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Matt Hougan, Chief Investment Officer of Bitwise Asset Management, answered a pressing question among investors: Does the US dollar need to collapse before Bitcoin can reach a valuation of $200,000 per coin? Hougan’s analysis suggests that Bitcoin’s rise to such a price level is not dependent on a decline in the value of the US dollar, but rather on Bitcoin’s maturation as a store of value and on global economic factors that increase demand for such assets.
Bitcoin can reach $200,000 without the US dollar collapsing
In a series of to inform on the social media platform X, Hougan recounted a conversation with a financial advisor who popped the question over dinner. “Should the US Dollar Collapse Before Bitcoin Reaches $200,000? The answer is ‘no’. Here’s why,” Hougan wrote.
Hougan explained that investing in Bitcoin involves two different bets. First, “Bitcoin will succeed in establishing itself as a new store of value asset.” Currently, Bitcoin’s market cap is about 7% of the $18 trillion gold market. Hougan noted: “If it ‘matures’ and becomes 50% the size of gold, each Bitcoin will be worth more than $400,000.
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Second, “Governments will abuse fiat currencies and increase demand for store of value assets.” If the market for stores of value triples in size due to such mismanagement, and Bitcoin maintains its 7% market share, “each Bitcoin is worth more than $200,000.”
He emphasized that these two arguments are independent, but can reinforce each other. “If Bitcoin matures and the store of value market doubles, you will quickly reach seven figures. For what it’s worth (FWIW), I think this is ultimately the most likely scenario,” Hougan said.
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Hougan directly addressed the initial question, stating: “So no, the dollar doesn’t have to collapse before Bitcoin reaches $200,000. All you need is Bitcoin to continue on its current path of maturation as an institutional asset.” He added that it is increasingly likely that both factors – BTC’s maturity and the potential misuse of fiat currency – will occur at the same time. “That’s why Bitcoin is soaring to record highs.”
The discussion continued with input from X user Kevin Brent Cook, who added nuance to Hougan’s explanation. “Concise, clear and simple,” Cook noted. “I would just add that the reason a ‘collapse’ isn’t necessary is that ‘abuse of fiat’ involves the steady grind of deficit-driven dollar inflation (the US writes endless checks that never bounce), which of course leads to more currency chasing. all possessions.”
Hougan agreed with Cook’s assessment and responded with a terse “Agree.”
At the time of writing, BTC was trading at $72,445, up 23% in the past 20 days.
Featured image created with DALL.E, chart from TradingView.com