Bitwise CIO Sees Huge Crypto Rally Ahead
Matt Hougan, the Chief Investment Officer of Bitwise Asset Management, shared his crypto market outlook in a new memo. According to him, now may be the best time to invest in crypto from a risk-adjusted perspective.
On this page
Hougan mentioned the varying sentiments among investors.
There is a fascinating dichotomy in crypto right now between institutional and retail investors.
– he wrote.
The Bitwise CIO noted that although retail sentiment is terrible, the fundamentals are great, and he smells opportunity. He believes this is due to broken expectations regarding altcoins’ performance.
Based on TradingView data, the returns of most crypto assets on a year-to-date basis are negative, and the average crypto asset is getting crushed. This is despite a few assets, including Bitcoin, Solana, and XRP, which have increased in value. In the past 12 months, BTC is up by 95%, while Ether is up only 2%.
On the one hand, institutional sentiment towards crypto is the most bullish I’ve ever seen.
– Hougan says.
Related: Bitwise Files for Dogecoin ETF: A Step Closer to Approval
He highlighted two key things shaping the market: the huge wave of institutional money flowing into crypto through ETFs and Washington’s changing stance on crypto. According to Hougan, the government has gone from being one of crypto’s biggest threats to one of its biggest supporters.
The biggest risks to crypto, like government bans or legal threats to software developers, are distant nightmares.
– the expert suggests.
When comparing institutional and retail sentiments, it may seem that “retail investors are living in an alternate reality,” according to Hougan.
He cited the crypto sentiment score by Bitwise, which is at a low point despite institutional interest. The index is based on on-chain data, capital flows, and derivative analytics. Hougan said this data aligns with the vibes he gets from Crypto Twitter and other crypto market sentiment indicators.
Related: Is Bitcoin’s Four-Year Cycle Breaking? Bitwise Weighs In
Matt Hougan Believes Institutions Are Right About Crypto
Hougan noted that the absence of an altcoin season has been disappointing for investors, but he believes the setup for altcoins is stronger than ever.
A key driver of adoption is regulatory progress – crypto is moving out of the grey zone, moving beyond the condition where the SEC was suggesting that most cryptocurrencies were unregistered securities.
He predicts a clear shift in the altcoin market within the next year or two. Highlighting recent developments, he pointed to stablecoins reaching a new all-time high in AUM and advancements in tokenization, citing Ondo Finance’s tokenization of stocks and ETFs as an example.
Hougan shared some stats that make a strong case for being bullish on Bitcoin right now. First, ETFs have bought around 47,000 Bitcoin, and corporations have acquired about 57,000 since the start of the year. Meanwhile, demand is strong, yet the Bitcoin network has only minted 18,000 new coins.
Considering the supply-demand balance, Hougan predicts Bitcoin will hit a new all-time high soon.
Why Are Things More Complex With Altcoins?
Looking at the historical performance of altcoins, Hougan noted that previous bull cycles were driven by major new applications. For example, the 2020-2021 bull market was fueled by DeFi, and the 2017-2018 bull market by ICOs.
The current market catalyst?
Hougan says there’s no major new application driving huge interest at the moment.
The closest one is the memecoin boom, but most investors see it as a short-term gamble, he added.
It’s hard to tell yourself that you’re building a new and better world on the basis of Fartcoin or the Hawk Tuah token,
– Hougan wrote.
Related: Hawk Tuah Missing After HAWK Token’s Collapse Sparks Allegations
Despite the uncertainty around what specific catalyst will cause altcoins to rally in the next few months, the Bitwise CIO is confident that things will improve. In his words:
It’s hard to call out a specific catalyst that will cause altcoins to rally in the next few months, but it’s harder to imagine a scenario where the market isn’t significantly bigger in the next few years.
At the time of writing, Bitcoin is trading at around $96,300 with a market cap of over $1.9 trillion. The coin’s market dominance is higher than 59.5%.
According to CoinMarketCap, Ether and Solana are among the trending coins, hovering at $2,750 and $184, respectively.
The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.
Articles by this author
