Why Bitcoin’s Latest Crash Is a Historic Buying Opportunity: Bit by Bit

Bitwise CIO Matt Hougan said on Monday that he viewed the violent weekend crypto/stock selloff as a Bitcoin buying opportunity.

In a Twitter thread on Monday, the executive compared the market crash to March 12, 2020, a day of “chaos” that foreshadowed new all-time highs for the crypto in the months that followed.

Bitcoin buying opportunity, says Bitwise

How pointed out per Hougan, the NIKKEI, Japan’s stock index, experienced its worst day since 1987 on Monday, falling 12% on the day. The carnage also spread to US markets, with the NASDAQ100 down 2.9% and Bitcoin down 18.6% for the week.

Similarly, in March 2020, the Dow Jones Industrial Average had its worst selloff since 1987, and Bitcoin fell 37% from $7,911 to $4,971. However, Bitcoin soared over the next month, eventually hitting a one-year high of $64,000 as central banks responded with lower interest rates and quantitative easing.

“Nothing fundamental has changed about bitcoin because of Covid,” Hougan explained. “At the same time, Covid supercharged the reasons for bitcoin’s long-term rise. It showed us that central banks would bail out the economy at the first sign of trouble.”

The executive sees a similar setup for Bitcoin today. Bad macroeconomic news from Japan met with news of Jump trading liquidating hundreds of millions of dollars in crypto to send the price of Bitcoin spiraling to its lowest level since February.

Events are pricing in a near-guaranteed 0.5% interest rate cut from the Federal Reserve in September. There are even some, including Wharton finance professor emeritus Jeremy Siegel, who expect an “emergency meeting” of the Fed before then.

“Maybe this time it’s really different, but I wouldn’t bet on it. I actually bet the other way around,” Hougan said.

Raoul Pal: Just a macrospasm

Raoul Pal, CEO of Real Vision expressed similar views, calling the latest market pullback a “macro spasm” that will likely only last a “few weeks.” When the Federal Reserve reacts by lowering interest rates, expect them to drop to 2.5%.

“The likely outcome is that this is just a nasty exit,” Pal wrote on Twitter on Monday. “It’s too early to tell, but I’m looking to add to my cryptography and technology in the next week or so.”

“For me, this is the last time to enter or fully position myself,” he concluded.

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