'I think crypto market is close to a bottom': Bitwise CIO Matt Hougan

Retail Bitcoin Demand Hits Lows, But No Prolonged Downturn Expected—Key Insight for Investors

Imagine watching a roller coaster slowly climb up, then suddenly drop down fast—leaving everyone wondering if it will zoom back up or keep falling. That’s what’s happening in the world of Bitcoin and other cryptocurrencies right now, and it matters for anyone thinking about investing their money.

Why Investors Should Care

When Bitcoin’s price falls sharply, it can shake up not just crypto fans but also the whole market. Some people get scared and sell, while others look for chances to buy low. This back-and-forth can affect portfolios, especially if you own crypto or funds that invest in it. It also hints at how much faith people have in risky investments overall.

The Bearish View: Why Some Are Worried

  • Crypto Winter Fears: Bitcoin dropped below $100,000, its lowest since June, making many worry about another “crypto winter,” which is a long period where prices stay down.
  • Retail Panic: Everyday investors (not big companies) are selling off their coins in desperation, which can push prices even lower.
  • ETF Slowdown: While there are new crypto ETFs (funds that track crypto like Bitcoin), money flowing into them has slowed down lately.
  • Recent Losses: New funds like the Solana staking ETF (BSOL) lost nearly 20% since late October, showing how fast things can go south.

The Bullish View: Reasons for Optimism

  • Institutional Support: Big Wall Street firms and financial advisors are still interested in crypto, seeing it as a long-term investment.
  • Strong Yearly Returns: If you zoom out and look at the past year, Bitcoin and other major coins have still delivered strong returns compared to many other assets.
  • ETF Growth: New exchange-traded funds like iShares Bitcoin Trust (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), and Grayscale Bitcoin Trust (GBTC) are making it easier for people to invest in crypto.
  • Possible Rebound: Some experts, like Michael Saylor, predict Bitcoin could reach $150,000 by the end of the year, and others think new record highs aren’t out of reach.
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What the Data Says

Crypto can be a wild ride. According to a Statista report, the total market value of all cryptocurrencies went from under $200 billion in 2019 to over $2 trillion in 2021, then dropped sharply in 2022—showing just how quickly things can change.

Even with recent dips, crypto ETFs are seeing strong inflows. For example, Bitwise’s Solana ETF pulled in over $400 million in its first week, even though it quickly lost value after launch.

Bulls vs. Bears: What Could Happen Next?

  • Bulls (Optimists): Think the worst may be over soon and expect a bounce back, especially with big investors staying positive.
  • Bears (Pessimists): Worry that regular investors are still too nervous and that there could be more drops before things get better.
  • Historical Lessons: After past crashes, like the one in 2018, crypto has often bounced back to new highs—but it can take time and nerves of steel.

Investor Takeaway

  • Stay Calm: Don’t let wild price swings push you into panic selling or risky bets. History shows crypto can bounce back, but it’s not for the faint of heart.
  • Diversify: Don’t put all your eggs in one basket—mix crypto with stocks, bonds, or other investments to spread out risk.
  • Watch the Big Players: Keep an eye on what institutions and financial advisors are doing, since their moves can help support prices.
  • Learn from the Past: Look at how crypto has recovered after past downturns, but remember, past performance doesn’t guarantee future results.
  • Consider ETFs: If you’re interested in crypto but nervous about buying coins directly, ETFs can be a safer way to get exposure.

For the full original report, see CNBC

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