KEY POINTS
- Hougan expects Bitcoin volatility to drop by 50% due to the entry of new investors interested in BTC ETFs
- He also believes Bitcoin ETFs will post over $200 billion in net flows and pass $250K
- He expects countries increasingly using financial tools as policy levers to join the Bitcoin craze
Bitcoin's price has not moved much since the halving on Saturday, but some crypto experts remain bullish, and Bitwise's chief investment officer is just one of them as he predicted that the world's first decentralized digital asset will pass $250,000 sometime before the next halving.
Matt Hougan, the CIO of Bitwise Investments, which is the largest crypto index fund manager in the U.S., wrote in a recent memo that Bitcoiners can expect several scenarios before the expected fifth halving in 2028 that will once again cut BTC mining rewards in half and significantly reduce the release of new Bitcoins into the hungry market.
First, the digital currency's volatility "will decline 50%." Hougan said BTC's volatility has been in decline in the past years, but he believes the decline will only accelerate, and exchange-traded funds (ETFs) may help support his prediction.
He noted that spot BTC ETFs open up the Bitcoin market to a host of new investors, including family offices, financial advisors, institutions, and other investor types. The said new investors "act differently" than retail investors, who have dominated the market since it was introduced. The rebalancing among institutional investors will introduce "countercyclical flows which could dampen volatility," he said.
Still, on Bitcoin ETFs, Hougan believes the ETFs will post over $200 billion in flows, at least based on "ETF history" that suggests flows have just started. He used gold ETF net flows as an example, noting that the flows increased annually for seven consecutive years after the first gold ETF entered the American market in 2004. "Watch for something similar in Bitcoin ETFs," he wrote.
He also believes Bitcoin will trade above $250,000 while users wait for the next halving. "With the ETFs launched and gathering assets – and major Wall Street firms lining up behind Bitcoin – I suspect the asset will continue to move further into the mainstream. At $250,000, Bitcoin would be a $5 trillion asset. Could it go higher? Of course. But $250,000 would represent solid progress between halvings, and I think we'll see at least that," he said.
He went on to predict that central banks will start dabbling into the Bitcoin market "before the next halving." He believes the world's largest cryptocurrency by market value is "more functional" than gold due to its offerings in payments and settlements. Such provisions may attract governments, especially in countries that "are increasingly using financial tools as levers for foreign policy."
Bitcoin hit a new all-time high last month at $73,000, but saw a sharp drop in the week leading to the halving and only spiked significantly on Tuesday post-halving. As of writing, the digital coin was trading around $64,000.
