Bitwise CIO sees Bitcoin bottom nearing
- Bitwise Chief Investment Officer Matt Hougan said the recent unwind in Strategy's STRC preferred stock may signal Bitcoin is approaching a market bottom.
- Hougan said Strategy may become a less significant source of Bitcoin demand as institutional investors increasingly drive the market.
- He said the current deleveraging cycle could create conditions for a new Bitcoin rally later this year, while cautioning that market bottoms cannot be identified with certainty.
Bitwise Chief Investment Officer Matt Hougan said the recent decline in Strategy's STRC preferred stock suggests Bitcoin (CRYPTO:BTC) may be approaching a market bottom following a period of deleveraging.
Hougan said the fall in STRC, which Strategy used to help fund Bitcoin purchases, reflects a late-stage market reset rather than a structural problem, noting that the company has responded by increasing the preferred dividend to 12%, approving share buybacks and adopting a capital management framework.
“The volatility in STRC is a natural and important part of the crypto cycle. I think we’re nearing the bottom,” said Bitwise Chief Investment Officer Matt Hougan.
Hougan said Strategy is unlikely to remain the dominant source of Bitcoin demand, arguing that banks, asset managers, pension funds, sovereign wealth funds and financial advisers are expected to play a larger role in future market growth.
Hougan said the current deleveraging phase could support a stronger Bitcoin market later this year.
He also said investors should monitor indicators including Strategy trading below the value of its Bitcoin holdings, negative funding rates and low Crypto Fear and Greed Index readings as potential signs that market sentiment is stabilising.
Hougan compared the recent STRC unwind with the collapse of the Grayscale Bitcoin Trust premium after the 2019 to 2021 market cycle, saying both events represented periods of leverage resetting before a potential recovery.
At the time of reporting, Bitcoin price was $61,370.72.
