Bitwise CIO Matt Hougan believes latest dovish feedback by US Federal Reserve Chairman Jerome Powell may spark a brand new bull market in Bitcoin.
In an Aug. 27 observe to traders, Hougan emphasised that Powell's assertion partially eased the uncertainty surrounding Bitcoin.
On August 21, Powell hinted {that a} price lower was imminent. The information sparked optimism amongst traders who imagine decrease charges will profit bitcoin.
Why Bitcoin will rise
Hougan famous that Powell's remarks signaled the beginning of the 2024-2025 rate-cutting cycle. In accordance with him, CME futures now predict a 100% probability of a price lower on the September assembly, with a possible lower of 200 foundation factors (2%) over the following yr.
Traditionally, such price cuts have been favorable to danger property akin to Bitcoin. Hougan defined that decrease charges cut back the low cost issue used to calculate the worth of long-term property, which tends to push costs up. Furthermore, price cuts have a tendency to spice up market sentiment.
Consequently, Hougan believes sidelined traders may now take motion, given the brighter market outlook. He acknowledged:
“One of many oldest adages in investing is 'Don't combat the Fed.' It’s usually used to warn traders towards shopping for shares and different dangerous property when the Fed raises charges. However the proverb additionally works the opposite means round. When charges fall, “don't combat the Fed” means “don't sit on the sidelines whereas dangerous property rise.”
Hougan admitted that the bull market will not be simple as a consequence of lingering uncertainty. These embody the upcoming US election, the potential sale of Bitcoin Mt. Gox and the US authorities and the opportunity of SEC enforcement motion earlier than the tip of the fiscal yr.
Regardless of these considerations, Hougan believes Powell's assertion will mark the start of a “new period” for BTC.
Osprey funds
Hougan's bullish prediction adopted his agency plans to amass the property of rival Osprey Bitcoin Belief.
In accordance with a press release on August 27, Bitwise will purchase OBTC property for an undisclosed sum. Osprey's web site exhibits its belief had greater than $123 million in property below administration as of Aug. 26.
As a part of the transaction, OBTC shareholders will obtain BITB shares in a liquidation distribution. The deal can be designed to be tax-free for OBTC unitholders below US federal earnings tax legal guidelines.
Osprey Funds stated extra particulars shall be supplied in a registration assertion to be filed with the SEC.
The transaction is anticipated to shut later this yr, topic to the satisfaction of customary closing situations.
