Bitwise CIO States Election Removes Crypto’s Remaining Reputational Risk
Donald Trump’s election win and the increase in pro-crypto Congress members have reportedly reduced reputational risks associated with cryptocurrency, as stated by Bitwise Chief Investment Officer Matt Hougan.
Bitcoin's price has responded positively, reaching nearly $85,000 recently. Hougan noted that professional investors previously faced lingering concerns due to a hostile regulatory environment and ongoing investigations from the Securities and Exchange Commission.
The anticipated regulatory clarity is expected to stimulate buying activity, while long-term bitcoin holders may choose to retain their assets until Bitcoin reaches the $100,000 mark. Hougan emphasized that many industry stakeholders are unlikely to wait for the fulfillment of Trump's crypto promises, given their explicit nature and the industry's involvement in funding and lobbying efforts.
Bitcoin Market Dynamics:
Hougan mentioned that Bitcoin could become harder to short if the US establishes a strategic bitcoin reserve, potentially prompting other countries to act preemptively. He forecasts Bitcoin will reach $100,000 by year-end and continue to rise in 2025.
While positive for Bitcoin, Hougan believes the impact will be even more significant for other crypto assets, which have struggled due to the lack of regulatory clarity. He expects this situation to improve, leading to a surge in crypto applications.
Institutional Adoption Trends:
Hougan indicated that institutional adoption was already in progress and would accelerate following Trump's victory. The removal of uncertainty surrounding regulation is seen as a catalyst for increased institutional interest in Q3 and Q4. However, he acknowledged that institutional capital allocation processes can be slow, leading to gradual increases in ownership.
Regarding Bitcoin and Ether ETF flows, Hougan projected substantial inflows for Bitcoin, estimating around $30 billion by year-end. While Ethereum adoption might not see immediate dramatic increases, he anticipates better conditions for Ethereum ETFs in 2025 due to improved regulatory environments.
Regulatory Concerns:
Concerns remain about volatility and the reliability of historical data for modeling crypto's role in portfolios, as the asset class is relatively young. Issues related to illicit use and headline risk also persist, particularly for assets outside Bitcoin and Ethereum. Despite these challenges, Hougan believes that the reputation of cryptocurrencies has significantly improved, suggesting a future where holding crypto becomes a standard practice.