Matt Hougan on Bitcoin's Outlook

Matt Hougan, CIO at crypto asset manager Bitwise, identified three primary factors influencing the potential for a Bitcoin “melt-up” above $80,000 this quarter: the U.S. election outcome, economic conditions, and the absence of significant crypto industry surprises.

Year-End Predictions

At the end of 2023, Bitwise predicted Bitcoin would rise from $42,400 to above $80,000, citing spot Bitcoin ETF approvals in the U.S. and Bitcoin's fourth halving as key catalysts.

In a memo to clients Wednesday, Hougan reaffirmed this prediction but noted the necessity for a non-Democratic sweep in the U.S. elections. He emphasized the complexity of the Democratic stance on crypto, pointing out divisions within the party from pro-crypto representatives to anti-crypto figures.

> “To thrive, Bitcoin doesn’t need politicians. It just needs them to get out of the way,” Hougan stated, suggesting that a balanced political landscape would be more favorable for the industry.

Election Predictions

According to the decentralized predictions platform Polymarket, there is a 20% likelihood of a Democratic sweep versus a 33% chance for a Republican sweep. Further data suggests a 53% chance of a Trump victory, 73% for a Republican-controlled Senate, and a 62% chance of a Democratic House.

Analysts from Bernstein agreed that Bitcoin could achieve new highs between $80,000 and $90,000 should Trump win.

Economic Factors

On the economic front, Hougan mentioned that two 50 basis points rate cuts and fiscal stimulus from China are necessary for a Bitcoin rally.

> “The number one reason people are attracted to Bitcoin is simple: You can’t trust the government with money,” he explained, emphasizing the need for favorable economic conditions to spark a Q4 rally.

Industry Stability

Lastly, Hougan cited the importance of avoiding major disruptions in the crypto space, stressing: “No major hacks. No massive new lawsuits. No previously locked coins suddenly coming to market.”

Broader Crypto Market

Beyond these conditions, Hougan believes a broader crypto rally could further support Bitcoin's growth. While asserting Bitcoin’s independence from other cryptocurrencies, he acknowledged that proactive sentiment across the crypto market could contribute to a dramatic spike towards $100,000.

He noted that Bitcoin has had a successful year, appreciating 47.5%, being buoyed by high-performing ETFs and rising institutional adoption. He concluded that regardless of this year’s outcomes, Bitcoin is poised for significant growth, potentially surpassing $80,000 and beyond by 2025.