Matt Hougan, the Chief Investment Officer at Bitwise, has predicted a notable increase in Bitcoin’s price, hinting at a potential surge to six figures due to a mix of factors capturing investor interest.
Increasing Demand for Bitcoin
As the sole cryptocurrency valued above $1 trillion, Bitcoin has showcased remarkable strength and growth amidst rising interest from both retail and institutional investors. Currently, it hovers near its all-time highs, with prices approaching $69,000.
Eric Balchunas, senior ETF analyst at Bloomberg, recently pointed out that US spot Bitcoin ETFs have amassed over $20 billion in net inflows, while the broader Bitcoin ETF market oversees more than $65 billion in total assets. This rapid expansion, occurring within a year, surpasses the growth timelines of traditional ETFs, such as gold.
According to Hougan, the mounting interest in Bitcoin ETFs heralds a positive shift in market dynamics, particularly as institutional investors seek exposure to crypto assets.
Political Events and Economic Policies
Looking ahead, Hougan and other analysts view next year’s US presidential elections as a critical influencer on Bitcoin’s market trajectory.
Former President Donald Trump currently leads in on-chain betting forecasts, raising speculations that political developments could foster further Bitcoin acceptance, especially in light of his open support for the cryptocurrency sector.
Furthermore, bipartisan strategies addressing rising fiscal deficits have been termed “infinite deficits” by Hougan. These could promote sustained lax fiscal policies, potentially diminishing fiat currency value and highlighting Bitcoin’s appeal as a deflationary asset.
In addition, economic stimulus efforts in China paired with prospective global interest rate reductions from institutions like the Federal Reserve and the European Central Bank are likely to boost Bitcoin demand, as low-interest environments typically enhance risk appetite across financial markets.
The Impact of Supply Dynamics
Hougan emphasized that the impending supply shock following the Bitcoin halving is starting to have a tangible effect, with significant accumulation activities from whales and ETFs. Data indicates that major Bitcoin holders are accumulating assets at unprecedented rates, with whale wallets now controlling 9.3% of the total Bitcoin supply.
Recent insights from CryptoQuant show that new Bitcoin whales have invested approximately $108 billion as of October 6, which represents a dramatic 13-fold increase this year. These newcomers now comprise 48.8% of Bitcoin’s total realized market capitalization, reflecting the highest investment levels witnessed, nearly equaling the $113 billion held by established whale investors.
This wave of new whale activity is being viewed as a significant generational shift, with their realized market cap expected to exceed that of older investors shortly. The term ‘realized cap’ refers to the value of each Bitcoin computed based on its most recent transaction price, serving as a benchmark for gauging Bitcoin’s value retention.
