Yasuo Matsuda, Senior Analyst of Rakuten Wallet, talks about Bitcoin's scenario up to 2025

Bitcoin prices are influenced by the balance of supply and demand and uncertainty about fiat currencies.

In an exclusive interview with our magazine, a "Bitcoin market expert" who has accurately predicted the price of Bitcoin many times talked about the trends and price predictions of the cryptocurrency market up to 2025.

Currently, the cryptocurrency market is booming, led by Bitcoin, but how do you think it will progress in the future?

Matsuda Yasuo (hereinafter Matsuda): The price of Bitcoin has risen significantly since the launch of the spot Bitcoin ETF this year, but I think that more institutional investors will enter the market and the handling will expand regionally in the future.

For now, the market this year is influenced by the movement of spot Bitcoin ETFs. About 220,000 BTC of Bitcoin has been purchased through ETFs in the past three months (at the time of the interview).

In response, 80,000 BTC of Bitcoin has been issued. This difference of 140,000 BTC, or about 1.4 trillion yen, is the reason why Bitcoin has risen significantly in price because demand exceeds supply.

And what is noteworthy is who was buying this Bitcoin ETF. It was expected that the introduction of the ETF would lead to an increase in the participation of institutional investors, but in the first three months, it turned out that the majority of purchases were made by individual investors.

These individual investors are mainly from the so-called "baby boomer generation." As we enter an era of unstable value of fiat currency, Bitcoin is beginning to be recognized as digital gold not only by young people who are tolerant of new technology, but also by those who have been skeptical until now.

Institutional investors have also begun to allocate part of their portfolios that were formed with traditional assets, but I think their movements are just beginning. Institutional investors make investment decisions after carefully considering an exit strategy for how to sell assets as smoothly as possible, just as they do when purchasing assets.

Therefore, when a new product such as a spot Bitcoin ETF is released, they tend not to jump on it immediately, but to carefully check the track record before entering.

After that period, it is said that the number of institutional investors entering the market will increase in the second half of this year, about six months after the introduction of the Bitcoin spot ETF.

Seeing the success of Bitcoin ETFs in the United States, other countries are not just sitting idly by. In April, a cryptocurrency spot ETF was also approved in Hong Kong, and this trend will continue to spread in the future.

In this way, the base of Bitcoin investors will continue to expand between generations, from young people to baby boomers, in terms of investment entities, from individuals to corporations, and between regions, such as the United States, Asia, and Europe.

What do you think are the factors that are attracting demand for spot Bitcoin ETFs at this time?

Matsuda: There may be a supply and demand balance due to Bitcoin's halving, but I think the current distrust of fiat currencies and the move away from the dollar are also factors.

Looking back, the Nikkei average, Bitcoin, and gold all hit their all-time highs at almost the same time. As you can see from the rise in real estate prices, I think this is the result of many people moving to hedge their risks due to concerns about the relative decline in the value of fiat currencies.

It's still fresh in our memory that Bitcoin hit its highest value from 2020 to 2021, triggered by global monetary easing. The situation is essentially similar to the time when the value of fiat currencies became unstable due to monetary easing.

Please tell us if there are any factors that could have a positive effect on market trends in the future.

Matsuda: First of all, the US recession and interest rate cuts could have a positive effect. These are also related to the depreciation of fiat currency, which is one of the motivations for buying Bitcoin.

Lowering interest rates will reduce the incentive to hold US dollars, so I think this could be a major buying factor. However, there is one thing to be careful of, as many people are mistaken about the speculation surrounding interest rate cuts.

What do you mean by misunderstanding?

Matsuda: People often discuss employment statistics and economic trends as factors for deciding on interest rate cuts, but the Fed (Federal Reserve Board) is not using these as a reason to cut interest rates this year.

For example, when talking about GDP, many people talk not about nominal GDP but real GDP, which removes the effects of price fluctuations.

It should be the same even if you replace it with the policy interest rate, but for some reason many people only focus on nominal interest rates. What the Fed is currently looking at is real interest rates.

If the inflation rate falls, real interest rates rise, which has a negative impact on the economy and employment, so the Fed is looking to cut interest rates at the right time to avoid that situation.

There are various opinions about when the interest rate cuts will begin, with some predicting it will be around June or after the US presidential election, but in your opinion, when do you think they will occur?

Matsuda: Given the political background, it seems unlikely that it will be after the presidential election.

President Trump has publicly stated that he will fire Chairman Powell, so given the chairman's position, he has an incentive to start cutting interest rates before the presidential election.

If we focus only on the political aspect, it is likely that they will begin in September at the latest.

Conversely, are there any factors that could have a negative effect?

Matsuda: At the moment, it's the situation in the Middle East. It is often said that Bitcoin and gold are similar, but their characteristics are slightly different.

Gold is seen as a hedge in times of emergency, but Bitcoin is ultimately a risk asset. In recent years, Bitcoin has been incorporated into portfolios, and this has strengthened its character as a risk asset.

Therefore, its characteristic of being particularly vulnerable to war and conflict is becoming stronger.

When an armed conflict such as war occurs, investors try to protect their assets. What they do at that time is to try to reduce the amount of risk.

The quickest way to do this is to sell assets with high volatility, so Bitcoin is the first to be targeted.

Therefore, the current worst-case scenario is that the current local conflict will spread globally, and if the possibility of this increases, the psychology of "let's reduce the risk a little" will come into play, and Bitcoin will tend to be sold.