Author: Stephen McBride, Chief Analyst at RiskHedge.com Translated by: Shan Eoba, Jinse Finance

The crypto market is at a turning point. After breaking $100,000, Bitcoin (BTC) has stagnated. Meanwhile, many smaller cryptocurrencies have already returned their post-election gains.

However, in the crazy history of cryptocurrencies, we are about to get something that everyone has been begging for: government support. My research shows that this is a tailwind for the next leg up in crypto prices. It may even break the four-year cycle.

Source: TradingView

Washington's policy shift makes cryptocurrencies a national priority, from de facto illegal to legal

We have seen a dizzying array of positive regulatory changes in the past month:

• Trump signed an executive order laying the groundwork for a supportive regulatory environment for cryptocurrencies. The order ended "Operation Choke Point 2.0" and ensured crypto companies' right to banking services.

• The SEC announced the formation of a "working group" to develop new rules clarifying which tokens are securities and which are commodities - a critical question.

• The SEC also rescinded SAB 121, an ambiguous rule that made it nearly impossible for banks to custody crypto for clients.

• The CFTC, crypto's "other" major regulator, will be led by crypto advocate Brian Quintenz.

• Congress is likely to pass a stablecoin bill this year.

• Trump's crypto czar, David Sacks, says the government wants to make the U.S. the "crypto capital of the world".

• A Texas judge overturned sanctions on the privacy protocol Tornado Cash, signaling a massive shift in the country toward more innovation-friendly regulations.

I could go on for another two pages about the positive regulatory changes we've seen in the past month.

Regulatory clarity is the green light for Wall Street

The world's largest pools of capital can finally enter the crypto space.

For example:

Last month, when asked if U.S. banks would enter crypto, CEO Brian Moynihan said, "If the rules get set, and it becomes something you can actually do business in, you'll find the banking system will be very hard to keep out."

Wall Street can finally invest. Entrepreneurs can finally start businesses. As investors, we'll capitalize on this massive shift by continuing to hold the best crypto companies.

Most investors don't understand how devastating the regulatory onslaught has been. Now, they're underestimating the importance of these changes for crypto's future.

The U.S. government, the world's most powerful entity, is shifting from opposing crypto to supporting it. Investors are blind to this.

For four years, every time we talked about crypto regulation, the news was bad. "Oh great, another three-letter agency suing a protocol." Now, the opposite is true.

Just as market sentiment hits multi-year lows, the biggest catalyst in crypto history is about to arrive.

The memecoins' heyday is coming to an end. Next up is the flourishing of U.S. crypto innovation.

The regulatory floodgates have finally opened. The Wall Street titans will soon come marching in.

The "flow" is why Bitcoin has led this bull run so far

BlackRock's Bitcoin ETF - the iShares Bitcoin Trust ETF (IBIT) - has amassed $40 billion since launching a year ago.

Smaller cryptos don't have this capital support. They're bleeding funds. Most are retail investors buying a few hundred dollars at a time.

The big crypto funds (which previously drove the market) have been unwilling or unable to raise capital in recent years due to regulatory headwinds. This means there's little competition bidding for smaller cryptos, even those with strong fundamentals.

As regulatory clarity emerges, this is changing. I'm hearing dozens of funds are actively raising capital. Their target is to close by the end of this quarter, meaning we could see a flood of new capital enter the market by early summer.

Regulatory clarity may break the four-year cycle

Since the crypto market bottomed at the end of 2022, Bitcoin has led this market. At this four-year cycle point, capital would normally start flowing into smaller tokens. This time, they're still ahead of us. In a normal four-year cycle, we'd be preparing for a 2026 pullback. Washington's crypto U-turn has extended this cycle. These ETFs have brought hundreds of billions of dollars in new investor capital to crypto. The changes in D.C. could bring trillions.

Our research indicates we're earlier in this cycle than the calendar suggests. By 2025, Bitcoin's price could reach $250,000.

Most investors are still looking backward, scarred by years of regulatory mismanagement. They don't see what's in front of us: the U.S. is about to become the global center of crypto innovation.