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BitcoinSistemi 2025-03-19 19:24:09

Analyst Claims Bitcoin Experiencing “First Bottom Then Rise” Cycle, Gives $1 Million Target for BTC

Bitwise Chief Investment Officer Matt Hougan says Bitcoin (BTC) often responds to moments of crisis with a sharp drop followed by a strong recovery, which he describes as a “bottom then rise.” In a note to clients, Hougan explained that this phenomenon was recently observed following President Trump’s tariff-induced market decline. While Bitcoin is often viewed as a long-term hedge asset, it has a tendency to experience sharp short-term declines during market volatility, disappointing many investors. According to previous research by Bitwise, Bitcoin has historically declined 30% more during significant declines in the S&P 500. However, investors who did not sell during these declines or bought more often gained an average of 190% over the following year, reinforcing the “bottom then rise” trend. Hougan attributes this to Wall Street’s “net present value” (NPV) approach, a common valuation method that determines the value of an asset by discounting future earnings to today’s value. Traditional companies use discounted cash flow (DCF) analysis to calculate present value by adjusting future cash flows for risk and interest rates. Related News: Donald Trump's Advisor on Cryptocurrencies Speaks, Answers the Question of How Much Bitcoin They Will Buy Bitcoin, which lacks cash flow, still suffers from a similar concept. Bitwise estimates that Bitcoin will be worth $1 million by 2029. However, its current value is affected by a discount factor that fluctuates based on market uncertainty. For example, at a 50% discount rate, Bitcoin’s net present value is around $218,604, while a 75% discount rate reduces that value to $122,633. Bitcoin surged after Trump’s November election victory, rising from around $70,000 to an all-time high above $109,000 in mid-January. But new tariff announcements targeting imports from China, Canada, Mexico and the EU have caused widespread turmoil in the market, sending Bitcoin down nearly 30% to $76,700 earlier this month. The S&P 500 is down about 10% in the same period. Comments from institutional Bitcoin firm NYDIG suggested that Bitcoin’s link to tariff-related market disruptions is primarily due to its status as a highly liquid, globally traded asset. According to NYDIG, tariffs create short-term uncertainty, increasing Bitcoin’s perceived risk and discount factor. However, in the long term, Bitcoin benefits as a hedge against geopolitical and economic instability. Hougan explained this effect with a hypothetical scenario: if tariffs increase Bitwise’s 2029 Bitcoin price target from $1 million to $1.1 million, while also increasing the discount rate from 75% to 85%, Bitcoin’s net present value would fall from $122,633 to $109,521. This would explain the short-term decline, with a potential recovery if the discount factor stabilizes. *This is not investment advice. Continue Reading: Analyst Claims Bitcoin Experiencing “First Bottom Then Rise” Cycle, Gives $1 Million Target for BTC

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