Bitcoin recently experienced a brief dip below $100,000, a notable shift from its record high of over $126,000 just a month prior. Despite this volatility, Bitwise Chief Investment Officer Matt Hougan views this period as Bitcoin's "IPO moment." He suggests that historical patterns indicate this is a time for increased buying rather than passive observation.
Hougan further elaborated that the current market conditions signal the end of the era where 1% Bitcoin allocations were considered sufficient.
Bitcoin's Sideways Trading Is an Opportunity
The current period of sideways trading, even with substantial ETF inflows and regulatory advancements, is characteristic of an asset transitioning from an early-adopter investment to a mainstream, institutionally-held blue chip. Hougan referenced an essay by macro investor Jordi Visser, who describes Bitcoin as being in a "silent IPO" phase. This phase mirrors the structural shift experienced by major companies like Facebook and Google during their public listings, without a formal IPO process.
For instance, Facebook's IPO in 2012 was followed by a 15-month period of stagnant or declining prices before surging to over $600 per share. This sideways movement did not signify weakening fundamentals but rather a distribution phase where early stakeholders realized profits, and institutions gradually acquired available shares.
Hougan posits that Bitcoin is currently in a similar phase. Early investors who acquired Bitcoin at significantly lower prices are now holding substantial wealth. The advent of spot ETFs, allocations from sovereign funds, diversification by corporate treasuries, and the establishment of regulated financial infrastructure have created a sufficiently deep and liquid market for these early holders to exit into.
Previously, a $1 billion Bitcoin sale would have been a major market event. Today, it is absorbed more readily. Hougan emphasizes that this signifies maturity rather than a bearish outlook. Unlike traditional companies that need to develop new revenue streams, Bitcoin's path to further growth hinges on widespread global acceptance.
Once early investors complete their distribution, the primary factor limiting Bitcoin's potential growth from its current $2.5 trillion valuation to a projected $25 trillion is its global adoption. This is why Hougan views the current sideways trading as a positive indicator, not a cause for concern.
A 5% Allocation Is the New Minimum
Hougan also highlighted the significant implications for investment allocations. Since the launch of spot ETFs in January 2024, Bitcoin's volatility has begun to decrease. As a maturing, institutionally-backed, and liquid macro asset, Hougan anticipates Bitcoin will likely be the top-performing large asset over the next decade.
The days of a 1% allocation to Bitcoin are over. Increasingly, investors need to be thinking of 5% as a starting point. Bitcoin is going through its IPO moment. If history is any guide, we should celebrate by buying more.