Matt Hougan, Chief Investment Officer of Bitwise, suggested that the Federal Reserve's decisions on interest rates may not be as decisive for Bitcoin's price over the next five years as they have been in the past.
Hougan stated that, contrary to the prevailing market view, Bitcoin may be less sensitive to interest rate fluctuations in the coming period. The veteran executive explained that the main reason for this is that future interest rate movements are likely to be more limited compared to previous years.
Hougan noted that interest rates have fluctuated quite sharply throughout Bitcoin's history, rising from 0% to 2.5% in different periods, then falling back to 0%, and then rising to 5%. He emphasized that during this process, interest rate changes were mostly measured in whole percentage points.
In contrast, Hougan argued that interest rate changes in the upcoming period may occur in smaller increments. He noted that CME data points to a total increase in interest rates of 50 basis points over the next year, and said the impact of such scale movements on Bitcoin may be more limited compared to past major interest rate change cycles.
Hougan also predicted that the Fed under the leadership of Kevin Warsh may resemble the Alan Greenspan era of the mid-1990s more than the recent periods of Bernanke and Powell. In this scenario, he suggested, the Fed may make small, gradual adjustments to its interest rate policy rather than implementing large-scale changes.
Hougan stated that interest rates will retain their importance for Bitcoin, but as the scale of changes diminishes, the weight of interest rate decisions in the market will also decrease. According to Hougan, other factors such as institutional adoption, regulatory changes, capital flows, and Bitcoin-specific supply and demand dynamics may become more defining in the coming years.
*This is not investment advice.
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