What are the four factors that the cryptocurrency market has not yet priced in? Bitwise analysis

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## What factors could push the market up?

Matt Hogan, Chief Investment Officer of the cryptocurrency management firm Bitwise, pointed out four factors on the 13th that he believes the market has not yet priced in. He stated that this could potentially lead to a significant increase in prices.

First of all, among the factors that have already been priced in, it was pointed out that regulations and legal frameworks are progressing positively, the rapid growth of stablecoins, an increase in cryptocurrency purchases by companies, cryptocurrency purchases through ETFs (Exchange-Traded Funds) by institutional investors, and the vibrant activity of altcoins led by Ethereum (ETH), which has regained momentum.

Mr. Hogan stated that these movements may be underestimated, but they have already become well-known. He listed the following four factors that are considered to not yet be priced in.

  • There is a possibility that a government will emerge to purchase Bitcoin newly.
  • Possibility of Dollar Weakness + Lower Interest Rates
  • Decrease in Bitcoin (BTC) volatility
  • Initial Coin Offering (ICO) 2.0

First, I discussed the Bitcoin purchases by various national governments. As for the current situation, it is pointed out that while the United States has established a strategic Bitcoin reserve, it only holds BTC that has been seized through criminal forfeiture.

Additionally, the Pakistani government has announced the establishment of a Bitcoin reserve, and Abu Dhabi in the United Arab Emirates (UAE) has also begun investing in Bitcoin ETFs, but it continued that the scale is small compared to the large purchases made by ETFs and corporations.

Nevertheless, it is expected that there will be at least a few announcements that could represent a significant turning point for government-held Bitcoin by 2026.

Next, it was mentioned that the Trump administration in the U.S. strongly desires a weaker dollar and a more dovish stance from the Federal Reserve.

President Trump criticized Jerome Powell, the chairman of the Federal Reserve, and nominated Stephen Moore, who advocates for a weaker dollar, to the Federal Reserve Board. This sends a strong signal that he desires interest rate cuts and a weaker dollar.

Mr. Hogan expressed the view that if interest rates significantly decline due to the printing of banknotes and the US dollar weakens, the trading price of Bitcoin could rise significantly.

It was pointed out that the decrease in Bitcoin's volatility (the magnitude of price fluctuations) is behind the accelerated inflow of funds into Bitcoin spot ETFs. It was also mentioned that there is an increasing number of institutional investors starting to allocate more than 5% of their portfolios to Bitcoin.

Before the introduction of physical ETFs, a 1% allocation was the main starting point, but there is a trend of increasing initial allocation amounts.

Mr. Hogan predicted that looking at past data, summer is a period of low fund inflow into ETFs, and it is highly likely that inflows into ETFs will continue to accelerate from autumn onwards.

Finally, regarding Initial Coin Offerings (ICOs), it is noted that SEC Chairman Paul Atkins has presented a vision for the revival of ICOs.

Mr. Atkins mentioned that in his vision of making the United States the center of cryptocurrency, he instructed SEC officials to propose information disclosure, partial exemptions from regulations, and a safe harbor in relation to ICOs.

A safe harbor refers to a system where violations are not considered as long as predetermined conditions regarding regulations and laws are followed.

Mr. Hogan has stated that if this vision is realized, the creation of a new ICO market could attract a significant amount of new funds into the cryptocurrency market.

What is an ICO?

An "Initial Coin Offering" refers to the act of companies or projects issuing and selling their own cryptocurrency tokens to raise funds. While it has a high-risk, high-return nature with strong speculative aspects, there are many issues, such as the prevalence of fraudulent ICOs due to the lack of legal frameworks in various countries, leading to a trend towards international regulatory strengthening.

ETH-3.94%
BTC-1.23%
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