The Value of Bitcoin: Bitwise Explains Why the Price Has Remained Stable

Recently, the sharp corrections in Bitcoin (BTC) have significantly increased investor interest in the market. Following a %27.5 decline from the peak level in October, Bitcoin’s price briefly dipping below the 90,000 dollar level this week has triggered concerns. However, Bitwise Investment Director Matt Hougan emphasizes that Bitcoin's long-term value comes from the nature of the service it provides, rather than current price movements.

In discussions with his consultants, Hougan states that he views Bitcoin's recent pullback as temporary. According to him, the main question is not Bitcoin's current price, but rather why this asset has any value at all. Despite being a non-income generating, non-dividend paying, and physically intangible asset, Hougan stresses that Bitcoin should be defined as a digital wealth storage service.

It is expected that a service carries value, says Hougan, and he notes that this perspective helps to reduce doubts surrounding Bitcoin. The service that Bitcoin provides is quite clear: it allows for wealth storage in a digital environment without the need for any government, bank, or intermediary. As the demand for this service increases, so does Bitcoin's value.

By citing the Microsoft example, he recalls that the value of Microsoft’s shares is also related to the demand for the service it provides. However, the difference with Bitcoin is that benefiting from this service is only possible by directly purchasing the asset. Hougan argues that the approximately %28,000 increase in Bitcoin’s value over the past decade is a clear indication of the rising demand for this service.

Today, Harvard Endowment, Abu Dhabi Investment Authority, along with significant investors such as Ray Dalio and Stan Druckenmiller, as well as millions of individual investors, want to benefit from this service. In light of increasing digitalization and the rapidly growing debt burdens of governments, Hougan believes that the demand for the service offered by Bitcoin will continue to increase in the future.