Bitcoin’s ‘Teenage Phase’: Volatility Sparks Debate on Crypto’s Future

The debate over Bitcoin’s utility reignited following a Bloomberg report that framed the current market downturn as an “existential” struggle for the cryptocurrency. The report questioned what role Bitcoin serves if it fails to act as a reliable inflation hedge, an efficient payment rail, or a stable speculative vehicle. Adding fuel to this critical narrative, former Merrill Lynch trader Tom Essaye was quoted dismissing Bitcoin’s core value propositions, stating flatly that “Bitcoin is not replacing gold, it’s not digital gold” and rejecting its utility as a hedge against chaos or inflation.

Matt Hougan, a prominent voice in the institutional crypto investment space, responded by rejecting the premise that Bitcoin must emerge as a fully formed, stable asset from its inception. He described Bitcoin in 2009 as “100% speculation,” projecting a future in 2050 where it could be “0% speculation” and potentially held by central banks. “You cannot travel from 100% speculation to 0% speculation without ticking every gradient in between,” Hougan argued. “The reason it doesn’t fit any individual box right now is it’s in the uncomfortable middle. But that’s a necessary part of the journey.” This defense arrives as external pressures test investor resolve, including a market dip following former U.S. President Donald Trump’s announcement of proposed 10% global tariffs and a notable spike in Google searches for “Bitcoin is dead”—a metric some view as a contrarian signal.

Hougan’s central thesis is rooted in a historical parallel he first detailed years ago and has recirculated: the performance of gold after the United States left the gold standard in 1971. He argues that when President Nixon severed the dollar’s link to gold, the precious metal was “set loose from its moorings,” entering a period of massive volatility as it fought to establish itself as an independent store of value outside a government-managed system. The data from that era supports his comparison: in 1974, gold surged 73%, only to fall 24% in 1975. Similarly, after gaining 121% by 1979, it lost 33% of its value in 1981.

“If you had asked someone in 1975 if gold was a store of value, they’d have pointed to that 24% drop,” Hougan implied in his prior analysis. He posits that Bitcoin is on an identical trajectory: a path defined by rapid early appreciation that slows over decades, accompanied by high—but gradually declining—volatility. “Either you believe it’s literally impossible to create a digital store of value, or you have to imagine it passing through exactly this teenage state,” insisted the Bitwise CIO. Within this framework, the current drawdown, which has seen BTC fall roughly 50% from an October 2025 peak near $126,000, is interpreted not as a sign of failure but as a predictable pattern of an asset class undergoing a painful but necessary maturation process.

The core of Hougan’s argument is that Bitcoin’s present identity crisis is unavoidable. It exists in a transitional state between being a purely speculative technological novelty and a potential cornerstone of the global monetary system. This “uncomfortable middle” means it does not yet perfectly fulfill the roles its most ardent proponents claim—be it digital gold or a ubiquitous payment network—but is actively evolving toward them. The volatility that frustrates institutional investors and attracts criticism from figures like Tom Essaye is, in this view, the price of admission for an asset attempting to reinvent a foundational concept like store of value.

The current market sentiment, marked by the “Bitcoin is dead” search spikes reminiscent of the FTX collapse period, underscores the psychological battle being waged. Hougan’s message from Bitwise Asset Management is ultimately one of long-term perspective, urging the market to view Bitcoin’s journey through a decades-long lens rather than reacting to quarterly price action. By drawing a direct line from gold’s chaotic post-1971 price discovery to Bitcoin’s present struggles, he provides a historical narrative intended to contextualize the pain of a 50% drawdown as part of a much larger, and potentially revolutionary, financial story.