“Think of it as Bitcoin’s IPO”: BTC will launch new price discovery post-ETFs, says Bitwise

Bitcoin is poised to enter new territory following the success of recently approved exchange-traded funds (ETFs), and the price of BTC could surpass $80,000 this year, says Matt Hougan, chief investment officer of Bitwise.

The early success of the Bitcoin ETFs have broken records for similar products and sparked a steady flow of money into Bitcoin since mid-January. In an interview with DecipherHougan said Bitwise launched its BITB spot ETF at the same time nine more on Jan. 10 expects there will be strong demand after years of hearing from customers who have expressed interest in these types of products.

Still, Hougan said the sustained demand over the last month was a surprise, considering ETFs typically see slower growth after their launch. He suggested that demand for Bitcoin will increase as more institutions invest due to the expanded access they provide.

“Think of the ETF launch as the IPO of Bitcoin in the US market,” Hougan said Decipher. “It just sparked a huge wave of interest in traditional finance and exceeded my expectations.”

In fact, spot Bitcoin ETFs have been successful by any measure in the past, but Bitwise has done particularly well. On the last day alone, Bitwise received approx $126.5 million of inflows, the second largest inflow since going online, and recently exceeded $1 billion in assets under management. This assigns it to a level that only includes BlackRock, FidelityAnd 21Shares from Ark Invest until now.

Although the ETFs are available now, not every financial institution can access them yet, Hougan said, and much of the trading is done by retail investors. Firms like banks and wirehouses are still a long way from getting on board, but that's to be expected, Hougan explained, noting that every ETF goes through extensive due diligence by these institutions before being offered to customers.

Like other assets, the price of Bitcoin is influenced by supply and demand, and this “second wave” of demand from institutions promises this drive up prices, say analysts. In his own research, Predicted bit by bit Heading into the year, Bitcoin is expected to trade above $80,000 between inflows into spot ETFs and the expected supply shortage that will follow the upcoming Bitcoin halving.

Halving refers to an event that occurs programmatically on the Bitcoin blockchain approximately every four years. Bitcoin rewards for miners, the people responsible for securing the Bitcoin network, will be halved following the halving, which is expected to take place on or around the time 20th of April. It is intended to keep BTC inflation under control as it slows down the amount of new Bitcoins entering the market.

“If we see such sustained demand exceeding net supply, that will have a positive impact on prices,” Hougan said. “It will stay that way until long-term investors are happy with it and are ready to sell.”

Of course, this isn't a glide path to sky-high prices, and there are caveats.

One of these remains risks related to new regulations related to cryptocurrencies, which creates uncertainty, especially in the face of another disputed presidential election in the United States. Both outcomes promise to change the regulatory landscape.

Another variable is the presence of pools of unmoved Bitcoins outside of the current supply. About 70% of these pools—owned by governments or involved in litigation relating to insolvent companies such as: B. can be integrated FTX—have not been developed, Hougan said, but their release could lead to supply pressures that drive down prices.

After the introduction of the ETFs, this was already observed in the outflows of Bitcoins held by Grayscale after the transition from a trust to an ETF. This pushed prices lower for a while, but as these outflows appeared to slow, Bitcoin's price rose again.

Despite these risks, Hougan believes that the current picture of Bitcoin adoption offered by ETFs promises more returns with the opening they have created in the world of traditional finance.

“The attention that Wall Street is paying to Bitcoin now has gradually shifted, and I don’t think that genie will go back in the bottle,” Hougan said.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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