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Matt Hougan, Chief Investment Officer at Bitwise, shared his perspective on last week's crypto flash crash, framing the event through a long-term investment lens.
What Happened: In his latest investment memo, Hougan noted that crypto markets attract both long-term believers and highly leveraged short-term traders, making sudden shocks—like the $20 billion liquidation triggered by a Trump tweet on tariffs—appear extreme but often temporary.
To evaluate the event's significance, Hougan asked three key questions:
He concluded that the flash crash was a blip, not a fundamental shift. Long-term drivers like technology adoption, regulation, and institutional participation remain intact. While short-term volatility may persist, the broader crypto bull market is expected to continue.
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Why It Matters: Hougan's optimism is supported by recent market trends: spot Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) ETFs have returned to net inflows totaling $340 million, a sharp recovery from Monday's $755 million outflow.
Liquidations, which peaked at $1.2 billion on Friday, have stabilized as Bitcoin rebounded to $115,000 and is now consolidating.
While sentiment improved after Donald Trump's softening stance on U.S.-China trade tensions, Hougan emphasizes that crypto markets tend to self-correct quickly in the absence of major fundamental shifts, filtering out macroeconomic noise.
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