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Bitwise CIO Sees Bitcoin as a Buying Opportunity Following Market Turmoil
On Monday, Matt Hougan, the Chief Investment Officer at Bitwise, expressed his belief that the recent sharp decline in cryptocurrency and equity markets presents a prime opportunity to purchase Bitcoin. In a series of tweets, Hougan compared the current market situation to the tumultuous events of March 12, 2020, a day marked by significant market chaos that ultimately led to record highs in the cryptocurrency space in the subsequent months.
Market Decline Mirrors Historic Patterns
According to Hougan, Japan’s NIKKEI index faced its most significant drop in over three decades, plummeting by 12% on Monday. This downturn had repercussions in the U.S. markets as well, with the NASDAQ100 experiencing a 2.9% decline, and Bitcoin witnessing a staggering 18.6% drop over the week.
In a similar fashion, during March 2020, the Dow Jones Industrial Average recorded its largest sell-off since 1987, with Bitcoin dropping 37% from $7,911 to $4,971. However, following this decline, Bitcoin rebounded dramatically, eventually hitting a peak of $64,000 within a year, propelled by central banks’ responses which included lowering interest rates and implementing quantitative easing measures.
Long-Term Outlook for Bitcoin Remains Positive
“The fundamentals of Bitcoin have not changed due to the COVID-19 situation,” Hougan noted. “In fact, the pandemic has amplified the long-term reasons for Bitcoin’s value increase. It has demonstrated that central banks are willing to intervene to stabilize the economy at the first signs of distress.”
Hougan perceives a similar scenario unfolding for Bitcoin today, as unfavorable macroeconomic data from Japan coincided with reports of Jump Trading liquidating significant amounts of cryptocurrency, causing Bitcoin’s price to drop to its lowest level since February.
Market Response and Interest Rate Expectations
The current events have prompted market participants to anticipate a nearly certain interest rate reduction of 0.5% from the Federal Reserve in September. Some analysts, including Wharton finance professor emeritus Jeremy Siegel, even predict an “emergency meeting” from the Fed before that date.
“Perhaps this time is truly different, but I wouldn’t wager on it. In fact, I’m positioning myself in the opposite direction,” Hougan stated.
Raoul Pal’s Perspective on Market Dynamics
Raoul Pal, CEO of Real Vision, shared a similar outlook, describing the recent market downturn as a “macro spasm” that is likely to be short-lived, lasting only a few weeks. He anticipates that when the Federal Reserve adjusts its rates, they will lower them to around 2.5%.
“The probable outcome is that this is just an intense market correction,” Pal remarked on Twitter. “It’s too early to draw conclusions, but I am looking to increase my investments in crypto and tech in the coming week.”
“In my view, this is the final opportunity to enter or fully allocate in the market,” he concluded.
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