Bitwise CIO cites ‘the four-year cycle’ for losses

A multibillion-dollar crypto asset manager cites several reasons for the bitcoin plunge, but he’s listing “the four-year cycle” as the No. 1 downward catalyst.

According to Matt Hougan, chief investment officer at Bitwise Asset Management, it’s a phenomenon that’s happened three other times in the crypto market.

“People are looking for one thing to blame for the current retracement in bitcoin. But there is not any one thing to blame,” he told “ETF Edge” on Monday.

Hougan contends investors have been favoring other hot investments including gold and artificial intelligence stocks over cryptocurrencies, too.

“There is some quantum risk. There is fear of [Fed nominee] Kevin Warsh,” he said. “In bear markets, all these things are amplified.”

When he was on “ETF Edge” last November, bitcoin had fallen below the $90,000 mark for the first time since April. Its record high of $126,279 was hit in October.

But bitcoin weakness shouldn’t ultimately disrupt the rise of exchange-traded funds specializing in crypto, according to Hougan — who thinks a “self-fulfilling prophecy” is dominating the crypto market right now.

“There is good news underneath the surface. It’s just slow to materialize. So, I don’t think this sort of financialization of bitcoin fundamentally changes the scarcity argument,” Hougan said. “It may change some intraday movements or short-term trading dynamics, but it doesn’t change the sort of fundamental fact there are only 21 million bitcoin. All that derivative demand has to pass through eventually to the spot market.” 

His firm, which has more than $15 billion in assets under management, is heavily involved in crypto ETFs.

It launched the Bitwise Solana Staking ETF, which tracks the price of cryptocurrency solana, on Oct. 28. The fund is down about 57% since the launch. So far this year, the cryptocurrency is off more than 30%.

Meanwhile, bitcoin tumbled below $61,000 last Thursday — its lowest level in roughly 16 months.