Bitwise CIO Believes The Crypto Crash Sets The Stage For Bitcoin To Thrive – Key Reasons Why
August 06 2024 - 10:00PM
NEWSBTC
In the aftermath of a tumultuous week that saw Bitcoin (BTC)
plummet to a seven-month low of $49,000 on Monday, global financial
markets were rattled by a significant downturn, sparking concerns
across stock exchanges and the crypto sphere. However, amid
the chaos, Bitwise’s Chief Investment Officer Matt Hougan analyzed
the drivers behind the recent market meltdown. He explained
why he believes traders’ fears may be misplaced and that the market
dip holds key opportunities for potential Bitcoin price
appreciation. Crypto Crash Or Opportunity? In a recent note
to investors, Hougan pointed to the broader market chaos, including
a 12% single-day crash in Japan’s Nikkei index and a 4% tumble in
Nasdaq futures, sparking the crypto selloff. He drew parallels to
the market turmoil seen at the onset of the COVID-19 pandemic in
March 2020, when Bitcoin crashed 37% in a single day. “It felt as
if we might never recover. The media claimed Bitcoin had failed its
test as a hedge asset,” Hougan recalled. However, he noted that in
the year following that crash, Bitcoin surged over 1,000% to new
record highs of $57,322. Hougan believes a similar dynamic could
play out this time, arguing that Bitcoin’s fundamental case remains
intact, regardless of short-term price volatility. Related
Reading: UNI Price Bounces Back 13% Above $5.6, Can Bulls Maintain
Control? “Nothing fundamental had changed about Bitcoin because of
Covid,” Hougan said. “The maximum number of Bitcoin that could
exist (21 million) was the same on March 11 as on March 12. You
didn’t need to rely on any bank, government, or company to store
wealth in Bitcoin on March 11, which was still true on March 12.”
Moreover, Hougan contends that the factors that propelled Bitcoin’s
rise during the pandemic – the expansion of central bank
intervention, the limitations of centralized institutions, and the
growing digitization of the economy – are still in play
today. Will Bitcoin Emerge Stronger? Hougan also acknowledged
in his remarks the near-term uncertainty, noting that it remains
unclear whether the crypto market has found its bottom yet. He
pointed to the potential for further deleveraging and contagion
risk among crypto firms as key monitoring factors. However, the
Bitwise CIO urged investors to look past the short-term noise and
focus on Bitcoin’s long-term trajectory. He warned against the
temptation of market timing, reminding readers that “the four most
expensive words in finance are ‘this time it’s different.'”
Historically, Hougan said, crypto has tended to trade lower
initially during periods of broader economic panic, only to end up
higher over the following 12 months. He expressed confidence that
the current market meltdown will be no exception and that Bitcoin
will emerge stronger from the turmoil. “In fact, I’m betting the
other way,” Hougan concluded. “Resist the urge to look at intraday
prices, and focus instead on where Bitcoin could be next year, in
five years, and in ten years.” Related Reading: Helium (HNT) Stays
Afloat With 31% Gains Amid Crypto Market Mayhem When writing, the
largest cryptocurrency on the market has climbed back to the
$56,300 level, surging 4.5% in the last 24 hours. Featured
image from DALL-E, chart from TradingView.com
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