Bitwise’s chief investment officer, Matthew Hougan, recently informed investors that institutional investors will invest over $1 trillion into cryptocurrency through ETFs, which will drive Bitcoin to new heights. Hougan advised investors to remain calm and take a long-term perspective, stating that the wave of institutional interest will propel Bitcoin to $150,000 during the current bullish market.
Hougan believes that the inflow into Bitcoin ETFs by institutional investors is just the beginning, with only 1% of the expected total investment received thus far. According to data from Farside, Bitcoin ETFs have attracted over $26 billion since their launch in mid-January. BlackRock leads the race with $14 billion in investments, followed by Fidelity with over $7.5 billion. Ark and Bitwise have attracted $2.3 billion and $1.6 billion, respectively.
This influx of investments is believed to have contributed significantly to Bitcoin reaching new highs of nearly $74,000 two months ago. However, Hougan, an expert in ETFs, believes that this is just the beginning. In his note to investors, he analyzed the crypto ETF market and explained why he believes that the majority of the investments are yet to flow into Bitcoin.
Hougan, the former CEO of ETF.com, noted that Bitcoin is currently experiencing short-term volatility but will likely be influenced by the halving event on April 20. However, the approval of Bitcoin ETFs by major US institutions such as Morgan Stanley, Goldman Sachs, and Wells Fargo for their wealthy clients could be a game-changer.
He stated, “But long-term, we believe bitcoin is in a raging bull market. Not only is it up nearly 300% in the past 15 months, but there are strong reasons to think that will continue.”
The approval of ETFs in January was a significant milestone for Bitcoin, allowing institutional investors to include Bitcoin in their portfolios. Hougan highlighted that each of these investors controls billions of dollars, with an estimated total of at least $100 trillion. While it will take years for a portion of this money to flow into Bitcoin, Hougan emphasized the potential impact, stating, “Imagine global wealth managers allocating just 1% of their portfolios to bitcoin on average. It’s not crazy… a 2.5% allocation to Bitcoin has enhanced a traditional 60/40 portfolio’s risk-adjusted returns in every three-year period in Bitcoin’s history.”
A 1% allocation across the board would result in approximately $1 trillion of investments in the cryptocurrency space. Compared to the current $12 billion, this is merely a down payment, with 99% of the expected investments yet to come.
With $26 billion in institutional inflows driving Bitcoin from $46,000 on January 12 to a new all-time high of over $73,680 this month, an additional $1 trillion would push the top cryptocurrency even higher, potentially doubling its value.
