Bitwise CIO’s “Dip Then Rip” Theory Sees BTC Gain Up to 190% Within a Year

Matt Hougan, Chief Investment Officer at Bitwise, has suggested the recent volatility we’ve seen in Bitcoin’s price is part of a ‘dip then rip’ pattern, which presents an opportunity for long term investors to grab a bargain.

Hougan said Bitcoin’s recent dip was driven by a surge in uncertainty around Trump’s economic policies, which have outsized short-term impacts on high-risk assets such as Bitcoin. Once some stability returns, Hougan argues, Bitcoin’s price is likely to ‘rip’ — possibly by as much as 190% over the next year.

To support his “Dip Then Rip” argument, Hougan cited Bitcoin’s past performance and used a pricing model similar to net present value (NPV), which is often used to value stocks. Despite Bitcoin’s obvious differences from a traditional security, Hougan believes this NPV-like calculation can still be useful to get a sense of what Bitcoin’s current fair value should be.

Related: Standard Chartered Adjusts 2025 Price Estimates for Ethereum, Bitcoin

Perceived Risk Spark Significant Declines While Long-Term Estimates Improve

Hougan cited historical data showing that Bitcoin tends to react more dramatically to negative news in the short-term than traditional markets — on days when the S&P 500 has dropped by 2.0%, Bitcoin has fallen on average 2.6%. 

People buy bitcoin as a hedge asset, but when markets get volatile, bitcoin tends to pull back in the short term.

Matt Hougan, Chief Investment Officer at Bitwise

It’s not all bad news. Bitwise’s analysis found that those who continued holding Bitcoin — or bought the dip — saw average returns of 190% in the 12 months after these declines. Dipping then ripping.

So what explains this?

Hougan said it all boils down to investors’ evaluation of Bitcoin’s risk increasing in the short-term. According to the Bitwise CIO, this can create a situation where even if long-term estimates of Bitcoin’s price increase, this uptick in perceived risk can see its price plummet.

To demonstrate this dynamic, Hougan did some simple maths — he said Bitwise currently estimates Bitcoin will be valued at US$1 million at some point in 2029. If he takes this estimate and applies a discount factor (basically a risk estimate) to Bitcoin of 75%, its net present value comes in at US$122,633. 

If the firm’s 2029 price estimate were to increase to US$1.1 million, however, due to short-term uncertainty, its discount factor would also increase by 10% to 85%. That means Bitcoin’s net present value would actually fall substantially to US$109,521 even while its 2029 price estimate has increased by 10%.

Hougan noted it’s unlikely many Bitcoin investors are actually doing these kinds of calculations, instead saying the “invisible hand of the market is walking through these calculations, feeling its way to new price targets.”

Hougan: “I’ve Never Been More Bullish”

Understandably, turmoil created by tariffs has people concerned right now. But Hougan believes Trump’s protectionist policies will have little impact on Bitcoin other than briefly spooking investors, arguing that in the long-term they’re likely to be a net-positive:

Long-term, tariffs play into bitcoin’s hands, because bitcoin is a hedge against political and economic disorder. Translation: They increase the long-term price target for bitcoin.

Matt Hougan, Chief Investment Officer at Bitwise

Related: Analysts Say Bitcoin in ‘Shakeout’ Phase, Not Cycle’s End Amid Warning of Months of Consolidation

The Bitwise CIO also claimed that these “short-term spikes in the discount factor are a chance to get in at a discount”, adding that, “from where I sit, I’ve never been more bullish.”