The recent decline in Bitcoin prices has worried investors, but long-term expectations have not changed. According to Bitwise Chief Investment Officer Matt Hougan, these declines are temporary and could herald a significant rise in the future. Hougan stated that Bitcoin operates on a 'dip then rip' model and that current price levels present opportunities for long-term investors. The expert noted that the increase in market risks has led to volatility in the short term, but predicts that Bitcoin could gain 190% in value within 12 months.
Why Has Bitcoin Recently Declined?
Among the main reasons for the decline in Bitcoin prices are global economic uncertainties. Hougan expressed that especially former U.S. President Donald Trump's economic policies and protectionist measures have increased short-term market risks. As investors price in such risks, fluctuations in volatile assets like Bitcoin become inevitable.
The cryptocurrency market reacts more sharply to macroeconomic developments compared to traditional financial markets. According to Hougan's analysis, on days when the S&P 500 index experiences a 2% decline, an average loss of 2.6% is observed in Bitcoin. This situation is due to investors exiting risky assets considering short-term uncertainties. However, according to Hougan, the long-term direction of the market does not change. Historical performance of Bitcoin and net present value (NPV) calculations indicate that prices are likely to recover and show strong increases after a certain point.
While reiterating his prediction that Bitcoin could reach $1 million by 2029, Hougan emphasized that the market is often directed towards new price targets by an 'invisible hand' during certain periods. He noted that the declines in Bitcoin prices present buying opportunities for large-scale investors.
Expectations for Bitcoin in the Long Term
Economic uncertainties and protectionist policies may contribute to Bitcoin's long-term rise. According to Hougan, factors such as tariffs and trade wars particularly drive investors away from traditional markets towards alternative investment vehicles. The decentralized structure of Bitcoin allows it to be seen as a hedge against financial and political uncertainties.
Hougan stated that despite market fluctuations, he believes Bitcoin will gain value in the long term. Saying, 'I’ve never been more bullish,' he advised investors to develop long-term strategies. According to him, short-term declines may represent an opportunity for investors.
Hougan also pointed out that many investors do not consider long-term models when calculating Bitcoin's value. However, historical data shows that Bitcoin has experienced price declines before significant rallies. Hougan argued that investors who do not overlook Bitcoin's long-term value appreciation potential could come out profitable.