Bitcoin Drops 2.49% Amid Economic Uncertainty, Long-Term Growth Predicted

Bitcoin's price has been trading in a narrow range, currently at $81,995.96, down 2.49% at the time of writing. Despite the bearish outlook, Bitwise CIO Matt Hougan has predicted that Bitcoin could reach $1 million in the mid-term. In an investor note issued on March 18, Hougan explained why Bitcoin's price reacts to economic crises in ways that differ from its typical role as a hedge against such events.

Hougan noted that Bitcoin does not always behave as a hedge against crises, and its price can sometimes correlate with the broader US stock market in response to macroeconomic news. As the March 2025 FOMC Meeting approaches, this consolidation in Bitcoin's price is becoming more apparent. Hougan advised that staying invested in Bitcoin is key to long-term growth, highlighting that the coin's price has surged over 190% in subsequent years after a dip. He termed this trend a “dip then rip” phenomenon, which he believes could soon play out for Bitcoin.

Using the Discounted Cashflow Analysis (DCA) discount factor, Hougan projected that a $1 million Bitcoin price target by 2029 implies a net value of $218,604 today if investors apply a 50% discount. Hougan also analyzed the correlation between Bitcoin and the US tariff war, noting that Bitcoin's reaction is influenced by its low liquidity. In the short term, the geopolitical tariff war injects liquidity into the market, which could favor Bitcoin as a hedge against economic uncertainty. Hougan reiterated Bitwise’s long-term price target of up to $1.1 million for Bitcoin.

Currently, Bitcoin is trading within a tight range, moving from a low of $81,179.99 to a high of $84,230. While the headwinds are not yet cleared, experts, including Cathie Wood, have predicted a deflationary boom ahead. The US government's potential move to set up a strategic Bitcoin reserve could play a long-term role in shaping the asset's future. With proponents like Senator Cynthia Lummis re-introducing the Bitcoin Act Bill, institutional investors' confidence in the coin is growing. The shifting regulation around Bitcoin is also spreading to other asset classes, such as stablecoins in the ecosystem.