Bitcoin crashes often cause 190% rebounds, and it bullishes Bitwise more than ever, as market chaos shows a major setup for an explosive upside down.
Bitwise CIO says Bitcoin’s “dip, ripping” pattern is flashing bullish 190% setup
Matt Hougan, chief investment officer at asset management firm Bitwise, used a note from March 17th to explain why Bitcoin tends to reduce moments of financial stress, even when considered a hedge. Drawn from a study by colleague Juan Leong, Hougan noted that when the S&P 500 falls more than 2% in a day, Bitcoin tends to get worse, with an average drop of around 2.6%.
“But Juan’s research showed something else. If you were continuing to invest, or if you bought more after the pullback, you would have done very well. In the years after these sharp pullbacks, Bitcoin rose a shocking 190% and performed all of your other assets dramatically,” Hogan said. Explaining the trend, he states:
I call this pattern “Dip Then Rip,” and it has historically been one of the most consistent patterns in cryptography.
Hougan suggested that this behavior was attributable to the way investors use future expectations and risk assumptions to determine their asset value. Bitcoin has no cash flow, but he applied a similar model based on expected value and discount rates.
He explained:
For example, at Bitise, we believe Bitcoin will be worth $1 million in 2029.
“So, what is the value today? It depends on the discount factor, which means the risk of assigning it. If you discount at 50% per year, your net current value is $218,604.
Hougan emphasized that geopolitical disruptions like tariffs can temporarily raise risk awareness, raise discount rates and lower Bitcoin’s short-term valuation.
To explain the latest drop in prices caused by the fear of tariffs, Hougan cited a comment from crypto services company Nydig. For Hougan, such market turbulence may present a strategic opening. He concluded:
If you are a long-term investor, these short-term surges in discount rates are an opportunity to enter at discounts. I couldn’t be more bullish from where I was sitting.
