Bitwise CIO Matt Hougan says the market is “dramatically underestimating” the impact of the Bitcoin ETF – here’s why
Bitwise Asset Management Chief Investment Officer Matt Hougan weighs in on the impact spot Bitcoin (BTC) ETFs could have on the King cryptocurrency.
In a new interview on crypto-focused YouTube channel The Defiant, Hougan says the market appears to have led the way in approving ETFs, as price action has been mostly sideways since their launch last week.
However, he believes the long-term impact will be huge and the market has not yet priced this in.
“I think the short-term flows are priced in. I think that's what we're seeing in the market. While the price has fluctuated, it hasn't changed much since it became clear that these were coming to market. I think it's fair to assume that the immediate flows are probably priced in. I think the market significantly underestimates the long-term impact.
I'll give you an example from ETF history because I worked in the ETF industry for 15 years. In 2004, gold ETFs were introduced. Gold was a $2 trillion market. Today it is a $15 trillion market. And the ETF has made a significant contribution to this. I think tens of billions of dollars will flow into these ETFs over the years, and that will have a huge positive impact on prices. But short-term, volatile, unchanged. That's perhaps what you should expect. In the long term, I think it’s really substantial.”
Hougan says that retail investors holding small amounts of wealth in the United States have historically largely determined the price of Bitcoin, but that BTC ETFs on the spot market are now allowing huge amounts of wealth to be invested in the top digital industry flow asset by market capitalization.
“Crypto is built primarily by self-managed retail investors who buy it individually. And there are a lot of these people and they're very important, but they only control about 20% of the wealth in America…
The majority of assets are controlled either by financial advisors, people who help other people invest, or by institutions. That's 80% of the assets. So we went from zero to $44,000 and essentially captured only a fifth of the market. And what ETFs do is they tap into the other four-fifths, and that's really significant, especially at a time when the supply of new Bitcoin coming to market is relatively tight. That’s why I think people underestimate it.”
Bitcoin is trading at $42,667 at the time of writing, down slightly in the last 24 hours.
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