Bitcoin’s fall below $100,000, its lowest level since June, has sparked fears that the worst is yet to come—a so-called crypto winter, a prolonged bear market in cryptocurrencies that the market wrestles with every time digital currencies sell off hard in a short period.
However, Bitwise Chief Investment Officer Matt Hougan offers a more optimistic view. While retail investors are currently in “max desperation” mode, he sees this as a potential sign that crypto prices may bottom out sooner rather than later.
Speaking on CNBC’s “Crypto World” on Tuesday, Hougan said, “It’s almost a tale of two markets. Crypto retail is in max desperation. We’ve seen leverage blowouts. The market for crypto-native retail is just more depressed than I’ve ever seen it.”
Despite this, Hougan believes that more crypto trading will continue to shift towards an institutionally driven market, which, interestingly, remains bullish. “When I go out and speak to institutions or financial advisors, they’re still excited to allocate to an asset class that, if you pan back and look over the course of a year, is still delivering very strong returns.”
“My view of the market is we have to get through this retail flush out. We have to hit bottom from a sentiment perspective. I think we’re very close to that,” he added.
The boom in crypto exchange-traded fund (ETF) launches—such as the iShares Bitcoin Trust (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), and Grayscale Bitcoin Trust (GBTC)—is changing the investor composition. Although week-to-week flows into these ETFs have slowed since the second quarter, Hougan notes, “We continue to see strong inflows into bitcoin.”
He expects increased support for crypto to materialize toward the end of the year among financial advisors, who will likely look past the current dip and view it as “an opportunity to show their clients that they understand where this market is going.”
Bitwise’s own Solana staking ETF (BSOL) attracted over $400 million in flows during its first week. However, it has experienced a sharp sell-off amid the recent crypto downturn, losing nearly 20% since its October 28 debut.
Last week, Strategy CEO Michael Saylor told CNBC he believes bitcoin could reach $150,000 by the end of the year—one among several recent bullish calls that, for now, seem ill-timed given current conditions.
Still, Hougan does not dismiss Saylor’s prediction. “I think bitcoin could easily end the year at new all-time highs,” he said. “That means getting north of about $125,000 up to $130,000. Whether we’ll get all the way to $150,000, we’ll have to see.”
“I do think the sellers are nearing exhaustion and the buyers are still relatively hungry. When those two things cross paths, again, I think we could end the year close to or at new all-time highs. And if we’re lucky, we’ll get to Saylor’s target as well,” he added.
Hougan describes institutional investors as “more maybe even-keeled about what’s going on at a fundamental level in crypto” and believes they will start to drive the market forward.
“But we do have to finish this washout of retail sentiment. I think we’re closer to the end of that than the beginning, but there always could be a little bit more downside,” he concluded.
https://bitcoinethereumnews.com/bitcoin/bitcoin-retail-buyer-at-max-desperation-but-no-crypto-winter-bitwise-cio/