Bitcoin's value is based on its 'service'

Bitcoin's value is based on its 'service' - Bitwise

Bitwise CIO maintains bullish bet on Bitcoin's value

Bitcoin, which has sustained bearish pressure over the past month, remains valuable because of the service it provides to investors, according to Bitwise CIO Matt Hougan.

Hougan claims that Bitcoin's value is in its function rather than its form, arguing that the asset should be viewed as a service that enables individuals and institutions to store wealth digitally without depending on banks, governments, or corporate intermediaries. That utility, he said, is what continues to underpin Bitcoin's long-term appeal despite short-term price swings.

He noted that adoption has expanded significantly over the past decade as more investors seek a non-sovereign, censorship-resistant way to preserve capital.

"The reason Bitcoin's price is up 28,000% over the last ten years is that more and more people want the ability to store digital wealth in a way that isn't intermediated by a company or a government. In other words, they want Bitcoin's service," Hougan wrote in a note to investors on Tuesday.

From major endowments to sovereign wealth funds and prominent macro investors, demand for what Hougan describes as Bitcoin's "digital wealth-storage service" has grown steadily, and, in his view, is likely to increase in an era marked by rising debt levels and deeper digitization.

Unlike traditional companies that monetize services through subscriptions or fees, Bitcoin has no central provider. As Hougan pointed out, the only way to access its service is by purchasing the asset itself, meaning its value rises or falls entirely on how many people want what it offers.

When comparing Bitcoin to Microsoft, Hougan stated that both derive their value from demand for the services they provide, though they operate in fundamentally different ways. He explained that Microsoft delivers its utility through software tools such as Word, Excel and Teams, all of which users access through ongoing subscription fees.

The company captures that revenue, and the demand for those services directly influences its stock price.

Bitcoin operates on a similar demand-driven principle but without a corporate intermediary, stated Hougan. There is no subscription model or company behind Bitcoin to charge for the service it provides. Instead, investors gain access to its non-sovereign, digitally native wealth-storage capability solely by owning the asset.

As more individuals and institutions seek that service, Bitcoin's value increases, mirroring Microsoft's demand dynamics, but within a decentralized system where value accrues entirely to the asset itself.

The statement comes amid Bitcoin's rapid decline over the past month, as the top crypto dropped below $90,000 for the first time in over six months.

BTC is down 2% in the past 24 hours, trading around $92,700 at the time of publication.