In its most recent investor memo titled “The Great Derisking of Bitcoin,” Bitwise Asset Management has taken a decisive position regarding the future of the original cryptocurrency. In a report dated March 25, 2025, Chief Investment Officer Matt Hougan provided an in-depth analysis, stating, “Now is the best time in history to purchase bitcoin (on a risk-adjusted basis).” The memo reflects on Bitcoin’s formative years and evaluates its key milestones, offering insight into why Bitwise believes the risk profile of the leading digital asset has shifted significantly in recent years.
Best Time To Buy Bitcoin
In his introductory remarks, Hougan shares his first encounter with Bitcoin back in February 2011, while he was part of a financial analytics team at ETF.com. During a routine market review, a younger analyst pointed out that Bitcoin had just surpassed $1—a significant moment that sparked a conversation about its underlying technology and possible applications. “If I had invested $1,000 in bitcoin after that meeting, it would now be worth $88 million,” Hougan recalls with regret.
However, this tale is not just one of missed chances. Hougan emphasizes the risks that were prevalent at the time, noting how transferring $1,000 to a “random PayPal address” via a fledgling crypto exchange felt risky and largely untested. Additionally, there was virtually no custody, regulatory clarity, or government oversight, effectively turning cryptocurrency exposure into a high-risk, high-reward gamble. “Adding custody, regulatory, technological, and governmental risks made investing $1,000 in bitcoin in 2011 a massive bet,” he explains.
Central to Hougan’s argument is the idea that Bitcoin has systematically navigated almost every existential challenge that has arisen over the years. He observes that early endeavors to establish digital cash—such as the NSA’s 1997 paper titled “How To Make A Mint: The Cryptography of Anonymous Electronic Cash”—never achieved lasting traction, leaving Bitcoin’s success uncertain.
Subsequently, improvements in trading platforms and custodial services gradually dismantled entry barriers. The launch of Coinbase in late 2011 represented a significant milestone, providing a more user-friendly and reliable on-ramp for both retail and institutional investors. Major custodial firms, including Fidelity, would later leverage their operational and brand authority to enter the crypto space, alleviating security and storage concerns.
At the same time, the once-widespread fears of regulatory crackdowns began to diminish. The approval of spot Bitcoin exchange-traded funds (ETFs) in the US in 2024 removed another significant impediment. Hougan notes that increased acceptance within traditional financial markets has made it easier for institutions to justify including digital assets in their portfolios without the concern of obscure regulatory frameworks or inadequate market oversight.
“When bitcoin first emerged, there was no certainty it would succeed. […] The remarkable aspect of bitcoin is that it has gradually dismantled each and every one of these existential threats over time,” Hougan writes, reinforcing his belief that Bitcoin’s evolution has been marked by resilient progress.
Bitcoin Last Threat Is Removed
Yet, one crucial question remained a specter over Bitcoin’s ascension: What if a significant government chose to ban or heavily restrict the cryptocurrency? Hougan draws a historical analogy: the US government’s gold confiscation order in 1933, enacted under President Franklin D. Roosevelt. This measure aimed to consolidate gold holdings to bolster government reserves, fueling a widespread fear among Bitcoin investors that a similar ban could hinder cryptocurrency growth or render it illegal.
“In 1933, the US famously confiscated private gold holdings to enhance public funds. Why would it allow bitcoin to expand to a point where it threatens the US dollar?” acknowledges Hougan.
This worst-case scenario, he adds, was often countered with the reminder that if Bitcoin did indeed become substantial enough to rival the dollar, “you’ll probably have done pretty well on your investment.” Nevertheless, uncertainty lingered—until a transformative event occurred earlier this month, in Hougan’s view.
President Trump’s executive order establishing a US Strategic Bitcoin Reserve, signed in early March, appears to have alleviated that lingering concern, Hougan argues. By making a direct investment in Bitcoin, the US government effectively nullified the possibility of an outright ban, shifting instead to a policy of strategic alignment. “Just like that, the last existential risk facing bitcoin vanished before my eyes,” Hougan reflects.
Critics have questioned why the US would endorse what might be seen as a competitor to the dollar’s status as the global reserve currency. Quoting Cliff Asness, founder of AQR Capital, Hougan highlights the immediate question: “(I)f crypto is a viable long-term competitor to the US dollar, why on earth would we be promoting this direct rival to our status as the world’s reserve currency?”
In Hougan’s view, the US government is positioning Bitcoin as a hedge rather than forfeiting monetary dominance. Should the dollar’s primacy come under threat, Bitcoin offers a more controllable or, at least, more transparent alternative than foreign options like the Chinese yuan. “The most favorable outcome for the US is that the dollar maintains its status as the world’s reserve currency. But if we reach a point where that is jeopardized, we’re better off shifting to bitcoin than to something like the Chinese yuan,” he adds.
Shifting Institutional Allocations
On the institutional side, Bitwise has observed a significant change in how investors are allocating to cryptocurrencies. Just two years ago, a 1% allocation to Bitcoin or other digital assets was regarded as fairly aggressive for a diversified portfolio. This level of investment was intended to harness potential speculative gains while minimizing exposure to what still felt like a nascent, unpredictable market.
Today, however, with enhanced government-endorsed legitimacy and more regulated avenues for investment, the firm is witnessing clients adopting allocations approaching 3%. Hougan notes that this trend signals a dramatic shift in perception: Bitcoin has transitioned from merely a gamble to a viable alternative asset. “As more individuals recognize the significant derisking we’ve experienced in bitcoin, I anticipate this percentage will rise to 5% and beyond,” he predicts.
At press time, BTC was trading at $87,865.
