Matt Hougan, Chief Investment Officer (CIO) at crypto asset manager Bitwise, has outlined the key factors that could drive Bitcoin to surpass $80,000 this quarter. In a memo to clients, Hougan emphasized the importance of the U.S. election outcome, the broader economic landscape, and stability within the crypto industry as crucial elements for a potential “melt-up” in Bitcoin’s price.
At the end of 2023, Bitwise forecasted that Bitcoin, then trading at $42,400, would more than double to over $80,000 by year’s end. The prediction was based on two major catalysts: the approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. and the upcoming Bitcoin halving event.
U.S. Election Outcome
Hougan identified the U.S. election as a pivotal factor for Bitcoin’s price movement, particularly ruling out the possibility of a Democratic sweep. While many see a Republican win as beneficial for the crypto industry, with pro-crypto figures like Donald Trump boosting sentiment, Hougan highlighted that the Democratic Party’s stance is more nuanced. He pointed to contrasting views within the party, from Senator Elizabeth Warren’s staunch anti-crypto stance to Representative Ritchie Torres’ deep support for the sector.
“The issue over the past four years has been that the Warren wing of the Democratic Party has controlled policy, creating a hostile environment for crypto,” said Hougan. However, he believes that unless Democrats win both houses of Congress and the White House, a more neutral approach to crypto policy may prevail.
According to decentralized predictions platform Polymarket, there’s a 20% chance of a Democratic sweep and a 33% likelihood of a Republican sweep, with Trump having a 53% chance of winning the presidency. Analysts at Bernstein also projected that a Trump victory could push Bitcoin to new all-time highs in the $80,000 to $90,000 range.
Economic Factors and Rate Cuts
Hougan also pointed to economic conditions as critical for Bitcoin’s rally. He argued that two further interest rate cuts by the Federal Reserve, totaling 50 basis points by year-end, along with additional fiscal stimulus from China, would create a favorable backdrop for Bitcoin’s price surge.
“The number one reason people are attracted to Bitcoin is simple: You can’t trust the government with money,” Hougan stated, adding that if these economic conditions align, a Q4 Bitcoin rally could be imminent.
No Major Crypto Industry Surprises
The final requirement for Bitcoin to reach $80,000 is a period of stability within the crypto industry. Hougan noted that any major hacks, lawsuits, or sudden releases of previously locked coins could derail the price rally. “No major surprises in the crypto industry would be key to sustaining a Bitcoin surge,” he said.
Crypto ‘Animal Spirits’ and Altcoin Momentum
While Bitcoin can rally independently, Hougan added that a broader bullish sentiment across the crypto market could propel the asset even higher, possibly reaching $100,000. He pointed to altcoins like Ethereum, Solana, and new high-throughput blockchains like Sui and Aptos as potential drivers of market-wide momentum.
Despite the overall cautious sentiment in the crypto market this year, Bitcoin has already risen by 47.5%, with the successful launch of spot Bitcoin ETFs and growing institutional adoption. Hougan concluded that regardless of short-term movements, Bitcoin is well-positioned for significant gains, potentially reaching $80,000 or more by 2025.
