Bitcoin may begin to lose its reputation as a volatile asset.
According to Matt Hougan of Bitwise Asset Management, wild price swings in cryptocurrencies have subsided significantly over the past decade.
“What’s driving the bitcoin market right now is a simple imbalance of supply and demand,” the company’s chief investment officer said on CNBC’s “ETF Edge” Monday. “We have a huge new source of demand from these ETFs, and we have inelastic supply.”
On January 11, the first Bitcoin exchange-traded funds began trading. Since then, the asset has grown by more than 50%. Bitcoin hit an all-time high of just under $74,000 this week.
However, Hougan admits it may not be for everyone.
“He moves around a lot. It’s hard for some people to understand,” Hougan said.
While Bitwise is betting on Bitcoin’s growth, ProShares has an ETF that seeks to profit from losses with its Short Bitcoin ETF Strategy. It’s down 42% this year and has fallen nearly 70% over the past year.
“To quote Mark Twain, ‘Rumors of our death have been greatly exaggerated,'” Simeon Hyman of ProShares told CNBC. “We’re excited to be here and think we serve as a key alternative.”
Hyman, the firm’s global investment strategist, notes that Bitcoin’s historical strength has lasted much longer than the launch of spot Bitcoin ETFs.
“This is the anniversary month of the collapse of cryptocurrency-related financial institutions. Last year, Bitcoin was also growing then,” Hyman said. “I think there are long-term people who are starting to come in for asset allocation and diversification purposes.”
Hyman’s ProShares also runs a long Bitcoin ETF: ProShares Bitcoin Strategy ETF. Since January 1, it has grown by 55%, and over the past year – by 111%.
As of Friday evening, Bitcoin was up 180% over the past 12 months.