After a bloodbath in recent days, cryptos seem to be slowly regaining their breath. As investors wait anxiously to see what’s in store for the market, Matt Hougan, Chief Investment Officer (CIO) of asset manager Bitwise, remains optimistic. According to him, there is a transformation that could change Bitcoin forever.
Bitcoin is in its ‘IPO moment’
According to Matt Hougan, Chief Investment Officer (CIO) of asset manager Bitwise, Bitcoin (BTC) is in a crucial transition phase. In a blog he states that the cryptocurrency is experiencing its “IPO moment”, a period in which it develops from an experimental niche product into a full-fledged investment instrument.
An IPO stands for Initial Product Offering, or an IPO. According to Hougan, the comparison with an IPO is apt. Just like technology companies such as Facebook or Google, which first went through a long consolidation phase after their stock market debut, Bitcoin also seems to be going through such a transition. The price is moving sideways, despite strong inflows into exchange-traded funds (ETFs), increasing adoption by companies and growing interest from sovereign wealth funds.
Macro investor Jordi Visser, who was quoted by Hougan in his blog and called “one of his favorite macro thinkers”, speaks of a ‘silent IPO’. He points out that it may take some time for the market to fully absorb this transition, but that it will ultimately lay the foundation for a new phase of growth. According to Hougan, the market is now deep enough to even handle billion-dollar sales without major fluctuations.
From pioneers to institutional investors
According to Hougan, the recent correction in the market does not indicate weakness, but a healthy shift. Early investors, who once bought BTC for a few dollars, are now taking profits. At the same time, new, institutional parties are steadily building up their positions. This process, in which risky pioneers give way to stable long-term holders, is typical of the maturation of an asset class.
According to the CIO, there is also no reason for concern. On the contrary: “Those who see the bigger picture recognize this as an opportunity to get in before the next rally starts.”
According to some experts, the sudden decline is not the result of bad economic news, but of technical factors within the crypto market itself. For example, the analysts at The Kobeissi Letter point to the high leverage positions among traders.
When the Bitcoin price started to fall, a chain reaction of forced liquidations followed. In October alone, $19 billion worth of positions were liquidated in one day. That caused a snowball effect with more and more investors being pushed out of their positions, amplifying the panic and worsening the crash.
Bitcoin to $1.3 million
The impact of institutional interest on Bitcoin’s role in investment portfolios is significant, according to Hougan. While previously it was often advised to allocate only one percent of a portfolio to BTC, he now calls this outdated. “Five percent or more will be the new norm,” he writes. “The risks have fallen, volatility is lower, but the upside potential remains enormous.”
Hougan predicted last month that Bitcoin could be worth $1.3 million by 2025. That assessment is based on the idea that BTC is increasingly taking on the role of digital gold, a globally accepted and scarce store of value.
Source: https://newsbit.nl/bitwise-cio-ziet-bitcoin-volwassen-worden-en-ruikt-enorme-kansen/
