RESOLVING THE LEDGER
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The first professional investors to allocate at scale will be financial advisers and family offices, Hougan said in an email interview on Friday. The shift, said Hougan, is already visible in 13F filings for spot bitcoin ETFs and in moves by large wealth firms, including Morgan Stanley and Wells Fargo, to make bitcoin more accessible to clients.
Over time, Hougan expects the money to come from even larger pools of capital: foundations, endowments, pension plans, insurance companies, sovereign wealth funds and central banks.
“It’s a process that will take 10+ years,” Hougan said.
The scale matters. Those institutions control between $100 trillion and $200 trillion in assets globally, he said. A 1% allocation to bitcoin would be enough to support his long-term price targets.
Hougan's $1.3 million BTC price target by 2035 rests on bitcoin taking a 25% share of an expanding store-of-value market. Gold’s market capitalization has risen from about $2 trillion when gold ETFs launched in 2004 to roughly $30 trillion today, he said. If the market keeps expanding at its historical 13% annual pace for another decade, bitcoin reaching a quarter of it would put each coin at $1.3 million.
“When people value bitcoin, they often talk about it as competing with gold for the ‘store of value’ market. They say something like: Gold is a $30 trillion asset. If bitcoin can take 50% of the market, each bitcoin will be worth $715,000,” he said.
“Institutions have most of the money in the world,” Hougan said. “Crypto grew up in retail, which took it from $0 to $2 trillion. But if it wants to get from $2 trillion to $20 trillion, it’s going to be institutional capital that leads the way.”
Strategy has been one of the biggest buyers of bitcoin for years, becoming the world’s largest corporate holder of BTC with 842,138 BTC, even after some modest recent sales. But Hougan believes it will no longer be bitcoin’s primary driver of demand.
Michael Saylor and team were able to build their bitcoin-buying machine by exploiting two capital-market dislocations, he said: investors once treated its stock as one of the few ways to get public-market crypto exposure, allowing it to sell shares at a premium to the value of its bitcoin holdings; it then used convertible debt and preferred-stock offerings to raise more cash for purchases.
Both advantages have weakened. Spot ETFs now offer a direct alternative, making it harder for Strategy to sustain a premium to net asset value, while the company has already issued as much debt as markets were willing to support against its existing capital stack, Hougan said.
“The easy paths to accumulation have been exhausted."Strategy will continue buying bitcoin, Hougan said, but at a slower pace and in a way more closely tied to the price cycle.
For long-term investors, Hougan said, the question is not whether bitcoin has found a local bottom.
“The much better question is if the top is in,” he said.
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