The cryptocurrency market is showing optimism, with Bitcoin and Ethereum reaching new highs. However, according to Bitwise CIO Matt Hougan, there are four significant factors that are yet to be priced into the current market.
Government Purchases of Bitcoin
The first factor Hougan pointed out is the potential for increased government purchases of Bitcoin. By early 2025, it is projected that the main sources of Bitcoin demand will include ETFs, corporations, and governments. While ETFs have purchased 183,126 BTC ($22 billion), and corporations have added 354,744 BTC ($43 billion), government purchases have been lagging.
High Interest Rate Issues
Hougan emphasizes that it is unusual for BTC to be trading near its peak amidst high interest rates. He notes that appointments made by the Trump administration suggest plans for a weaker dollar, a dovish Fed target, and even more aggressive rate cuts.
Declining BTC Volatility
The third factor is the sharp decline in BTC volatility. With the launch of spot ETFs in January 2024, BTC volatility has decreased to levels comparable to those of highly volatile tech stocks. This opens the door for institutional investors to allocate 5% or more of their portfolios into cryptocurrency.
Thus, according to Hougan, the current rise in the cryptocurrency market is possible not only due to positive news but also thanks to factors yet to be reflected in market prices.
