Bitwise CIO believes investors are ‘still early’ until Bitcoin reaches $500k

Bitwise CIO Matthew Hougan believes that investors are “still early” until Bitcoin (BTC) stakes its claim Price zone of $500,000 for Bitcoin (BTC).

In a recent investor note, Hougan emphasized that current conditions make him feel the $100,000 milestone could be “just around the corner.”

Bitcoin registered a new all-time high of $93,523.65 on November 13, marking the best day in history and a 130% gain since the beginning of the year.

Despite the recent surge, Hougan reassured investors who may have felt they had missed their opportunity to invest, explaining why the $500,000 threshold is an important metric for measuring Bitcoin’s market maturity.

‘Still early’

One of the key factors Hougan pointed out in his analysis is the growing demand for stores of value, such as Bitcoin and gold.

With sovereign debt levels rising and currencies under pressure, more and more investors are turning to these assets as a hedge. Hougan also noted that Bitcoin’s increasing adoption as a store of value, similar to gold, marks an important milestone.

“A mature store of value looks like gold. No one looks forward to it when institutions invest gold or when central banks invest billions of their balance sheets. You don’t read many skeptical media stories about gold, nor do you see sitting US senators building anti-gold armies. Gold ‘made it’.”

However, Bitcoin remains a game-changing and volatile asset. Investors, such as pension funds and endowments, continue to tread carefully, and regulators including the U.S. Department of Labor are urging “extreme caution” when considering Bitcoin investments.

$500,000 BTC

The $500,000 target for Bitcoin is based on the current store of value market, which totals approximately $20 trillion, including gold and Bitcoin. With approximately 20 million BTC in circulation today, reaching a price of $500,000 would require Bitcoin to capture half of that market, indicating Bitcoin’s maturity as an asset class.

In August 2022, Twin co-founders Tyler and Cameron Winklevoss published an article arguing that Bitcoin could reach $500,000 if more investors recognize its value as a robust inflation hedge.

According to the Winklevoss brothers, Bitcoin’s fixed supply of 21 million coins creates scarcity, while its decentralized nature provides security and protection against physical seizure. These characteristics, they reasoned, position Bitcoin as a potential “gold 2.0.”

The Winklevoss twins also pointed out that oil, gold and the US dollar are poor inflation hedges. Oil is volatile and vulnerable to geopolitical and economic forces. Although gold is stable, it also has limitations, such as transport problems, susceptibility to confiscation and limited supply growth.

Meanwhile, the U.S. dollar suffers depreciation as the Federal Reserve increases the money supply, eroding its purchasing power over time.

Furthermore, Gemini co-founders pointed out that oil, gold and US dollars are failing as a means of protecting against inflation.

Path to adoption

For Bitcoin to reach the $500,000 mark, Hougan emphasized that broad institutional adoption, especially by central banks, will be critical. Currently, central banks own about 20% of the world’s gold reserves, but less than 2% of global Bitcoin holdings.

Hougan highlighted legislative efforts, such as Senator Cynthia Lummis’ proposal for a U.S. national Bitcoin reserve, as signs of progress. He believes that as central banks increase their Bitcoin holdings, the cryptocurrency will move closer to its $500,000 price target.

Hougan also expressed optimism that Bitcoin could eventually surpass $500,000 and possibly reach $1 million as both adoption and demand for a store of value increase, especially in response to rising government debt and currency inflation.

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