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Cryptocurrency News Articles

Bitcoin Soars: Experts Predict 50% Volatility Reduction, Surge in Institutional Demand

Apr 25, 2024 at 02:16 pm

As Bitcoin miners adjust to diminished rewards following the halving event, industry experts provide forecasts for the future. Bitwise's CIO, Matt Hougan, predicts a significant shift in Bitcoin's trajectory, outlining five key predictions that shed light on the asset's projected path toward institutional adoption, increased portfolio allocations, and a surge in price potential.

Bitcoin Soars: Experts Predict 50% Volatility Reduction, Surge in Institutional Demand

Bitcoin's Meteoric Ascent: Experts Foresee 50% Volatility Reduction and Institutional Dominance

As Bitcoin miners come to terms with the aftermath of the recent halving event, industry luminaries are offering valuable insights into the cryptocurrency's future trajectory. Foremost among them is Matt Hougan, Chief Investment Officer of Bitwise, who has outlined five key predictions that shed light on Bitcoin's path in the years leading up to the next halving in 2028.

Declining Volatility: A Sign of Maturation

Hougan anticipates a significant reduction in Bitcoin's volatility, a phenomenon he attributes to the increasing presence of institutional investors via exchange-traded funds (ETFs). The CIO believes that this influx of institutional capital will bring greater stability to the market, as these investors tend to rebalance portfolios and make steady investments rather than engaging in speculative trading.

"ETFs attract new types of investors to the Bitcoin market, including financial advisors, family offices, and institutions," Hougan explains. "These investors behave differently from the retail investors who have traditionally dominated Bitcoin, bringing a greater level of sophistication and risk management to the ecosystem."

Growing Portfolio Allocations: A Vote of Confidence

Experts predict that Bitcoin allocations in target-date portfolios, a popular retirement savings vehicle, could reach 5% or more in the coming years. Hougan states, "I expect to see the average portfolio allocation to Bitcoin rise to the point where it becomes commonplace to hold 5% or more of one's portfolio in this asset." This growing acceptance indicates a shift in sentiment toward Bitcoin, solidifying its position as a legitimate investment option.

ETF Flows Surpass $200 Billion: A Tidal Wave of Capital

Hougan predicts a meteoric rise in Bitcoin ETF inflows, surpassing the $200 billion mark in the near future. "In the United States, Bitcoin ETFs have already attracted approximately $12.5 billion in net flows since their launch just three months ago," Hougan notes. "This makes them the fastest-growing new ETF category in history." As more investors discover the benefits of ETFs and financial institutions join the trend, Hougan anticipates sustained long-term demand for Bitcoin.

Central Banks Embrace Bitcoin: A Paradigm Shift in Finance

Hougan speculates that central banks, intrigued by Bitcoin's unique properties as non-debt money and its utility in a geopolitically fraught world, may begin allocating reserves to the cryptocurrency. He suggests that central banks could view Bitcoin as a hedge against geopolitical risks, marking a significant shift in global finance.

"Central banks are recognizing the potential benefits of Bitcoin, including its non-inflationary nature, its ability to diversify reserves, and its role as a safe haven asset in times of uncertainty," Hougan explains. "This could lead to substantial demand for Bitcoin from central banks around the world."

Bitcoin Price Surpasses $250,000: A New Era of Value

With Bitcoin's growing mainstream acceptance and institutional backing, Hougan predicts a surge in its price, potentially exceeding $250,000 per Bitcoin by 2028. He believes that the asset will continue to move further into the mainstream as more institutions and investors embrace it.

"With ETFs gaining traction and major Wall Street firms aligning themselves with Bitcoin, I expect the asset to continue to gain legitimacy and attract even more institutional participation," Hougan states. "This could lead to a significant increase in demand and drive the price of Bitcoin to new heights."

Industry Experts Echo Hougan's Optimism

Hougan's predictions are echoed by other industry experts, who also anticipate substantial price increases driven by institutional adoption and broader acceptance. Pav Hundal predicts a 100% price increase, while Henrik Andersson envisions prices reaching $200,000 before 2028. This bullish outlook is supported by the ongoing institutional interest and growing market presence of Bitcoin.

As Bitcoin miners navigate the challenges of reduced rewards, predictions for the next halving offer valuable insights into the cryptocurrency's future trajectory. With institutional interest on the rise and Bitcoin's role evolving, the next halving could mark a significant milestone in Bitcoin's journey toward mainstream acceptance and adoption.

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