According to Matt Hougan, the Chief Investment Officer of Bitwise Asset Management, Bitcoin, the world’s largest cryptocurrency, may soon no longer be a volatile asset.
Hougan believes that this change is due to a significant decrease in Bitcoin’s price volatility over the past decade.
Hougan explains that the current Bitcoin market is fundamentally driven by a simple supply-demand imbalance.
Hougan told CNBC on Monday: “We have a new massive demand coming from ETF funds and a non-expanding supply.”
The first Bitcoin exchange-traded funds (ETFs) started trading on January 11. Since then, the price of BTC has increased by over 50%, reaching an all-time high this week.
Despite these promising numbers, Hougan admits that Bitcoin may not be suitable for everyone due to its volatile nature. “It moves too much. Some people struggle to understand it,” he said.
Simeon Hyman, the Global Investment Strategist at ProShares, notes that Bitcoin’s historical strength predates the launch of Bitcoin ETFs. “This month marks the anniversary of the collapse of cryptocurrency-related financial institutions. Last year, Bitcoin also surged in price,” he said. Hyman believes that long-term investors are starting to enter the market with the purpose of asset allocation and diversification.
