In a recent memo to investment professionals, Bitwise’s Chief Investment Officer, Matt Hougan, shared his thoughts on navigating the choppy waters of today’s crypto market, particularly focusing on Bitcoin. Amidst the backdrop of a volatile crypto market, with Bitcoin’s value oscillating between $60,000 and $70,000, Hougan offers a steadying perspective that emphasizes patience, long-term thinking, and an understanding of the broader financial landscape shaping Bitcoin’s trajectory.

Hougan begins by addressing the media’s reactive nature to Bitcoin’s fluctuations, noting the tendency towards sensationalism in reporting price movements. This environment of heightened sensitivity to short-term gains and losses, he suggests, detracts from the more significant, underlying trends that offer a promising outlook for Bitcoin.

Central to Hougan’s message is the recommendation to maintain composure and adopt a long-term perspective towards Bitcoin investment. He outlines the current holding pattern in the crypto market, pinpointing several pivotal developments on the horizon. Among these is the anticipated Bitcoin halving event around April 20, which historically has had a significant impact on Bitcoin’s value due to the reduced rate at which new bitcoins are generated. Additionally, Hougan points to the potential approval of spot Bitcoin Exchange-Traded Funds (ETFs) on major national account platforms like Morgan Stanley and Wells Fargo as imminent catalysts that could substantially influence Bitcoin’s market position.

Further, Hougan highlights the ongoing processes within investment circles—meetings, expert consultations, and due diligence efforts—geared towards understanding and potentially integrating Bitcoin into broader investment portfolios. These steps, though procedural, are indicative of the growing interest and cautious optimism surrounding bitcoin.

Delving deeper, Hougan articulates a bullish stance on Bitcoin’s long-term market outlook, backed by a nearly 300% increase in its value over the past 15 months. He identifies the January launch of spot Bitcoin ETFs as a watershed moment, opening the crypto market to investment professionals on an unprecedented scale. This development, according to Hougan, is just the beginning of a significant shift in how global wealth is allocated, considering the tens of trillions of dollars managed by these professionals globally.

The memo underscores the enormity of the potential capital influx into the crypto space, contemplating a scenario where global wealth managers allocate merely 1% of their portfolios to Bitcoin. Hougan rationalizes this allocation by referencing Bitcoin’s historical performance, noting its capacity to enhance the risk-adjusted returns of traditional investment portfolios. He envisions this 1% allocation translating into approximately $1 trillion of inflows into the crypto market, dwarfing the $12 billion that has already entered via US-listed spot Bitcoin ETFs since January.