform the market. He pointed out that historically, cryptocurrency has been a divisive issue among US lawmakers, with Democrats often more resistant despite recent strategic efforts by crypto advocates to build political influence.

Recent legislative actions, such as the repeal of the SEC's SAB 121 rule with bipartisan support in Congress, mark significant progress. Hougan noted that this was the first positive legislative action on crypto in US history. Furthermore, the passage of the FIT21 bill in the House, which would assign oversight to the crypto-friendly CFTC, underscores growing bipartisan support.

Despite these advancements, challenges remain, including President Biden's veto of the SAB 121 repeal, reflecting ongoing regulatory complexities. However, Hougan sees these developments as a turning point for the industry, suggesting that once regulatory uncertainties diminish, a substantial inflow of capital from financial advisors and institutions could propel the crypto market forward.

Hougan believes that while the broader market has yet to fully grasp these political shifts, there is significant potential for investors to capitalize on the emerging regulatory clarity and acceptance of crypto as a mainstream asset.