Bitwise Chief Investment Officer (CIO), Matt Hougan, recently shared insights on Bitcoin (BTC) investment, asserting that it’s still early days for potential investors. Hougan emphasized that until the leading cryptocurrency reaches the $500,000 mark, there are still opportunities for those considering entering the market.
Potential Investors Should Not Be Discouraged By Bitcoin Price Action
In a memo addressed to clients, Hougan highlighted that although Bitcoin is no longer in its “first inning,” investors shouldn’t feel discouraged. He elaborated on why the journey towards BTC reaching $500,000 is still in its early stages.
Bitcoin is currently navigating through a historical price discovery phase. The cryptocurrency achieved an all-time high (ATH) of $89,864 on November 12, before experiencing a slight decline to around $85,200. Despite these fluctuations, Bitcoin has seen impressive growth, with a year-to-date (YTD) increase of over 100%. Following Donald Trump’s victory in the 2024 US presidential election, BTC surged by more than 25%, contributing to a market cap of approximately $1.76 trillion.
Optimism for Bitcoin’s Future Price
Hougan expressed optimism about Bitcoin reaching a $100,000 price point, suggesting that it “could be right around the corner.” He reassured investors who might feel they missed the chance to invest early, stating they are still in an advantageous position until BTC achieves $500,000.
Factors Driving Bitcoin’s Ambitious Price Target
Hougan identified two critical factors that could propel Bitcoin towards the ambitious $500,000 target.
Rising Demand for Store-of-Value Assets
The rising demand for store-of-value assets, such as Bitcoin and gold, is driven by the debasement of government-led fiat currencies. This trend positions Bitcoin as a favorable alternative.
Increasing Acceptance of Bitcoin
Bitcoin’s acceptance as a store of value is growing. As this emerging asset matures, it is poised to compete with established assets like gold. Hougan noted that Bitcoin’s development is still in progress, despite recent rallies. He mentioned that investments by pensions and endowments in crypto are still considered newsworthy, while the Department of Labor advises caution for 401(k) providers considering Bitcoin. Additionally, there is notable excitement when prominent hedge fund investors express favorable views on crypto.
The Role of Bitcoin Spot Exchange-Traded Funds (ETFs)
Hougan emphasized the success of Bitcoin spot exchange-traded funds (ETFs), citing data from SoSoValue. The total net assets across various US-based spot BTC ETFs exceed $94 billion, accounting for 5.3% of Bitcoin’s total market cap.
Bitcoin’s Market Cap Compared to Gold
Hougan pointed out that Bitcoin’s current market cap, just under $2 trillion, pales in comparison to gold’s $18 trillion market cap. For Bitcoin to achieve maturity, its market cap should at least match that of gold.
What Will Propel BTC to $500,000?
Despite Bitcoin’s growing acceptance, Hougan identified a crucial missing piece for reaching the $500,000 target: acceptance by central banks.
Currently, governments hold approximately 20% of global gold reserves, whereas their Bitcoin holdings amount to less than 2%. Bridging this gap is essential for Bitcoin to attain a $500,000 valuation.
Potential for Strategic Bitcoin Reserves
Hougan referenced Senator Cynthia Lummis’ hopes for the United States to establish a strategic Bitcoin reserve under Donald Trump’s administration. Favorable crypto regulations were a significant aspect of Trump’s campaign, and the creation of a sovereign Bitcoin strategic reserve could be a possibility during his tenure.
In related news, analysts from the research firm Bernstein suggested that Bitcoin’s $200,000 price target by the end of 2025 might be “too conservative.” At the time of writing, Bitcoin trades at $89,560, marking a 4.5% increase in the past 24 hours.
