As bitcoin continues to set a series of new all-time highs following pro-crypto Donald Trump’s U.S. presidential election win, Bitwise Chief Investment Officer Matt Hougan made the case for a $500,000 price before the cryptocurrency’s early stage comes to an end.
Bitcoin briefly surpassed the $90,000 level yesterday and is currently trading for $87,917, according to The Block’s Bitcoin Price Page, up around nearly 20% in the week since Trump’s victory became apparent.
“The market may pull back — it’s come so far, so fast — but $100,000 feels like it could be right around the corner,” Hougan wrote in a note to clients late Tuesday. “It’s no longer the first inning. But until bitcoin hits $500K, it’s still early.”
While acknowledging that there’s no guarantee that bitcoin will ever be worth $500,000, noting the asset’s volatility and uncertain outlook, Hougan argued that a $500,000 price point is the correct demarcation between early and late, marking the point at which bitcoin becomes “mature.”
Hougan said that demand for store-of-value assets like gold, and increasingly bitcoin, will grow as governments take on debt and debase their currencies. While gold had “made it,” with no one questioning when institutions allocate to the precious metal or global central banks add billions of it to their balance sheets, that’s not true for bitcoin.
It’s still considered news when pensions and endowments make investments in bitcoin, the U.S. Department of Labor warns 401(k) providers not to put bitcoin in their portfolios and there is still excitement when big hedge funds investors reveal positive views on crypto, Hougan noted.
“The market has come a long way with the massive success of bitcoin ETPs and the rise of pro-crypto policymakers. But until bitcoin is as boring as gold—widely held by central banks and institutions alike—it’s by definition still early,” he said.
The crypto asset manager CIO’s rationale for the $500,000 figure is based on the current $20 trillion store of value sector, combining gold’s $18 trillion market with bitcoin’s approximate $2 trillion. He argued a mature bitcoin would at least account for an equal share of this market, requiring a price of around $500,000 to hit the 50% milestone as things stand.
Reaching that level would require the same groups that broadly allocate to gold today to also allocate to bitcoin, and the biggest missing piece in that equation was central banks, according to Hougan.
“Today, governments hold roughly 20% of the world’s gold reserves, compared to less than 2% of the world’s bitcoin. For bitcoin to approach the half-million-dollar level, we would need to see that gap narrow,” he said. “That’s a tall order, but we have seen some progress. Perhaps the biggest example here is the plan from Senator Cynthia Lummis (R-WY) for the U.S. to adopt a national bitcoin reserve, with a goal of buying more than $80 billion worth of bitcoin using government funds. If we start to see that happen, $500K bitcoin is fully within view.”
“Until then, it’s still early,” Hougan added. “Could we see $1 million bitcoin? Higher? Absolutely. But $500K feels like a good start.”
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