Bitwise CIO says key tailwinds could drive bitcoin to $100,000 by year-end

Matt Hougan, chief investment officer at crypto asset manager Bitwise, outlined five key tailwinds for the crypto industry that, despite current headwinds, could see bitcoin’s price reach $100,000 by the end of the year.

Bitcoin BTC +0.88% is currently down 21% from its latest all-time high of $73,836 set on March 14, partly amid concerns surrounding Mt. Gox distributions and the German government's sales of seized bitcoin.

Defunct exchange Mt. Gox finally began sending bitcoin back to its creditors on July 5 as part of plans to distribute around $8 billion worth of the cryptocurrency over the next few months. While the trustee has already sent 47,229 bitcoins (worth approximately $2.7 billion) to Bitbank and SBI VC Trade, he still has 94,771 bitcoins (about $5.4 billion) remaining to be distributed via Kraken, Bitstamp and BitGo.

Meanwhile, the German government appears to have sold more than $1 billion worth of bitcoin in recent weeks. Authorities in the country seized 50,000 bitcoins from the film piracy site Movie2K in January. It still currently holds around 13,110 bitcoins, worth $761 million, according to on-chain analysis firm Arkham Intelligence.

There’s also the matter of the $12 billion worth of bitcoin held by the U.S. government, which seized it from the online black market site Silk Road in 2013. On July 1, the U.S. Marshals Service selected Coinbase Prime to sell these assets, signaling those coins could hit the market soon, Hougan wrote in a note to clients on Wednesday.

However, those headwinds are one-off sales, Hougan added, causing short-term liquidity shocks amplified by a typically low-liquidity seasonal period for crypto that will come to an end.

‘Bitcoin to $100,000 and ether to new all-time highs’

In contrast, key tailwinds from spot bitcoin exchange-traded fund inflows, the Bitcoin halving, spot Ethereum ETH +1.76% ETFs, changing political attitudes, and the prospect of Fed rate cuts create a better long-term setup for crypto, Hougan said.

The U.S. spot bitcoin ETFs have attracted more than $15 billion in net inflows since launching in January — the most successful ETF launch of all time, Hougan noted. He expects to see billions of dollars more flow this year as the products get approved for mainstream use by the largest wealth management platforms, including Morgan Stanley and Wells Fargo.

ETFs tracking Ethereum's native token, ETH, are also expected to launch shortly, with Hougan predicting they will attract $15 billion of net inflows in the first 18 months. Bitwise manages one of the U.S. spot bitcoin ETFs and plans to launch a spot Ethereum product.

Hougan also expects the reduction in new daily supply of mined bitcoins from an average of 900 to 450 following April’s halving event will contribute to positive price action for bitcoin over the year, as in prior cycles.

Furthermore, the Bitwise CIO argues that there has been a “sea change” in the political attitude to crypto in recent months thanks to one of the strongest networks of pro-industry super PACs in Washington D.C. and the GOP making crypto part of its official 2024 platform .

Finally, Hougan noted that the Fed funds futures market was pricing in two rate cuts by the end of the year, with falling rates “generally good for crypto.”

Throw in strong growth in the stablecoin market, layer 2 development and institutions like BlackRock getting increasingly involved in the space, and “the right mix of developments in the second half of the year could easily drive bitcoin to $100,000 and push ether to new all-time highs,” Hougan said.