Bitcoin retail buyer at ‘max desperation,’ but no crypto winter: Bitwise CIO

BitcoinIts drop below $100,000, the lowest level since June, has fueled fears that the worst is yet to come; This is a situation that the market grapples with every time digital currencies sell off sharply in a short period of time, which is called crypto winter (a prolonged bear market in cryptocurrencies).

But Bitwise chief investment officer Matt Hougan says that even though the retail investor is in “maximum desperation” mode, he sees this as a reason to bet that the bottom in crypto prices could happen sooner rather than later. Given Wall Street’s institutional investor and financial advisor’s support for Bitcoin and the growth in crypto ETFs, he’s even willing to go out on a limb and say it’s not unreasonable for Bitcoin to hit a new record high before the end of the year amid intense selling.

“It’s almost a tale of two markets,” he said on CNBC’s “Crypto World” on Tuesday. “Crypto retail is extremely desperate. We’ve seen leverage explosions. … the crypto-native retail market is more depressed than I’ve ever seen,” he said.

But Hougan believes more crypto trading will continue to shift toward an institutionally driven market, noting that “interestingly, that market is still on the rise.”

“When I go out and talk to institutions or financial advisors, they’re still excited to allocate to an asset class that, if you look back over the course of a year, is still generating very strong returns. So my view on the market is that we need to get out of this retail sell-off. We need to hit the bottom from a sentiment perspective. I think we’re very close to that,” he added.

Explosion in fund launches traded on crypto exchanges, including iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin FundFBTC“We continue to see strong inflows into Bitcoin,” Hougan said, noting that Grayscale Bitcoin Trust (GBTC) and Grayscale Bitcoin Trust (GBTC) have changed investor composition, and weekly flows into these ETFs have slowed since the second quarter of the year.

He expects more support for crypto to materialize by the end of the year among financial advisors, who will look beyond the current decline and see “an opportunity to show their clients that they understand where this market is going.”

He said Bitwise’s own Solana staking ETF (BSOL) brought in over $400 million in flows in its first week, but sold off sharply in the latest crypto crisis, losing almost 20% since its debut on October 28.

Last week, Strategy CEO Michael Saylor told CNBC he thinks Bitcoin could reach $150,000 by the end of the year; This is one of several recent bullish calls on crypto that appear to be poorly timed, to say the least. But Hougan said he didn’t think it was an odd call even as Bitcoin was trending near a six-month low.

“I think Bitcoin could easily end the year at all-time highs,” Hougan said. “So that means going from about $125,000 up to $130,000. We’ll see if we can get up to $150,000.”

“I think sellers are getting close to exhaustion and buyers are still relatively hungry. And when those two things cross paths again, I think we could finish the year near or around all-time highs. And if we’re lucky, we’ll hit Saylor’s goal as well,” he said.

Institutional investors, whom Hougan describes as “more informed about what is happening at the fundamental level in crypto,” will begin to move the market forward. “But we have to finish the retail sentiment extinction… I think we’re closer to the end of this than the beginning, but… there can always be a little more downside.”