Three Factors That Could Drive Crypto Investment to New Heights This Quarter
Matt Hougan of Bitwise anticipates major inflows into Bitcoin ETFs, predicting record-breaking numbers for the upcoming quarter due to several key factors.
Three Factors That Could Drive Crypto Investment to New Heights This Quarter
Matt Hougan, Chief Investment Officer at Bitwise, projects a robust conclusion to 2025 for Bitcoin exchange-traded funds (ETFs) and anticipates that Q4 inflows may achieve unprecedented levels.
In a communication directed at investors, Hougan delineated three main catalysts expected to stimulate this surge, including platform approvals, prevailing macroeconomic conditions, as well as Bitcoin’s current price trends.
Highlights from Hougan
At the forefront is the influx of institutional approvals paving the way for prominent wealth managers to present Bitcoin ETFs to their clientele. He noted Morgan Stanley’s October 1 recommendations that permit its 16,000 advisors, overseeing $2 trillion in assets, to incorporate cryptocurrency allocations of up to 4% for clients willing to accept risks.
Wells Fargo is similarly shifting their stance, and Hougan indicated that firms like UBS and Merrill Lynch are expected to adopt comparable policies. Although the transition may not occur instantaneously, discussions Hougan has had with advisors suggest a significant latent demand.
The second point is what Hougan describes as the “Debasement Trade,” which reflects the rising interest in assets regarded as defenses against currency depreciation. Bitcoin, in concert with gold, has been one of the most successful major assets in recent times. Since 2020, U.S. monetary expansion has risen by 44%, bringing this trade to the forefront, as major finance firms, including JPMorgan, have been releasing reports emphasizing this strategy.
Hougan argued that advisors striving to demonstrate impressive portfolio performance by year-end are likely to guide clients towards BTC ETFs, akin to the previous year’s preference for high-performing tech stocks.
Momentum in Bitcoin Markets
Further, Hougan pointed to Bitcoin’s own market performance as a core driver of inflows. The cryptocurrency recently exceeded $126,000, breaking through significant psychological barriers and celebrating a 9% increase across the first week of October alone.
Historically, quarters marked by double-digit increases in BTC have aligned with billion-dollar ETF inflows, a trend Hougan believes will recur in Q4.
Hougan’s optimistic outlook is reinforced by preliminary Q4 statistics, as Bitcoin ETFs accrued $3.5 billion within just four trading days, pushing the total year-to-date flows to $25.9 billion. With 64 trading days left, he forecasts that the sector could easily surpass an additional $10 billion in inflows, potentially breaking last year’s record of $36 billion.
