Matt Hougan, Bitwise’s chief investment officer, is urging investors to look beyond Bitcoin’s sharp decline, arguing that the cryptocurrency’s long-term value has little to do with its recent decline and everything to do with the service it provides.
Key points to remember:
- Bitwise CIO Matt Hougan says Bitcoin’s recent decline is “short-term noise” and does not affect its long-term value.
- Hougan argues that Bitcoin should be viewed as a digital wealth storage service and not a traditional asset.
- He cites rising global debt and growing demand for non-sovereign value storage as drivers for future Bitcoin adoption.
In a note sent to clients late Tuesday, Hougan dismissed concerns about a deeper slowdown, saying the current decline, about 27.5% from Bitcoin’s all-time high in October, is “short-term noise.”
Bitwise CIO says Bitcoin’s value lies in its service, not its price
Bitcoin briefly fell below $90,000 this week, sparking new questions from investors about what underlies its value.
Hougan said he starts most conversations with advisors with the same question: How can something that doesn’t generate profits or dividends be worth $2 trillion?
The answer, he argued, lies in treating Bitcoin not as a physical asset but as a digital service.
Hougan describes Bitcoin’s primary function as a wealth storage service, a way to store value without relying on banks, governments or intermediaries. Looking at it this way, he said, removes the discomfort some feel about an intangible asset.
“The value of Microsoft’s stock is tied to the number of people who want its service,” Hougan wrote. Bitcoin follows the same logic. The more people who want its service, the more valuable it becomes.
However, unlike software, Bitcoin cannot be rented or subscribed to. “The only way to get the service is to buy the asset,” he noted.
This scarcity-based demand model, he said, explains Bitcoin’s roughly 28,000% appreciation over the past decade, a period in which large institutions, pension funds, sovereign wealth funds, high-profile investors and millions of individuals have sought access to it.
Hougan pointed to growing digital adoption and rising global debt as long-term tailwinds. As more people seek a self-owned, non-sovereign store of value, Bitcoin’s relevance increases, he said.
“In our increasingly digital age, with governments accumulating more and more debt, I suspect many more people will want this service in the future,” Hougan concluded.
Experts are divided on whether the Bitcoin sell-off signals a new crypto winter
As noted, despite the recent pullback, several analysts told Cryptonews that the current slowdown looks more like a macroeconomic correction than the start of a prolonged freeze, pointing to institutional adoption, regulatory progress, and industry resilience as signs that the foundations remain strong.
Bitwise’s Danny Nelson and HashKey’s Tim Sun both argued that the market is far from a true winter.
They noted that, unlike previous collapses, the current cycle has not seen a catastrophic event like FTX and that infrastructure improvements, from tokenization to stablecoin expansion, continue to strengthen the ecosystem.
Other analysts have pointed out that the lack of a euphoric spike and the impact of global liquidity make this downturn different from historical bear markets.
Several experts nevertheless warn that the coming weeks will depend on American monetary policy. If the Federal Reserve fails to ease borrowing conditions, liquidity could tighten further and worsen the shock to markets.
However, if rate expectations ease, analysts say the market could stabilize, giving long-term investors the chance to accumulate in anticipation of a future rebound.
Bitcoin’s value comes from its utility, not short-term price drops: Bitwise CIO appeared first on Cryptonews.
