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That’s according to Matt Hougan, chief investment officer at crypto asset manager Bitwise, who outlined his reasoning in a recent investor note on Wednesday, a day before official U.S. inflation data showed a dip in June.
Inflows to U.S. spot Bitcoin exchange-traded funds, post-halving supply shortages, the eventual launch of Ethereum spot ETFs, U.S. Federal Reserve rate cuts, and a shifting political landscape in Washington may offer a reprieve from falling crypto prices, he said.
“The crypto market is facing a weird dynamic right now, Hougan said. “All the short-term news is bad, and all the long-term news is good. The dichotomy is creating an incredible potential opportunity for long-term investors.”
It comes as the U.S. Bureau of Labor Statistics reported on Thursday the Consumer Price Index (CPI) fell by 0.1% in June, following a flat performance in May. It marks the first decrease in the index since May 2020.
"Tonight’s CPI release has captured everyone’s attention," QCP Capital wrote in a brief note on Thursday. "This optimism has been reflected in the continued rally in equities but has yet to be priced into the crypto market."
Cooling inflation could bolster the Fed’s resolve to begin cutting rates this year, benefitting risk assets like Bitcoin.
That could come as early as September, with traders anticipating an 84.6% chance it goes ahead, according to the CME FedWatch Tool.
The timing could prove fortuitous for investors as Bitcoin’s supply continues to shrink post-halving, forcing miners to capitulate as the difficulty of mining the asset mounts.
While an overhang stemming from Mt. Gox creditors and Germany’s Bitcoin sales weighs on investor sentiment, it's unlikely to amount to much in the face of ETF demand, Decrypt previously reported.
Since launching in January, spot Bitcoin ETFs have garnered some $15 billion in net new assets yet are still to be approved for use by large wealth management platforms, including Morgan Stanley and Wells Fargo.
“When that happens—later this year, I suspect—we’re likely to see billions more flow in,” Hougan said.