BitcoinThe fall from $100,000, its lowest level since June, has raised fears that the worst is yet to come, another so-called crypto winter (a prolonged bear market in cryptocurrencies) that the market struggles with every time digital currencies sell off sharply in a short period of time.
But Matt Hougan, Bitwise’s chief investment officer, said that even though the retail investor is in “maximum desperation” mode, he sees reason to bet that a bottom in crypto prices could materialize sooner rather than later. With support from institutional investors and Wall Street financial advisors for bitcoin and the growth of crypto ETFs, he is even willing to take a risk and say that amid the selloff, a new record high for bitcoin before the end of the year is not unreasonable.
“It’s almost a tale of two markets,” he said Tuesday on CNBC’s “Crypto World.” “Cryptocurrency retail trading is in desperation. We’ve seen explosions of leverage. …the native cryptocurrency retail trading market is just more depressed than I’ve ever seen it,” he said.
But Hougan believes more crypto trading will continue to move toward an institutional market, “and interestingly, that market is still bullish,” he said.
“When I talk to institutions or financial advisors, they are always enthusiastic about allocating to an asset class that, if you look back and over a year, continues to generate very strong returns. So my view on the market is that we have to ride out this retail wave. We have to hit bottom from a sentiment point of view. I think we are very close to that,” he added.
Bitcoin and Ether prices over the past year.
The boom in crypto exchange-traded fund launches, including iShares Bitcoin Trust (IBIT) and the Fidelity Wise Origin Bitcoin Fund (FBTC) and Grayscale Bitcoin Trust (GBTC) are changing the investor mix, and although weekly flows into these ETFs have slowed since the second quarter of the year, “we continue to see strong inflows into bitcoin,” Hougan said.
He expects more support to materialize for crypto by the end of the year from financial advisors who will look beyond the current decline and see an “opportunity to show their clients that they understand where this market is going.”
Bitwise’s own Solana Staking ETF (BSOL) generated more than $400 million in flows in its first week, he said, although it sold off heavily during the recent crypto downturn, losing nearly 20% since its Oct. 28 debut.
This chart shows 5 day BSOL
Last week, Strategy CEO Michael Saylor told CNBC that he thinks bitcoin could hit $150,000 by the end of the year, one of several recent bull calls on crypto that, for now, seem at least ill-timed. But Hougan said he doesn’t think it’s a far-fetched move, even though bitcoin is hovering near a six-month low.
“I think Bitcoin could easily end the year at new all-time highs,” Hougan said. “So that means going from about $125,000 to $130,000. We’ll see if we get up to $150,000.”
“I think sellers are almost exhausted and buyers are still relatively hungry. And when those two things intersect, again, I think we could end the year near or at new all-time highs. And if we’re lucky, we’ll hit Saylor’s goal as well,” he said.
Institutional investors, who Hougan described as “maybe even more worried about what’s happening at a fundamental level in crypto,” will begin to move the market forward. “But we need to stop this loss of confidence in retail…I think we’re closer to the end than the beginning, but…there could always be a little more downside.”
