Bitcoin has been on a tear, recently surpassing $88,000, but for Matt Hougan, the Chief Investment Officer (CIO) at Bitwise Asset Management, this is just the beginning. Despite the impressive rally, Hougan told investors that they are still early in the game and Bitcoin has much further to go—potentially up to $500,000 per coin before reaching maturity.

Bitcoin’s Surge and the $100,000 Milestone

As of November 12, Bitcoin had doubled in value year-to-date, and surged more than 25% since the U.S. presidential election on November 5. This meteoric rise has grabbed interest among investors, but Hougan remains focused on a longer-term vision. While $100,000 is likely the next significant milestone, he believes that Bitcoin’s true maturation will not occur until it crosses the $500,000 mark.

For Hougan, the $500,000 price target isn’t just speculative—it represents the point at which Bitcoin will have achieved a level of institutional acceptance that positions it as a store-of-value asset, comparable to gold. He explains that at this price level, Bitcoin will have gained the kind of widespread recognition and adoption needed to be considered a stable, trusted asset class.

The Two Bets on Bitcoin

Investing in Bitcoin, according to Hougan, involves making two intertwined bets. The first is based on the growing demand for store-of-value assets like Bitcoin and gold, particularly in an environment where governments around the world are increasing debt and debasing fiat currencies. The second bet is that Bitcoin will increasingly be recognized and accepted as a legitimate store of value in its own right.

Hougan contrasts Bitcoin’s current stage with gold’s established position. Gold has long been a cornerstone in institutional portfolios, central bank reserves, and in the broader financial system. In contrast, Bitcoin is still in its early stages, attracting growing but sporadic institutional interest. He notes that entities like pensions and endowments have only recently begun exploring crypto investments, and regulatory hurdles remain, such as warnings from the U.S. Department of Labor against including Bitcoin in retirement portfolios.

Bitcoin’s Path to $500,000

Hougan’s $500,000 target is rooted in the idea of Bitcoin eventually capturing a significant share of the market traditionally held by gold. Currently, gold’s market capitalization stands at around $18 trillion, while Bitcoin’s market cap is closer to $2 trillion. Combined, these assets represent a $20 trillion market. For Bitcoin to truly achieve maturity, Hougan argues it would need to capture at least half of this market, implying a price of $500,000 per coin, based on the current supply of Bitcoin (roughly 20 million coins).

While Bitcoin is still in the early stages of this journey, Hougan is optimistic that the infrastructure needed for its growth is taking shape. The rise of exchange-traded products (ETPs) and increasing political support for crypto could accelerate institutional adoption. However, Hougan emphasizes that for Bitcoin to reach his $500,000 benchmark, it will need to see a shift similar to gold’s level of acceptance, particularly in central bank reserves.

The Role of Central Banks

A significant shift in central bank policy is essential for Bitcoin to reach its full potential, according to Hougan. While central banks hold about 20% of the world’s gold reserves, they possess less than 2% of Bitcoin. Hougan points to U.S. Senator Cynthia Lummis’s proposal for a national Bitcoin reserve as a positive sign of progress, but he believes that for Bitcoin to become a true store of value, central banks will need to significantly increase their Bitcoin holdings.

Bitcoin’s Future Potential

Looking further down the line, Hougan is bullish on Bitcoin’s potential to exceed $500,000. He predicts that as the market for store-of-value assets grows—driven in part by governments’ increasing debt and money supply—Bitcoin’s price could eventually exceed $1 million. This, he believes, is a natural progression for an asset that continues to garner attention and adoption on a global scale.

While Hougan remains confident about Bitcoin’s long-term growth prospects, he also advises caution. Cryptocurrencies remain volatile, unregulated, and influenced by market forces that can be unpredictable. Investors should be aware of the risks and consider their long-term strategy when deciding to invest in Bitcoin.

In conclusion, while Bitcoin’s impressive recent gains are noteworthy, Hougan’s message is clear: for anyone investing in Bitcoin today, the journey is just beginning. The digital asset’s full maturation, he believes, will only occur once it reaches the $500,000 mark and is recognized as a legitimate store of value on par with gold. Until then, those investing in Bitcoin are still early to the game.