Bitwise CIO on Bitcoin’s Blistering Run: “We’re Still Early”

• Bitcoin is on a blistering run.
• Bitwise CIO Matt Hougan has suggested that investors are “still early.”
• The analyst has outlined what needs to happen for the Bitcoin market to attain maturity.

The past week has been nothing short of exhilarating for the crypto market. Buoyed by the optimism of a supportive U.S. administration under President-elect Donald Trump , the market has taken off on a blistering rally and has not looked back.

Bitcoin , the market leader, is recording new all-time highs every other day and is now seemingly sitting comfy above the $90,000 price point, representing a staggering over 100% return year-to-date (YTD). But if analysts are to be believed, this is only the beginning.

“Still Early”

“It’s no longer the first inning. But until bitcoin hits $500K, it’s still early,” Bitwise CIO Matt Hougan wrote in a note to investors on Wednesday, November 12, arguing that investors who had yet to get Bitcoin exposure had not missed out on the rally.

Explaining the rationale for this view, Hougan argued that while it was not guaranteed that the asset would ever reach this price point, it would mark the point of the asset’s maturity.

Hougan contended that investing in Bitcoin was betting that investments in store-of-value assets would continue to grow and that Bitcoin would eventually be recognized as a store-of-value asset on par with gold. Following this analogy, the market analyst noted that till Bitcoin became “as boring as gold,” it was still early.

"The market has come a long way with the massive success of bitcoin ETPs and the rise of pro-crypto policymakers. But until bitcoin is as boring as gold—widely held by central banks and institutions alike—it's by definition still early," the analyst wrote.

As for the $500,000 price target, he noted that it was the price point Bitcoin would reach when it had half the market share of gold.

"A mature bitcoin would at a minimum share this market equally with gold. Roughly 20 million bitcoins exist today—the remaining million will be issued over the next century—so bitcoin would hold half the market when it hits $500K. Until then, it's still early," he stressed.

So, what needs to happen for the crypto market leader to get to this point of maturity?

The Journey to $500K Bitcoin and Higher

According to Bitwise’s Hougan, one of the major things needed for Bitcoin to reach the $500,000 price point was for central banks to significantly hold a portion of their reserve in the asset, a feat he admitted was “a tall order.”

"Today, governments hold roughly 20% of the world's gold reserves, compared to less than 2% of the world's bitcoin. For bitcoin to approach the half-million-dollar level, we would need to see that gap narrow. That's a tall order, but we have seen some progress," he wrote.

By progress, Hougan refers to Senator Cynthia Lummis’ B.I.T.C.O.I.N. Act, which proposes the purchase of over $80 billion worth of Bitcoin with government funds. The proposal has seen renewed interest following the election of Donald Trump, who promised to create “a strategic national Bitcoin stockpile.”

"If we start to see that happen, $500K bitcoin is fully within view," Hougan argued.

Interestingly, the Bitwise CIO contended that he believed that the asset would eventually even surpass the $500,000 price point.

"My $500K target is based on bitcoin eating into gold's market share, when, in reality, I think it will actually grow the overall market. It also assumes that the total store-of-value market is static, when I think it will grow rapidly as governments continue to pile on debt and print money. Could we see $1 million bitcoin? Higher? Absolutely. But $500K feels like a good start," he wrote.

On the Flipside 

• Market corrections tend to follow rapid price rallies.
• Hougan admits that there is no guarantee that Bitcoin will go higher.

Why This Matters 

Matt Hougan’s statements suggest that Bitcoin still has significant room to go to the upside despite already posting over 100% gains year-to-date (YTD).

Read this for more on Bitcoin:
Bitcoin at $800K “Mathematically Guaranteed,” Says Keiser

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