The Value of Bitcoin: Bitwise Explains Why the Price Remains 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, concerns were triggered when Bitcoin’s price briefly dipped below the 90 thousand dollar level this week. However, Bitwise Investment Director Matt Hougan emphasizes that the long-term value of Bitcoin stems from the quality of the service it offers rather than its current price movements.

In discussions with his advisors, Hougan states that he views the recent pullback in Bitcoin as temporary. According to him, the real question is not Bitcoin's current price, but rather why this asset has any value at all. Despite being an asset that does not generate profits, pay dividends, or have a physical form, Hougan underscores that Bitcoin should be defined as a digital wealth storage service.

It is expected for a service to carry value, Hougan says, adding that this perspective helps reduce skepticism toward Bitcoin. The service offered by Bitcoin is quite clear; it provides the ability to store wealth in a digital environment without the need for any government, bank, or intermediary. As the demand for this service increases, Bitcoin's value rises as well.

Using Microsoft as an example, he reminds that the value of Microsoft's stock 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 Bitcoin's approximately 28,000% value increase over the last decade is a clear indication of the growing demand for this service.

Today, Harvard Endowment, Abu Dhabi Investment Authority, and prominent investors like Ray Dalio and Stan Druckenmiller, along with millions of individual investors, wish to benefit from this service. Considering the increasing digitization and the rapidly growing debt burdens of governments, Hougan believes that the need for the service provided by Bitcoin will increase even more in the future.