Bitwise Chief Investment Officer Matt Hougan explained Bitcoin’s (CRYPTO: BTC) often contradictory behavior during market crises, despite its narrative as an inflation hedge.
What Happened: In a research note released Tuesday, Hougan said that short-term price dips that Bitcoin experiences during economic turbulence are due to increased market uncertainty. This uncertainty amplifies the perceived riskiness of the asset, leading to a temporary decrease in the asset’s value, also known as a “discount factor.”
“So even though we're more bullish than ever on Bitcoin, our short-term price target falls. That explains the pullback. But if the market stabilizes and it turns out the world's not ending and the discount factor goes back from 85% to 75%, Bitcoin will recover from the pullback,” Hougan said, describing it as a “Dip Then Rip” phenomenon.
Hougan said Bitwise remained optimistic about Bitcoin, reiterating the $1 million price target by 2029 he gave in December 2024.
Meanwhile, Hougan said in a separate interview that Bitcoin could reach $200,000 by the end of 2025, if the Federal Reserve takes steps to stimulate the economy.
Price Action: At the time of writing, Bitcoin was exchanging hands at $85,876.49, up 3.42% in the last 24 hours, according to data from Benzinga Pro. Year-to-date, the coin has dipped 9%.
Image via Shutterstock
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