Bitcoin may reach $200,000 without a decline in the dollar, according to Bitwise’s Chief Investment Officer.

According to Bitwise CIO Matt Hougan, Bitcoin’s (BTC) price may rise to $200,000 without necessitating a decline of the US dollar.

In his most recent memo to investors, Hougan indicated that Bitcoin’s valuation is influenced by two distinct factors: its function as a digital store of value and the inflationary pressures affecting fiat currencies.

Key factors influencing Bitcoin

Hougan remarked that numerous analysts tend to underestimate Bitcoin’s broader potential, often presuming that its growth is contingent upon a weakening dollar. The Bitwise CIO stated:

“You get a much better view of Bitcoin. If you separate these arguments.”

He contended that the first factor is Bitcoin’s status as a digital counterpart to gold. Although it currently accounts for only 7% of gold’s estimated $18 trillion market, BTC’s market capitalization has significant growth potential as it gains traction among investors.

He observed:

“Bitcoin’s price could rise even if it captured just 25% of gold’s market pushing it well past $200,000.”

The second factor arises from the potential devaluation of fiat currencies, especially the dollar, which could lead more investors to seek assets like Bitcoin as a safeguard. With US federal debt reaching $36 trillion, Hougan perceives increasing fiscal pressures that could lead to substantial growth in the store-of-value market, benefiting Bitcoin.

Beyond store of value

Hougan highlighted that Bitcoin could appreciate in value even if only one of these factors comes to fruition. If Bitcoin’s share of the store-of-value market increases, it could attain $214,000, irrespective of inflationary influences.

On the other hand, a broader market for alternative assets, driven by concerns regarding fiat currencies, could also elevate Bitcoin’s price. However, the most significant upside would arise if both factors align.

Furthermore, Hougan proposed that Bitcoin’s utility might eventually go beyond its function as a store of value, potentially evolving into an international settlement layer. He believes that wider applications could further augment Bitcoin’s value, establishing it as a crucial component in the global financial landscape.

Hougan also warned investors about the risks associated with trading Bitcoin, stressing the volatility and regulatory issues that necessitate careful evaluation.

Ultimately, Hougan envisions Bitcoin’s journey to $200,000 as feasible if it continues to expand within these dual drivers — without the need for a collapse of the US dollar.

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