Source: cryptoslate
Compiled by: Blockchain Knight
Bitwise CIO Matthew Hougan believes that it is “still too early” for investors to head toward BTC’s purported $500,000 price zone.
In a recent investor note, Hougan emphasized that the current environment makes him feel that the $100,000 mark may be "just around the corner."
BTC hit a new high of $93,523.65 on November 13, its best day in history, bringing its year-to-date gains to 130%.
Despite the recent surge in BTC prices, Hougan reassured investors who “may feel they’ve missed out on the best investment opportunity” and explained why the $500,000 threshold is an important benchmark for measuring BTC’s market maturity.
Hougan pointed out in his analysis that one of the key factors for BTC’s large increase is the growing demand for store-of-value assets such as BTC and gold.
As government debt increases and currencies come under pressure, more investors are turning to these assets as a safe haven.
Hougan also pointed out that BTC’s growing acceptance as a gold-like store of value is an important milestone.
Hougan added: “The proven store of value asset is gold. No one bats an eyelid when institutions allocate to gold or central banks invest billions of dollars from their balance sheets.”
“Gold has ‘made it’ when you don’t read a ton of skeptical stories about gold in the media or see a sitting U.S. senator building an anti-gold brigade.”
However, BTC remains a seminal and volatile asset. Investors such as pension funds and endowments are still treating BTC with caution, and regulators including the U.S. Department of Labor have urged "extreme caution" when considering BTC investments.
BTC reaching the $500,000 milestone is determined by the current store of value market, which, including gold and BTC, totals approximately $20 trillion.
Currently, there are about 20 million BTC in circulation. To reach a price of $500,000, BTC would have to occupy half of the market, which would mark the maturity of BTC as an asset class.
In August 2022, Gemini co-founders Tyler Winklevoss and Cameron Winklevoss published an article arguing that when more investors recognize the value of BTC as a robust inflation hedge, the price of BTC can reach $500,000.
The Winklevoss brothers believe that BTC’s fixed supply of 21 million coins ensures its scarcity, while its decentralized nature provides security that prevents it from being physically confiscated.
“These characteristics make BTC a potential ‘gold 2.0’.”
The Winklevoss brothers also pointed out that oil, gold and the US dollar are not good inflation hedges.
Oil is volatile and susceptible to geopolitical and economic forces. Gold, while stable, has limitations, such as difficulty in transportation, susceptibility to confiscation and limited supply growth.
At the same time, as the Fed increases the money supply, the dollar depreciates, eroding its purchasing power over time.
Furthermore, the Gemini co-founder also pointed out that neither oil, gold, nor the U.S. dollar can serve as a means of protection against inflation.
Hougan stressed that widespread institutional adoption, especially by central banks, will be crucial for BTC to reach the $500,000 mark.
Currently, central banks hold about 20% of the world's gold reserves, but BTC holdings account for less than 2% of the world's total.
Hougan highlighted legislative efforts, such as a proposal from Senator Cynthia Lummis to create a U.S. national BTC reserve, as a sign of progress.
Hougan believes that as central banks increase their holdings of BTC, the Crypto asset will get closer to its $500,000 price target.
Hougan also expressed optimism that BTC could eventually surpass $500,000 and even reach $1 million as adoption and demand for a store of value increases, especially in response to rising government debt and monetary inflation.
