The chief investment officer of Bitwise Asset Management, Matt Hougan, is weighing in on the impacts that spot Bitcoin (BTC) ETFs could have on the king crypto.
In a new interview on crypto-focused YouTube channel The Defiant, Hougan says that the market appears to have front-run the approval of ETFs given that price action has been mostly sideways since their launch last week.
However, he believes that the long-term impacts will be massive, and the market has yet to price it in.
“I think the short-term flows are priced in. I think that’s what we’re seeing in the market. The price has been volatile, but it hasn’t moved that much since it became clear these were going to launch. I think it’s fair to think that the immediate flows are likely priced in. I think the market dramatically underestimates the long-term impact by a factor of quite a few.
I’ll give you an example from ETF history because I spent 15 years in the ETF industry. In 2004, gold ETFs launched. Gold was a $2 trillion market. Today, it’s a $15 trillion market. And the ETF has contributed significantly to that. I think we’re going to see tens and tens of billions of dollars of flows into these ETFs over the years, and that’s going to be tremendously supportive of prices. But short term, volatile, unchanged. That’s maybe what you should expect. Long term, I think it’s really substantial.”
Hougan says that retail investors, who control only a small amount of wealth in the United States, have largely driven the price of Bitcoin in the past, but that the spot market BTC ETFs now allow huge amounts of wealth to start funneling into the top digital asset by market cap.
“Crypto is built primarily from self-directed retail investors, people buying it individually. And there are a lot of those people and they’re very important, but they only control about 20% of the wealth in America…
The vast majority of the wealth is controlled by either financial advisors, who are people that help other people invest, or institutions. That’s 80% of the wealth. So we went from zero to $44,000, essentially capturing only one-fifth of the market. And what ETFs do is they open up the other four-fifths, and that’s really substantial, particularly at a time when there’s a relative scarcity of supply of new Bitcoin coming onto the market. That’s why I think people underestimate it.”
Bitcoin is trading for $42,667 at time of writing, down slightly in the past 24 hours.
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Source: https://dailyhodl.com/2024/01/15/bitwise-cio-matt-hougan-says-market-dramatically-underestimating-impact-of-bitcoin-etf-heres-why/