Bitwise Says Near Could 30x - And That's Just the Base Case

Matt Hougan (0:00)

Could NEAR 40X?

Of course it could 40X, it could 50X. If 50X would be about what Ethereum is today. That doesn't strike me as absurd if it actually executes on this vision.

John Gillan (0:10)

Bitcoin has retested support at $81,000. It is now trading around $82,000. Everyone is panicking because they think it is over. Is this the end of the bull market or just a retest before one of the biggest bull runs in history? Hello and welcome to Milk Road Crypto, the show that would tokenize itself, but Bitwise would probably put us into an ETF. I'm your host, John Gillan. This day is Friday, October 9th and the Bitwise boys are back. Matt Hougan, the Chief Investment Officer at Bitwise and Ryan Rasmussen, Head of Research at Bitwise. These are two of our favorite guests here. So if that sounds good to you, make sure you like and subscribe, share this episode with somebody who's going to enjoy it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you trade, earn and borrow all in one place, all from one account. So stay tuned for more information about them later in the episode. But for now, welcome back to two of our favorite guests, Matt and Ryan. Gentlemen, how are you?

Matt Hougan (1:00)

Doing great. Awesome to be here. Thanks for having us.

Ryan Rasmussen (1:03)

Likewise.

John Gillan (1:04)

I always do that wrong. I should do one at a time. Matt, how are you? Ryan, how are you? But you guys always handle it anyway.

Let's start the conversation. Matt, it's been a week since I've spoken to you. So welcome back. You look much different than the last time we spoke. Bitcoin is now scaring everybody with this pullback here. What's your reaction to this? Is this normal? Is it expected? Is it concerning to you? How are you reading this in the markets here?

Matt Hougan (1:26)

Yeah, it's a wrap. We're going straight to zero. It's all over.

It's my last podcast. No, I mean, it's been remarkable how quickly people soured on it. If you look at the chart, we've just sort of pulled back to a normal, important technological level. I think it's a completely normal part of the market. I actually think Bitcoin is performing extraordinarily well.

If you look back at the history of early bull markets in crypto, if you look at, let's say, 2023 or you look at 2019 or you even go way back and look at 2015, what you see is that a lot of the time Bitcoin bounces around and does nothing. And then the reason it's a bull market is every once in a while, you have a big leg up. So there's like a fat right tail in the distribution of returns for Bitcoin in the early phases of a bull market. In the middle of a bull market, there's a fat middle where it tends to appreciate day after day after day. But when we're just getting started, mostly at hems and haws and bounces around, and then every once in a while, it takes a leg up. That's the historical pattern, and that's what we've seen since June 30th. We went from 57, jumped in the 70s, treaded water, people rolled out the Bitcoin is dead narrative, jumped into the 80s, now we're treading water, roll out the Bitcoin is dead narrative, we're going to jump into the 100s. So from my perspective, I think it's pretty clear that this is just a normal consolidation. It fits the historical pattern of what happens in the early bull market almost precisely. And I look at Bitcoin at $82,000 and smile quietly to myself.

John Gillan (2:58)

Ryan, I want to get some thoughts from you on this because we can make light of people's reaction to this, but transitioning from a bear market into a bull market is a tumultuous volatile time in the markets. How do you communicate about this to clients and what is sort of the messaging you're giving people around this transition from bear to early bull?

Ryan Rasmussen (3:18)

Yeah, well, I mean, I agree with everything Matt said there. First and foremost, historically bull markets are never up and to the right. And so these are healthy pullbacks. You reset a little bit of the leverage. We had a big wipeout of leverage earlier this week. I think that brings things back to a healthier level. We're so far below where we were at the tops of prior bull markets in terms of leverage and wipeouts. And so I think it's pretty healthy that this happens. When we speak with clients about where we see the market today, we really focus on the long-term drivers. And yes, they're asking about this recent pullback, but I think the important thing to remember is that many of the clients we're speaking to have maybe allocated 1% or 2% or haven't yet allocated to Bitcoin. And so they're thinking about this from, if I'm going to make an allocation or if I'm going to increase my allocation, how does that look three years from now or five years from now? And so we talk a lot about the long-term drivers, which is something they think about a lot when they make investments on behalf of their clients. And those long-term drivers are very much still intact. We have all of this positive regulatory momentum in the last three weeks alone, and the price has rallied on that. We're still above where we were when the Clarity Act failed to pass by about 10%.