Bitcoin’s crashes often spark 190% rebounds, making Bitwise more bullish than ever as market chaos signals a prime setup for explosive upside.

Bitwise CIO Says Bitcoin’s ‘Dip Then Rip’ Pattern Is Flashing a Bullish 190% Setup Matt Hougan, chief investment officer at asset management firm Bitwise, used his March 17 memo to explain why bitcoin tends to drop in moments of financial stress—even though it's considered a hedge.

Moments of financial stress often witness bitcoin performing even worse than the S&P 500, especially when the latter experiences a 2% drop in a single day, as noted by Matt Hougan, chief investment officer at asset management firm Bitwise, in his March 17 memo.

However, if investors stayed invested or bought more after the pullback, they would have done exceptionally well. On average, in the year following these sharp pullbacks, bitcoin rose a staggering 190%, massively outperforming every other asset.

“I call this pattern ‘Dip Then Rip,’ and historically it’s one of the most consistent patterns in crypto,” Hougan remarked.

He further explained that this behavior arises from how investors value assets—by discounting future expectations and risk assumptions, principles borrowed from discounted cash flow analysis.

While bitcoin lacks cash flows, a similar model can be applied based on a projected value and discount rates. At Bitwise, for instance, they anticipate bitcoin to be valued at $1 million in 2029.

“So, you might ask, what do we think it’s worth today? It depends on the discount factor—that is, the risk you assign it. If you discount back at 50% a year, the net present value is $218,604. If you use a 75% discount rate, the net present value is $122,633,” the executive elaborated.

However, geopolitical disruptions like tariffs can temporarily escalate risk perception, increasing the discount rate and reducing bitcoin’s near-term valuation, even if the long-term forecast improves.

Highlighting the latest drop in prices triggered by tariff fears, Hougan cited a comment from crypto services firm NYDIG.

“What does bitcoin have to do with tariff wars? Nothing, other than it’s a highly liquid, globally available asset that trades 24/7. If anything, bitcoin stands to benefit from the rise in global entropy, the political and economic disorder created by the administration.”

From Hougan’s perspective, such market turbulence presents a strategic opportunity.

If you’re a long-term investor, these short-term spikes in the discount factor are a chance to get in at a discount. From where I sit, I’ve never been more bullish.