Hougan expects various factors such as lower volatility, increased portfolio allocations and exchange-traded fund (ETF) flows, central bank involvement, and a price target of at least $250,000 during this upcoming halving cycle.

Hougan believes that the declining volatility of Bitcoin, as the asset gains adoption, will continue to accelerate ahead of the next halving. He highlights the role of U.S. spot bitcoin ETFs, like the ones issued by Bitwise, in attracting diverse investors such as financial advisors and institutions to the market. These investors are more likely to rebalance their portfolios and make steady investments, introducing countercyclical flows that could dampen volatility.

Furthermore, Hougan anticipates that the "typical" portfolio allocation to bitcoin will rise to the point where it becomes considered "normal" to have 5% or more allocated to the cryptocurrency. He foresees this shift occurring in ETFs, 529 plans, and 401k plans, as he believes these investment vehicles will increasingly include bitcoin.

Regarding ETFs, Hougan noted that despite generating over $12.5 billion in net inflows since their launch on January 11, U.S. spot bitcoin ETFs are still not widely available in national wirehouses such as Morgan Stanley and Merrill Lynch. He also believes that institutions are only in the early stages of conducting their due diligence, which could drive long-term demand for these ETFs. Drawing a parallel to gold ETFs, Hougan suggests that net flows into bitcoin ETFs could rise steadily over several years after their launch.

In a bold prediction, Hougan asserts that central banks will begin allocating to bitcoin in the upcoming halving cycle. He posits that Bitcoin's traits as non-debt money, its resistance to seizure compared to sovereign bonds, and its superior functionality for payments and settlements make it increasingly attractive to governments in a multi-polar world. He speculates that a major central bank adopting bitcoin as a reserve asset would be a game-changer for the cryptocurrency and could contribute to a significant price increase.

Looking ahead to the halving, Hougan expects more progress in terms of sophisticated custody options, low correlations to stocks, ease of access through ETFs, and greater institutional adoption. He suggests that with the launch of ETFs and major Wall Street firms showing interest in bitcoin, the asset will continue to move further into the mainstream. While acknowledging that higher prices are possible, Hougan sets a conservative price target of $250,000 for bitcoin, considering it represents solid progress between halvings.

As we approach the next halving in 2028, the crypto community will closely watch for the realization of Hougan's predictions. Lower volatility, increased portfolio allocations, ETF flows, central bank involvement, and the potential for reaching a $250,000 price point all add to the anticipation surrounding Bitcoin's future.

(Note: The Block is an independent media outlet providing news, research, and data in the crypto industry. The information presented in this article is for informational purposes only and should not be considered as financial advice.