Bitwise Chief Investment Officer Matt Hougan recently shared insights in an investor note, envisioning a significant drop of 50% in Bitcoin’s volatility alongside increasing institutional involvement leading up to the 2028 halving.

Hougan’s analysis points to Bitcoin’s historical patterns, notably its surge to a new all-time high just weeks before the 2024 halving. He anticipates this trend to persist post-halving, propelling Bitcoin’s value upward, much like its ascent from a modest $13 valuation during its initial halving in 2012.

Reaffirming previous forecasts, Hougan remains confident in Bitcoin’s trajectory toward a $250,000 valuation in the years ahead.

He attributes this sustained growth to Bitcoin’s growing recognition within the financial landscape, particularly following the debut of spot Bitcoin ETFs, which have witnessed remarkable performance since their launch.

Institutional Impact

Highlighting the transformative effect of spot Bitcoin ETFs, Hougan underscores their role in attracting a fresh wave of institutional investors. These entities, including financial advisors and large financial institutions, are known for their disciplined approach to trading, which contrasts with the speculative behavior of retail investors that has historically characterized Bitcoin markets.

Hougan predicts that the influx of institutional capital through Bitcoin ETFs will contribute significantly to the projected 50% reduction in Bitcoin’s volatility by the next halving.

He envisions a future where Bitcoin becomes a standard component in diversified investment portfolios, potentially constituting 5% or more of allocations. This projection reflects a growing confidence in Bitcoin’s maturation and reduced price fluctuations.

$200 Billion AUM

Hougan anticipates that institutional investments in Bitcoin ETFs could surpass $200 billion, driven by increased market accessibility and deeper financial integration. This influx of capital is expected to enhance market stability and cement Bitcoin’s status as a mainstream financial asset.

While acknowledging the inherent risks associated with cryptocurrency investments, including market volatility and regulatory uncertainties, Hougan paints a picture of a future where Bitcoin achieves widespread institutional adoption and emerges as a staple in investment portfolios, fundamentally reshaping market dynamics by the 2028 halving.

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Hong Kong is gearing up to debut its spot bitcoin and ether exchange traded funds (ETFs) on April 30, as announced by three asset managers on Wednesday.

This move positions Hong Kong as a trailblazer in Asia, becoming the first in the region to embrace cryptocurrency products as mainstream investment tools. The regulatory green light from the Securities and Futures Commission, as indicated on the Hong Kong markets watchdog’s website, underscores the city’s commitment to fostering a conducive environment for digital asset investment.

While mainland China maintains a ban on cryptocurrency, Hong Kong is actively positioning itself as a global digital asset hub, a strategic move aimed at enhancing its status as a financial epicenter. Over the past decade, Hong Kong has seen the presence of several leading international crypto exchanges and funds, although regulatory requirements have sometimes led to fluctuations in their operations.

The approval of these new products in Hong Kong follows closely on the heels of the United States’ introduction of its inaugural ETFs tracking spot bitcoin just three months ago. The U.S. ETFs have already witnessed significant traction, with approximately $12 billion in net inflows, contributing to a notable surge in bitcoin’s value earlier this year.crypto 

China Asset Management, Harvest Fund Management, and Bosera Asset Management, alongside local cryptocurrency firm Hashkey, are spearheading the launch of these ETFs in Hong Kong, with a target date of April 30. Against the backdrop of bitcoin’s impressive 50% year-to-date appreciation and its record-breaking high of $73,803 in March, the cryptocurrency was trading around $65,000 on Wednesday.

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Following a brief period of net outflows preceding Bitcoin’s block-reward halving, spot bitcoin exchange-traded funds (ETFs) in the United States have returned to net inflows, with Fidelity’s Wise Origin Bitcoin Fund (FBTC) leading the way.

On Monday, spot Bitcoin ETFs collectively experienced net inflows exceeding $62 million, with FBTC securing the largest single-day net inflow of $34.83 million. The ARK 21Shares Bitcoin ETF and The iShares Bitcoin Trust also saw substantial net inflows of over $22.5 million and $19.65 million, respectively.

In contrast, the Grayscale Bitcoin Trust witnessed the largest single-day net outflow, with nearly $35 million exiting the product. However, since their inception, U.S.-traded spot bitcoin ETFs have amassed a cumulative total net inflow of $12.38 billion, indicating continued investor interest.

BlackRock’s IBIT ETF, known for its consistent inflows, extended its streak for the 70th consecutive day on Monday, solidifying its position among the top 10 ETFs with the longest streaks of daily inflows. IBIT currently commands a market share of nearly 54% among spot bitcoin ETFs.

Despite recent fluctuations, the price of Bitcoin remains resilient, hovering above $66,200 as reported by The Block’s Bitcoin Price Page. This stability in bitcoin’s price underscores ongoing investor confidence in the digital asset and its associated investment vehicles.

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Bitcoin’s recent halving, completed on April 19, may not immediately impact market dynamics, with analysts suggesting a potential two-month wait for significant effects. Despite an 8% increase in bitcoin’s spot price since the halving, experts anticipate a delay in supply and demand adjustments.

Analysts at QCP Capital suggest that historical patterns indicate a delay of around two to three months before the halving’s supply constraints translate into notable price movements. This suggests that bitcoin bulls may have additional time to build larger long positions.

Bitfinex analysts highlight the post-halving reduction in bitcoin supply issuance, which could stabilize prices and potentially lead to further appreciation. However, they caution that geopolitical turmoil, particularly in the Middle East, could impact Bitcoin’s long-term valuation.

Additionally, the Bitfinex Alpha report notes potential stabilization in demand from spot bitcoin ETFs, which have been a significant driver of market activity. However, recent outflows from ETFs suggest a possible slowdown in demand.

Meanwhile, QCP Capital analysts anticipate a short squeeze in the altcoin and memecoin market in the short term. Persistent negative funding in these markets, coupled with potential fluctuations in demand, could lead to increased volatility.

While the overall memecoin market has seen a slight uptick in market cap, top memecoins like dogecoin, shiba inu, and dogwifhat have experienced minor declines in the past 24 hours, reflecting ongoing market fluctuations.

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