Matt Hougan: Bullish! Crypto Is Following Gold’s Playbook
Summary
Market Outlook: Bitcoin is expected to mirror gold’s parabolic move as structural demand from ETFs overwhelms new supply once existing sellers are exhausted.
Institutional Adoption: Institutional interest is steadily rising, with long sales cycles culminating in accelerating ETF approvals and allocations; sovereign buying is likely but slow.
Regulatory Clarity: The Clarity Act could be a major throttle, pulling forward value in stablecoins, tokenization, and DeFi; even without it, a pro-crypto regulatory tilt underpins a bullish trajectory.
Stablecoins & Tokenization: Stablecoins and real-world asset tokenization are hitting new highs and could inflect parabolically once liquidity deepens, becoming core building blocks for Wall Street products.
Altcoins & Futures: A differentiated altcoin cycle favors quality (e.g., ETH, Solana, Chainlink), while the rollout of token futures is key for institutional hedging, basis trading, and ETF enablement.
DeFi Vaults: Bitwise’s new non-custodial vault on Morpho targets 4–6% lending yields, with vaults positioned as the next major asset management wrapper over the long term.
ETFs & Staking: Single-asset ETFs lead today, but multi-asset crypto and blended crypto-equity products should dominate; staking is live in some SOL ETFs and likely coming to ETH ETFs as rules and taxes clarify.
Industry Influence: BlackRock’s push into tokenization and major platforms like Schwab, Fidelity, and Robinhood expanding direct crypto access are catalyzing mainstream integration.
Transcript
Just like gold eventually entered this parabolic move, Bitcoin will follow suit. Gold is telling you that the world is concerned about debasement, that it wants to be able to self- sovereignly hold assets. That same story is true for Bitcoin. This is a unique opportunity. There are very rare moments in crypto where the fundamentals are ahead of price. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. Ladies and gentlemen, welcome back to the Wealthy podcast. My name is Chris Perkins and today I'm with Matt Hogan, chief investment officer at Bitwise Asset Management. Welcome to the podcast, sir. >> Chris, thanks for having me. I'm so excited to be here, >> man. There's so much going on in our space right now. Um, look, maybe you can just start off by telling us a little bit about Bitwise and then and yourself and then we'll get into it. >> Yeah, sure. So, Bitwise is a specialist crypto asset manager. We've been in the market for eight years, so we've seen some ups and downs. We manage about $15 billion in assets across US ETPs, European ETPs. We have a large staking business and then we do some active strategies as well. We aim to be the leading specialist asset manager in crypto and we're definitely at least in the competition for that role. As for me, I've been here for eight years. Uh, but before I joined Bitwise, I spent more than a decade in the ETF industry. I was the CEO of ETF.com, built the first ETF ratings and data system, the largest ETF conference. So, this moment in the world where ETFs and crypto are colliding is like a peak into my resume. Um, so I I love experiencing it. Yeah, I think it's bigger than just ETFs, right? This is a big I call it the flipping moment where it we're really seeing the institutional adoption and and really the normalization of of the asset class, but yeah, man, eight years is a lot of dog years when it comes to crypto. Um, you're an old man at this point. So, >> you're telling me. >> So, let's start off with just basic markets. Um, things are kind of weird out there. you know, we're seeing the world really transition to real politic. Uh, when you look at it through a geopolitical lens, you're seeing a massive flight to to precious metals, gold, silver, etc. going through the roof. Bitcoin, however, has been lagging a bit and I think a lot of us are scratching our heads. Um, that said, we've seen Bitcoin oftent times lag gold on its rise up. You where do you see the market here and now? Um, just just let's get started there. Yeah, absolutely. So, specific to gold and Bitcoin because I think it's really instructive, uh, the thing to remember is the really simple fact that prices are set by supply and demand. So, what's happening in the gold market is when the US seized Russia's assets after they invaded Ukraine, you saw central bank purchases go from about 400 tons to a,000 tons per year. That was back in 2022. And when that happened, gold's price went up 2% in 2022. And then central bank purchases stayed the same in 23, 24, 25, and looks like they're continuing in 2026, about a steady thousand tons. So up from historical norms, but they've went up in 2022 and then stayed flat. The price of gold didn't start really running until 2025, right? It had good years in 22, 23, 24, but it started running in 2025. What does that tell you? That tells you that in any market where there is supply and demand, if there is new demand, it has to work through existing holders, right? Central banks caused purchases of gold to be more than net new supply, but there were people who were willing to sort of shovel coal into that fire in 22 and 23 and 24. They eventually ran out and the price skyrocketed. I think the same thing is happening in Bitcoin. We're just earlier in that process, right? Bitcoin entered this structural demand over net new supply when the ETFs launched in January of 2024. If you look at ETF purchases or corporate purchases or combined, it's vastly more than the amount of new Bitcoin being produced, but there were existing people that were willing to sell, particularly as we got to $100,000, which is this big behavioral cell level. We're still working through that sale wall. But just like gold eventually entered this parabolic move, Bitcoin will follow suit. Gold is telling you that the world is concerned about debasement, that it wants to be able to self-s sovereignly hold assets. That same story is true for Bitcoin. We're just earlier in burning through this willingness to sell from existing holders. We're going to get through it. Will it be the middle of this year? Will it be next year? I'm not sure. But I think we're going to see the same exponential move we saw in gold. I think gold, as you said, is painting the way. >> Yeah, I I I tend to agree with that. We're seeing a lot of retail, particularly the whales, they're cashing out. They're getting a little older. They want to buy a house. You know, they're playing the four-year cycle. They're like, "Hey, you know, it's time." And and and you're seeing that transition to the institutional space. The one thing we've yet to see is we've seen a lot of sovereign, to your point, sovereign buyers of gold. Um but it doesn't seem like those sovereigns, we haven't seen a ton of arsenals become formed yet, right? The US has announced one. I thought the rest of the world was going to follow suit. They typically do. Um I think in the end you have El Salvador. I think Pakistan may have said something but beyond that um we haven't seen that sovereign pivot and to me that would be another major impetus but as we saw in Davos it doesn't feel like those central bankers are ready. Um any thought about sovereign buying? >> Yeah look I think it's going to come. We do an increasing number of meetings with sovereigns. We met with a central bank in our office just a couple weeks ago. They wanted to talk about Bitcoin. But these guys move like molasses, right? You have to think of the the speed at which institutional investors move is slow to begin with. It's slow for financial advisors, which is like the easiest part of the institutional spectrum. As you go up to uh to to wirehouses to insurance companies, to endowments to sovereign banks, the timeline just blows out. So from what I can tell from the meetings we're having, they're moving on that timeline. Right. the demographics are good for Bitcoin. The core fundamental thesis is good, but they just don't move at at at crypto speed, right? I I think we're seeing adoption, but it'll still take years for to really accelerate. When it does, though, uh it's going to significantly kink that supply demand dynamic and and I think it will be another catalyst for Bitcoin. >> Yeah, totally. Um and you're very famous for having literally thousands of meetings with clients and getting their feedback. Uh, one of the things that's been popping up lately in in many of my discussions, frankly, is around the quantum threat. And people are saying, you know, this Bitcoin thing, it's super vulnerable, 30% of supply, blah, blah, blah. Like, my personal take is that quantum threat is real. It's out there. And the fact that we're surfacing it now actually mitigates a lot of the risk because it's going to get solved. What are people telling you about the quantum threat? And, you know, how what's your take on how this thing plays out? Is is that another obstacle to major adoption? >> Yeah, that I I agree with you in terms of what it means. The fact that we're talking about it and the fact that there are solutions to it means we will solve it. There's of course execution risk and uh and things to worry about, but I I don't think it's a fundamental threat to Bitcoin. My honest view is that people raise this excuse when they want a reason not to invest. >> Yeah. that that honestly if price were ripping at we were all-time highs. You wouldn't have institutions worrying about quantum. We've seen these sort of FUD raises through the eight years of of Bitcoin. People used to worry about Tether. They weren't really worried about Tether. They were just looking for a reason not to invest. And I think that's the same with Quantum. Ultimately, we're going to solve this problem. Um I I think you know Bitcoin has solved big problems before. It will solve this. Uh I think as price starts to accrete uh those quantum fears will sort of fade into the background again. >> Yeah. Look, I remember when I was at Croup and I was trying to get Bitcoin and Ethereum futures approved. There's an entire cadre of people at institutions that just get paid to say no. And it gives them another reason to say no. And so you got to be like, wait a second, you got to slow everything down. You have to explain why it's a risk and how it's being mitigated. It just takes time. Uh particularly in this institutional environment that that we're in. Um what's your take on alts? Alts have been getting really clobbered and if you look at you know through last year I think through various indices they were down I don't know 50 60%. Um you know what's your take on on that as I honestly I hate saying alts as a group because I think I think each token is separate and distinct has different fundamentals and you need to underwrite it separately but TLDDR long story short that that entire grouping has gotten hit pretty hard. um what's your sense as you look at the the non- Bitcoin alt market? Uh you know h how's it playing out? Is it going to recover? Where are we? >> Yeah, look, I think the first thing uh what you're hinting at is we had a full-blown bare market last year. >> Yeah, >> we didn't experience it because Bitcoin, ETH, and XRP did okay because they had institutional flows from ETFs and from corporations. If you look at everything that didn't have that, that didn't have ETF support, it got hammered. even like like the fifth or sixth largest asset was down 50 60%. This is fullbore 2022 2018 bare market. We ran the four-year cycle last year. We're already at the bottom. I think we're coming back up. My view on what's going to happen in the alts market is it's we're not going to have a classic alt season where every uh zombie coin raises. I think people are going to be insistent on fundamentals and they're going to distinguish between highquality projects and and lowquality projects. I think you have projects like uh ETH and Salana that have clear traction on stable coins and tokenization will do well. You have projects with strong fundamentals like chain link hyperlquid doing really well in the last little period. I think those will do well. Zombie coins, I think, will just be overlooked and won't have the same rising tide lifts all boats that we saw previous alt cycle. So, it's like a it's a more differentiated alt cycle, but I don't think it's dead at all. Like, I think high quality projects will do well. I don't think they're overvalued. I just think people will be more uh distinctive, and I say that as someone who runs an index fund, so I should hope for a rising tide, but I actually think people are going to pick and choose winners in the space. Um and that we're already through the bare market. I think that's probably the most important piece. >> Yeah, I I I think so too. I think we're doing a lot of healing. Um regulatory risk is coming off the table which is opening up a brand new set of new buyers. And I agree with you that you're going to have halves halves and have nots. The one thing I've been looking at though um is a structural gap in our market structure right now. And frankly, that's the lack of futures. Right. So the tokens that you mentioned, the proponents of them have futures. They're just getting off the ground. um we didn't have them because of some regulatory shenanigans I would say during the last administration. Um but what I'm watching uh are futures because if you have these tokens with futures they can obviously avail themselves of the generic ETF listing standards and I also think that as institutions are coming into the space they can't like regulatory risk is gone but they really can't go long or short because it's just too volatile and so with those futures they can start hedging and trading basis but anyway what do you think about my thesis? I I think it's massively true. I make an analogy to the bond market where you have on ther run bonds which are the current liquid market and off therun bonds which trade at a discount because they're not the focus of the of the market. I think you have uh you have crypto assets that have ETF and futures that have this institutional onboarding which is the marginal buyer and then you have everyone else. And if you're everyone else, >> good luck. I think you have to go like to the far end of the DGEN spectrum before you find an everything else that will do well. Like you have to go to privacy coins which attract just a completely different audience. But everything else needs those futures. They need the ETFs in order to get this institutional market because if you're an institution, why are you going to go outside that right? You're just not like you get fired. Um and they don't want to get fired. So I think that's a big deal. >> Yeah. One of the great opportunities and characteristics of this cycle is the regulatory derisking that we're seeing in the postgender SEC. Uh and Gendler terrorized us as you know for for years. He's out of the picture. And so now we're starting to see some real regulatory innovation whether it's DATs, whether it's ETFs, etc. We saw the Genius bill uh the Genius Act come out which really legitimizes stable coins and provides that foundational legislation to for stable coin and I think stable coins are going to be massive but now we're kind of stuck with this clarity act thing. Um would love to get your take on clarity uh which is for those of you who aren't tracking this is the market structure bill. this will provide clarity um I guess every pun intended uh so that so that people can actually you know institutions especially can operate in the space because they'll understand the legislation the regulation and be very clear um do we is this a what's going on with the bill uh and what does it mean for markets >> yeah it's it's getting uh it's it's a complex bill uh there are things that the crypto industry wants there's things that the banking lobby wants there's things that Republicans want and things that Democrats want and we're trying to get to a point where the bill is okay enough that no one is angry enough to meet it. Um the the most recent iteration there was a lot of hope around January 15th when there was a markup of the bill. Uh but then both the crypto industry and the Democratic side came out and basically said this is unworkable. If you look at poly market the odds are slightly above 50%. I think we're trending in a positive direction. The administration has delivered on most of its core promises on crypto. So absent a prolonged government shutdown, I'm modestly optimistic about clarity. I do think it's really important though. The mental model I have for why it's important in the market is what clarity does is it puts a legislative sort of foundation on this proc crypto regulatory tilt we've had under Atkins versus Gensler. Right? Absent having legislation, that pro- crypto regulatory tilt could flip again if we have a change in administration. If you want to go into a nightmare world, imagine Elizabeth Warren as the next chair of the SEC and you can think of sort of what's at stake. If we have legislation, it's cemented and people can build in this market. I suspect what we'll see from a return perspective is if clarity passes, investors will pull forward a lot of value into assets tied to stable coins, tokenization, and DeFi because they'll assume, look, this is the way all finance is going to work for the next 10 years. Wall Street's going to build on this. If clarity doesn't pass, they'll have to wait to see if those get real world traction. Because if they get real world traction, even a change at the SEC 3 years from now won't be able to unpeel it, right? If everyone is using stable coins, it'll be like when everyone was using Uber before it was really legal, right? the regulations will bend to fit, but the the the shape of the curve will be slower because people will insist on that real world traction before they believe it is here to say and sort of free of the the Warren style risk that we could see in three years. >> Yeah, you know, I'm kind of in the same spot. I I think that clarity is a throttle and if clarity gets passed, that throttle is going to be, you know, pedal to the metal. everyone's going to be racing because that's going to be the rule of uh rule of the land for probably close to forever. Um because legislation is really freaking hard. Um but kind of to your point, we're going to be in a good spot either way, I think, because the difference between the Gendler era and this era was that Gendler focused on strategic ambiguity. He didn't want to define anything. He wanted to keep us guessing. If we tried to like step out, he'd whack us when we go to court. Um, and so it was it was a period of strategic ambiguity. Whereas these two guys, uh, Chairman Celig, Chairman Atkins, they're going to be working together and they're going to be delivering pretty decent clarity about what they see as which. Maybe somebody sues them, maybe they don't, but we're going to have a framework. And then to your point, it's hard to put the toothpaste back in the tube if we get that adoption. So I think if we do get a clarity uh, law passed, I think markets are going to take off. If not, I think there's still I I personally think it's a great setup for crypto. Um, >> yeah, >> but I still think we're gonna be okay. >> I I totally think that's right. I mean, just to put a a sort of Mchavelian view, Larry Fates most profitable ETF is a Bitcoin ETF. Do you think that uh any administration is going to completely undo there? Like there's no way like there's just no realistic way. And that's true across Wall Street. They see the profits being made in stable coins. NIS is building on tokenization. We're not going to go all the way back. I just think it's it's more a matter of if the curve is like this or the curve is more like this. I think clarity will determine uh that to some degree. But I I do think we're in a bullish trend either way. >> Yeah. And when I was on Wall Street, I don't think people realize just how much power Black Rockck has as the biggest really buyside player. You know, if Black Rockck calls you up and says, "Hey, do this." You you jump. You say, "How high?" Um because they pay you so much. They're the largest wallet. Yeah. >> And so the fact that Larry is is going just so aggressively into tokenization and crypto, >> you know, I I think he's going to bring the whole street with him uh based on my experience. >> Totally agree. Fade to conflate. Yeah. >> Yeah. Yeah. 100%. All right. So, let's pivot to your company. You guys made a big announcement yesterday and you announced the partnership with Morpho. Uh, and I want you to explain what Morpho is, but you spoke about Vault and you know this is a new innovation could be the next kind of ETF if you will. Um, can you explain what you've done, what a vault is and what value does it give end users? >> Yeah, sure. Absolutely. I think vaults are the next big iteration of asset management. So I think this is akin to the launch of ETFs in 1993 or akin to the launch of index funds in the 70s or actively managed funds in the 20s. I think it's that kind of scale. What a vault is you can think of it as non-custodial asset management. So the way it works is you as a user would deposit money into a vault. The vault would be managed by a company like Bitwise which would decide where to allocate it according to certain rules to serve some investment purpose. In the case of the first vault we launched, that investment purpose is to generate what we're hoping to be a four to 6% yield by lending money into overcolateralized loans on Morpho. Morpho is a lending protocol where you can borrow or lend against collateralized positions. So you deposit Bitcoin, you can borrow a stable coin against that to do whatever you want to lever up in the market or use it in any form. It's a big fast growing wellestablished protocol. Vaults are like a layer on top of that that add asset management expertise, risk management, protocol management, uh sort of moving funds around, monitoring liquidity, takes care of all of that for you. So this is our first iteration of Vault. Uh again right now most vaults are focused on this idea of lending and yield but the concept of a vault is can be applied to anything right it's non-custodial asset management as an asset manager you contribute the IP and the risk management and then you allocate on behalf of investors um I think it's really I think it's I think it's absolutely massive I wouldn't be surprised if Black Rockck and others are doing vaults in another 12 months I think that's the direction of travel here >> so can We just walk users through the user experience. Typically, you want to buy an ETF. Uh you can look at the ETF. The there's a perspectus. Um you know, it has different investment parameters. You just go into your brokerage account and you buy it. Uh why would you want to use a vault instead of just go to your your ETF products? >> Yeah, I mean the vault is cryptonative uh for one, so you don't have to move money in and out of the crypto ecosystem to uh which is which is helpful for many people. Um two, it's transparent. you can see where your money is at all times, which is not true even in ETFs to a degree on an intraday basis. It's not true. Um, and in mutual funds, it's not true at a very systemic level. Um, as you know, uh, so you can monitor that in in real time. And then it's also non-custodial. You're not turning your money over to an asset manager. You're controlling your money. The way it works is akin to picking an ETF. That's not like a bad mental model. You can go at Morpho and look at the available set of vault curators, uh, which is what they're called. I'm not sure that's what they'll be called long term, but that is the term of art right now. Um, and you can see the yield that they're targeting and generating. You can see how they're targeting that, where they're allocating, what their risk standards are, and then you can look at the brand that is doing that. Right? One of the big advantages Bitwise brings is eight years of track record in a regulatory setting um of managing assets. So, um it's really not that different, right? It's actually not that different. It's just more transparent. It's cryptonative. It's non-custodial. You can see your assets. It's onchain. Um and for those reason, I think it appeals to a significant audience. Look, I don't think Joe Advisor is going to allocate into the space tomorrow, right? This is right now. It's for sort of cryptonnative institutions but over time as more of the world is tokenized I think this will be the primary way people invest. >> Got it. So when you say non-custodial um the the end user is actually holding on to their their assets at the entire time. So this is not necessarily aum for you per se. >> It's their it's their capital um and you're the adviser of that capital. So they're saying hey you know Bitwise is going to is going to has figured out everything uh within this vault. um it's it's my capital and they're going to be administering it for me >> and their withdrawal parameters and and and times and and and things you know you can get it out over certain periods of time but you can't get it out in certain periods of time. So there they're limitations but yeah it's dematerialized asset management. I mean you can't use regulatory it's not the same thing. It's in a different regulatory structure. So I don't want to imply that we're a a regulated fund manager in the vaults arena, >> but but one sort of common law or common word perception of it is sort of dematerialized asset management where the asset manager is more contributing IP >> uh than they are, you know, physically trading with with J or whatever. >> Totally get it. Yep. And uh do you think that's going to be you said crypto institutions is it also going to be a retail product? I mean it already is non native space >> 100%. Yeah, absolutely. So um uh that that is the existing user of vaults is mostly retail. We think cryptonative institutions are going to become the next marginal user and then from there it will start to blend into trady. >> Super interesting. And how do you see the space evolving in the future? I mean, I imagine that when you layer in things like agents, I mean, you could see almost vaults turning into NFTts in a way where they're unique and bespoke for every individual with like utmost customization. Is is that how you think about it? And maybe like liquidity will concentrate around a couple. How do you see this vaults? I mean, is this just going to be ubiquitous? There's going to be millions of vaults for every single human on Earth. Like, how's this going to play out? Yeah, I think there will be millions of vaults because the marginal cost of launching one is extraordinarily low compared to a traditional fund structure and because they can be customized in many ways. I think there will be a power law distribution. Maybe an analogy that makes sense is like going to sweet greens and getting a salad. You can infinitely customize the salad, but most people pick like 10 or 12. Uh I think that's going to be true in vaults as well. That's what we see in other asset management areas. So it does allow that infinite uh distribution. I think you'll see that and that will appeal to some people, but I do think big brands and big names and a select big vaults will have certain advantages that acrue most of the assets. Uh I I don't think it'll be that different from how the ETF world played out, right? There are 8,000 ETFs. Most of the assets are in the top 100. >> Yeah. >> H to see something like that because it's hard to differentiate. >> That's how it always works. Um >> that is Yeah. So, of the big the big boys, uh, of the of the the kale Caesar salads, the the the prefixed ones, which, uh, which ones do you think are going to be the the biggest one? Like, what types, you know, if you're going to have a top five vault, like what would be the biggest strategies do you think? Just straight up yield, like max yield would probably be one. I >> I think it's going to be uh like like three spectrums of yield. So, I actually think min yield is going to be pretty significant. There's a lot of money in crypto that wants yield but doesn't want very much risk, right? People need that anchor. So, I think min yield actually is going to be a pretty interesting category. >> I think max yield on the other spectrum is also going to be interesting. And then I bet there'll be something in the middle. You can think of it as like treasuries, investment grade debt, high yield debt. Um, we won't use those terms, but I imagine that that's about our breakdown uh happens. And long-term, look, I think we're going to expand. I think the world will expand beyond yield. There is no reason you can't run the equivalent of an equity mutual fund in a vault-like structure. Um, whether that's with crypto assets or tokenized equities, it is just a delivery mechanism for IP. So initially yield in in low, medium, high and then uh over time I think more traditional like long only style strategies will start bubbling up in the vault space. We're we're not even in inning one. We're in the preseason of vaults. Um >> spring training >> spring training is probably is the right word. Yeah. >> Yeah. I think that's right. Well, that's that's really interesting. And so when you step back uh from from a firm strategy perspective over time, do you think that vaults are just going to eat ETFs? Are they going to live in tandem? Are you gonna have ETFs in in your vaults? Like how's that going to come together? >> Yeah, great question. I I think over time vaults will eat ETFs, but that time frame is something like 30 or 40 years. uh you know when I was CEO of ETF.com we made a famous prediction I think in uh 2010 that ETF assets will surpass mutual fund assets by the end of the decade and they didn't uh they're just now getting there. Uh existing asset management doesn't go away. It just sort of uh slowly loses its dominance as a new generation evolves. But if someone's in their 20s, what do I think they'll be investing in in their 40s? I think it will be vaults. Um, right. I don't think they'll be putting money into traditional ETFs. I think they'll be using vaults and tokenized assets for 100% of their exposure because it's just a much more efficient vehicle, but it will take a while, right? These things uh crypto thinks it'll happen tomorrow. That's not what we saw in ETFs. Um, and I don't think that's what we'll see in vaults, but you'll start to see them take the increasing share of net new assets over time. Yeah, I've been out there saying just the size when it comes to tokenization. Um, you're a fiduciary, I'm a fiduciary at my shop. Given the choice, if there is sufficient liquidity, I have to buy the token every every day of the week because I can risk management on the nights and the weekends and when China invades Taiwan on a Saturday night, blah blah blah. So, I think on the tokenization front though, it's not going to be this slow steady drip. I think it is going to be a slow steady drip until there's sufficient liquidity then it goes parabolic overnight. Um because you have no choice you're fiduciary you have to buy the token. >> Yeah, absolutely a great point. I couldn't agree more. Um and and I think I think the the drip is solving very unique problems. The drip is not like my father using tokenized uh assets. It's solving very unique cryptonative problems or nights and weekends problems and perfecting the mechanism there. But it absolutely reaches an inflection point where it does go parabolic. I completely agree with that. >> Yeah. And so I think one of the reasons for your success is that you've taken this clunky operational crypto experience and you've made it very easy um by launching ETFs. You put this wrapper on top and I just go to my brokerage account and I buy a bit wise ETF. Piece of cake. Um let's just move back to the ETF side of things. Um would love to know about your strategies. um which strategies are working, which ones are not, and then as you move forward, how do you see the ETF complex evolving? >> Yeah, great question. So, so far in ETFs, what's primarily been working is single asset products, Bitcoin ETFs, Ethereum ETFs, Salana ETFs, those have had scale. My view is that over time, what works is multi-asset products. And there are two reasons for that. First, the ability to get single asset products outside of the ETF rapper is going to improve, right? Charles Schwab is famously trying to allow you to buy it directly. Fidelity is trying to allow it directly. Robin Hood will eventually get there as well. So, I think the the single asset ETP, as much as I love them, as much as they're a big part of our business, is a temporary fix. But multi-asset products, as you know, is how everyone invests in every other category. It's how they invest in stocks. and how they invest in bonds. Those could be index funds. They could be thematic products, rules-based strategy, active strategies. I think that that is ultimately the growth uh area of the market. The the core reason I joined Bitwise is it launched the first crypto index fund and I looked at what at the time was a trillion dollar industry and thought, well, index funds would probably be about a quarter of that. It's like a $250 billion TAM. Now, that's close to a trillion dollar TAM. uh we still have the largest index fund but it's a billion dollars which is crazy to me. I think that that category is hundreds of billions of dollars over time. So what's working is single asset. What I think will work is multi-asset both index and active and um you're going to see us orient our business to to serve both. I don't think single asset is going away uh in the next couple of years but I think the long-term trajectory is multiasset. >> Uh don't disagree there on multi-asset. I would probably argue that we're also going to see the introduction of non-crypto assets into that multi-asset portfolio. How do you think about that? What what type of sectors you going to see? Tech ccentric like how how will that play out? Or do you think it goes single asset crypto, multi-asset crypto, and then blended over time? How's that going to play out? >> No, completely blended. I mean, the first place that's going to play out is something like thematic exposure to stable coins and tokenization. If you want exposure to those things uh and you just buy crypto assets, I'm not sure you're getting it right. Right. If you don't own Circle, if you don't have exposure to PayPal, if you don't have exposure to private, uh Tether, uh you may be missing where the value occurs. So, I think within crypto, you're going to see this blend of crypto assets and crypto equities. But then more broadly, look like the the Mag Seven isn't the Mag Seven. It should at least be the MAG 8 with Bitcoin in there. And you could argue with ETH in there. The Q's aren't technology exposure without ETH and Salana. I think investors have this artificial divide between crypto assets and equities. You're just talking about exposure to the growth and how the value of cruise can be different, but there's no real reason why the Q's can't be replaced with uh the Q's plus the leading crypto assets or the MAG 7 can't be the MAG 10 with Bitcoin ETH and sold. love it. >> Uh, and I think you're going to see that in the next couple of years for sure. >> You just slipped in a word uh and you said private markets. Now, really interesting space right now. And if you step back for investors, I've been watching this closely, 81% of companies in the US with over $und00 million in revenue, they're private, which is kind of crazy because most people can't access the fastest growing companies uh in our economy and it contributes to the income inequality divide, blah blah blah. How do you see your products playing a role in private markets? And is this the moment we've been waiting for where, you know, we saw what Robin Hood did by tokenizing some private equity? Do you see how do we get your clients or, you know, is there a way that you're going to see the blending of private and public markets with vaults and with your ETFs going forward? >> Yeah. Oh, wow. What a great question. This is an area I think about a lot. Look, I'm a Jack Ogle investor. My starting point is to own everything. And as you mentioned, if you just own public equities, you're missing a lot of everything, right? You're missing some of the fastest growth. You're missing diversification. So, I really want to solve this. >> I think we've seen people chip around the edges and I haven't seen a perfect solution. Um, I think some of the ETFs that have a small amount of private exposure have actually done a pretty good job. uh we saw the effort with DXY which was private only and I don't think they quite communicated that uh perfectly to investors. >> I don't actually have the solution but I do think about this almost every day and so trying to figure out how to do that is something that's on my to-do list for the next year. If anyone has amazing ideas, please please uh please let me know. But I think we have to solve this problem because again most investors are missing out on some of the highest growth areas and despite our efforts to get more public companies, this problem is not going away. Um so I think we do have to solve it. I don't have the perfect solution quite yet. >> Yeah, I think Chairman Atkins is on a mission to make public markets great again. He keeps saying that. So hopefully, you know, he's taking the right actions to bring that 81% down. Um, yeah, >> one last question on ETFs that's been plaguing me is that there are certain ETF types that I think are awful products. And I'll give you an example like ETH. I'm a massive buyer of ETH. I'm a huge fan of that ecosystem, but why would I ever buy an ETF that does not have yield or staking? And there's been this issue because of this with ETFs. You have daily liquidity requirements. If people redeem, they have to get them out. But you can't, for those who don't understand, if you stake something, you're making around a 3% yield. And right now, people are leaving it on the table. Why? Because if you redeem it, then you can't pull it out of staking, per se, because there's a bonding curve. Right now, it's kind of low, but you never know. It's been weeks, been months, so you can't really plan that. Do you think that this conundrum is going to be solved and are people going to be able to to buy total return products going forward where they can actually get the yield the the native yield associated with some of these crypto assets be it soul or or ether or otherwise? >> Yes, I do think it's going to be solved. There's one other additional problem which I'll I'll raise at the end. But for some assets, we've we've solved it. In our Salana ETF, B Soul, we stake 100% of the assets and are are generating something like 7% um and and are pretty proud of that. In ETH, it's harder because as you said, uh the queue to exit can extend to like 45 days. It's worth noting ETFs have solved this before. They're bank loan ETFs which settle like in a millennia. Uh and they figured out how to make those work. So I do think there are solutions to it particularly as regulation improve and maybe you can start to use liquid staking tokens or maybe you can have agreements with market makers to sub in liquid staking. There are solutions to it that need regulatory improvements. I think those will be solved. There is another gating factor which is there is some tax uncertainty around staked income and I think that will be resolved one way or the other in the next year. So, two years from now, do I think most ETH ETFs will have staking? I do. Uh, there are already some that have staking. We we we stake ETH ETFs in our European business. Um, I think these problems will be solved. The reason people would buy it right now, and I agree with you, it's an inferior product, um, the reason you would buy it right now is if you have assets that are a brokerage only and you want exposure to ETH, then like your choice is ETHW or nothing. And maybe ETHW is better than nothing. But I agree you're missing out on the yield. Um but I I think we'll solve it in the next year with regulatory progress and and some tax certainty. >> Yeah. Cool. Um la last question for me. So you've seen this pivot from a lot of the you know crypto used to be you know a lot of focus you know craziness on crypto Twitter. You're you're great to follow on Twitter for those who are not following you already. >> Thank you. >> But that retail hot bowl of money seemed to gone you know into metals and and out. Um, you know, you guys are very famous for having like hundreds if not thousands of meetings with your clients. Want to just understand like sentiment generally. You know, are they giving up on this crypto thing? You know, for me, it feels like the cal before the storm in a good way. Um, I I think the the setup is really really strong, but we just love to hear the sentiment out there, you know, from from your clients and where you think where they think the world's going and it does it align with where you think the world is going, you know, or is it this like major buying moment because sentiment is bad, fundamentals are great. Like what are you hearing out there and how do you feel about it? >> Yeah, absolutely. Yeah. The the stat we love to throw around is 15,000 meetings a year with institutional investors, which is incredible. The the the thing about those meetings is they're just strictly bullish. So on the institutional side, it is literally just a matter of time. Uh assets are already flowing. You can see that in ETFs and they will flow at an accelerated rate going forward. I haven't had an institutional meeting that wasn't extraordinarily positive in well more than a year. So they are not experiencing this negative FOMO or this this negative sentiment that we see in retail crypto. >> Yeah. The the other side is that retail crypto is really depressed, right? I mean, it's worth noting Bitcoin was down what, 5% last year and the fear and greed index was at all-time lows. It was it was max depression. Um, and part of that was that the altcoin market was in a fullblown bare market. So, so this was more like 2022 or 2018. >> It'll come back, right? Uh the sentiment in crypto retail was not great in 2022 and it was zero in early 2019. Uh if you remember that time period where Bitcoin had been down and then fell further from 5,000 to 3,000. People threw up their hands. They rage quit on Twitter. The same things we're seeing right now. It will come back with prices. The driver of prices though will be this institutional uh money coming into the space. I I'll leave with one more statistic from my 15,000 meetings. Our average client uh allocates after eight meetings with us. Um which is brutal for my business. Uh but a fun fact because as you know uh financial advisors and institutions don't meet monthly. If you're lucky they meet quarterly. And so for people who weren't ready to buy the Bitcoin ETF when it launched and just started meeting with us, they're just now getting around to launching. That's why the wirehouses are approving Bitcoin ETFs now because we're at like that eighth meeting, right? They are now at the point where they're willing to allocate. So, I'm very optimistic on the institutional side. I think retail will catch up. I think it's just a matter of time. >> Sounds good, man. Uh any final thoughts before we uh we call it? >> No, I think this is a unique opportunity in very rare moments in crypto where the fundamentals are ahead of price. I think we're happen to be in one of those moments right now. You can see that in Bitcoin chasing gold. You can see that in stable coins and real world assets at all-time highs. While ETH, Salana, Chainlink, and others are not near all-time highs. You can see that in the spike of each transactions. As a long-term investor, fundamentals are ahead of price is beautiful thing. Um, that doesn't guarantee we're going up, but I'm pretty excited about what the next couple years brings. >> Me, too. And Matt, how can people connect with you? >> Yeah, you can find me on XMatt_hogan. It's spelled funny. H Ou T- an N. So, uh you can know it's me or uh reach out to us at Bitwise. I write a weekly memo called the CIO memo. You Google that, you can sign up for it. It's always short about 800 words because I know your time is precious. So, those are two ways to man. I really appreciate you coming on today and uh we will catch you next time. Ladies and gentlemen, Matt Hogan, chief investment officer of Bitwise Asset Management. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time.
Matt Hougan: Bullish! Crypto Is Following Gold’s Playbook
Summary
Transcript
Just like gold eventually entered this parabolic move, Bitcoin will follow suit. Gold is telling you that the world is concerned about debasement, that it wants to be able to self- sovereignly hold assets. That same story is true for Bitcoin. This is a unique opportunity. There are very rare moments in crypto where the fundamentals are ahead of price. Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. Ladies and gentlemen, welcome back to the Wealthy podcast. My name is Chris Perkins and today I'm with Matt Hogan, chief investment officer at Bitwise Asset Management. Welcome to the podcast, sir. >> Chris, thanks for having me. I'm so excited to be here, >> man. There's so much going on in our space right now. Um, look, maybe you can just start off by telling us a little bit about Bitwise and then and yourself and then we'll get into it. >> Yeah, sure. So, Bitwise is a specialist crypto asset manager. We've been in the market for eight years, so we've seen some ups and downs. We manage about $15 billion in assets across US ETPs, European ETPs. We have a large staking business and then we do some active strategies as well. We aim to be the leading specialist asset manager in crypto and we're definitely at least in the competition for that role. As for me, I've been here for eight years. Uh, but before I joined Bitwise, I spent more than a decade in the ETF industry. I was the CEO of ETF.com, built the first ETF ratings and data system, the largest ETF conference. So, this moment in the world where ETFs and crypto are colliding is like a peak into my resume. Um, so I I love experiencing it. Yeah, I think it's bigger than just ETFs, right? This is a big I call it the flipping moment where it we're really seeing the institutional adoption and and really the normalization of of the asset class, but yeah, man, eight years is a lot of dog years when it comes to crypto. Um, you're an old man at this point. So, >> you're telling me. >> So, let's start off with just basic markets. Um, things are kind of weird out there. you know, we're seeing the world really transition to real politic. Uh, when you look at it through a geopolitical lens, you're seeing a massive flight to to precious metals, gold, silver, etc. going through the roof. Bitcoin, however, has been lagging a bit and I think a lot of us are scratching our heads. Um, that said, we've seen Bitcoin oftent times lag gold on its rise up. You where do you see the market here and now? Um, just just let's get started there. Yeah, absolutely. So, specific to gold and Bitcoin because I think it's really instructive, uh, the thing to remember is the really simple fact that prices are set by supply and demand. So, what's happening in the gold market is when the US seized Russia's assets after they invaded Ukraine, you saw central bank purchases go from about 400 tons to a,000 tons per year. That was back in 2022. And when that happened, gold's price went up 2% in 2022. And then central bank purchases stayed the same in 23, 24, 25, and looks like they're continuing in 2026, about a steady thousand tons. So up from historical norms, but they've went up in 2022 and then stayed flat. The price of gold didn't start really running until 2025, right? It had good years in 22, 23, 24, but it started running in 2025. What does that tell you? That tells you that in any market where there is supply and demand, if there is new demand, it has to work through existing holders, right? Central banks caused purchases of gold to be more than net new supply, but there were people who were willing to sort of shovel coal into that fire in 22 and 23 and 24. They eventually ran out and the price skyrocketed. I think the same thing is happening in Bitcoin. We're just earlier in that process, right? Bitcoin entered this structural demand over net new supply when the ETFs launched in January of 2024. If you look at ETF purchases or corporate purchases or combined, it's vastly more than the amount of new Bitcoin being produced, but there were existing people that were willing to sell, particularly as we got to $100,000, which is this big behavioral cell level. We're still working through that sale wall. But just like gold eventually entered this parabolic move, Bitcoin will follow suit. Gold is telling you that the world is concerned about debasement, that it wants to be able to self-s sovereignly hold assets. That same story is true for Bitcoin. We're just earlier in burning through this willingness to sell from existing holders. We're going to get through it. Will it be the middle of this year? Will it be next year? I'm not sure. But I think we're going to see the same exponential move we saw in gold. I think gold, as you said, is painting the way. >> Yeah, I I I tend to agree with that. We're seeing a lot of retail, particularly the whales, they're cashing out. They're getting a little older. They want to buy a house. You know, they're playing the four-year cycle. They're like, "Hey, you know, it's time." And and and you're seeing that transition to the institutional space. The one thing we've yet to see is we've seen a lot of sovereign, to your point, sovereign buyers of gold. Um but it doesn't seem like those sovereigns, we haven't seen a ton of arsenals become formed yet, right? The US has announced one. I thought the rest of the world was going to follow suit. They typically do. Um I think in the end you have El Salvador. I think Pakistan may have said something but beyond that um we haven't seen that sovereign pivot and to me that would be another major impetus but as we saw in Davos it doesn't feel like those central bankers are ready. Um any thought about sovereign buying? >> Yeah look I think it's going to come. We do an increasing number of meetings with sovereigns. We met with a central bank in our office just a couple weeks ago. They wanted to talk about Bitcoin. But these guys move like molasses, right? You have to think of the the speed at which institutional investors move is slow to begin with. It's slow for financial advisors, which is like the easiest part of the institutional spectrum. As you go up to uh to to wirehouses to insurance companies, to endowments to sovereign banks, the timeline just blows out. So from what I can tell from the meetings we're having, they're moving on that timeline. Right. the demographics are good for Bitcoin. The core fundamental thesis is good, but they just don't move at at at crypto speed, right? I I think we're seeing adoption, but it'll still take years for to really accelerate. When it does, though, uh it's going to significantly kink that supply demand dynamic and and I think it will be another catalyst for Bitcoin. >> Yeah, totally. Um and you're very famous for having literally thousands of meetings with clients and getting their feedback. Uh, one of the things that's been popping up lately in in many of my discussions, frankly, is around the quantum threat. And people are saying, you know, this Bitcoin thing, it's super vulnerable, 30% of supply, blah, blah, blah. Like, my personal take is that quantum threat is real. It's out there. And the fact that we're surfacing it now actually mitigates a lot of the risk because it's going to get solved. What are people telling you about the quantum threat? And, you know, how what's your take on how this thing plays out? Is is that another obstacle to major adoption? >> Yeah, that I I agree with you in terms of what it means. The fact that we're talking about it and the fact that there are solutions to it means we will solve it. There's of course execution risk and uh and things to worry about, but I I don't think it's a fundamental threat to Bitcoin. My honest view is that people raise this excuse when they want a reason not to invest. >> Yeah. that that honestly if price were ripping at we were all-time highs. You wouldn't have institutions worrying about quantum. We've seen these sort of FUD raises through the eight years of of Bitcoin. People used to worry about Tether. They weren't really worried about Tether. They were just looking for a reason not to invest. And I think that's the same with Quantum. Ultimately, we're going to solve this problem. Um I I think you know Bitcoin has solved big problems before. It will solve this. Uh I think as price starts to accrete uh those quantum fears will sort of fade into the background again. >> Yeah. Look, I remember when I was at Croup and I was trying to get Bitcoin and Ethereum futures approved. There's an entire cadre of people at institutions that just get paid to say no. And it gives them another reason to say no. And so you got to be like, wait a second, you got to slow everything down. You have to explain why it's a risk and how it's being mitigated. It just takes time. Uh particularly in this institutional environment that that we're in. Um what's your take on alts? Alts have been getting really clobbered and if you look at you know through last year I think through various indices they were down I don't know 50 60%. Um you know what's your take on on that as I honestly I hate saying alts as a group because I think I think each token is separate and distinct has different fundamentals and you need to underwrite it separately but TLDDR long story short that that entire grouping has gotten hit pretty hard. um what's your sense as you look at the the non- Bitcoin alt market? Uh you know h how's it playing out? Is it going to recover? Where are we? >> Yeah, look, I think the first thing uh what you're hinting at is we had a full-blown bare market last year. >> Yeah, >> we didn't experience it because Bitcoin, ETH, and XRP did okay because they had institutional flows from ETFs and from corporations. If you look at everything that didn't have that, that didn't have ETF support, it got hammered. even like like the fifth or sixth largest asset was down 50 60%. This is fullbore 2022 2018 bare market. We ran the four-year cycle last year. We're already at the bottom. I think we're coming back up. My view on what's going to happen in the alts market is it's we're not going to have a classic alt season where every uh zombie coin raises. I think people are going to be insistent on fundamentals and they're going to distinguish between highquality projects and and lowquality projects. I think you have projects like uh ETH and Salana that have clear traction on stable coins and tokenization will do well. You have projects with strong fundamentals like chain link hyperlquid doing really well in the last little period. I think those will do well. Zombie coins, I think, will just be overlooked and won't have the same rising tide lifts all boats that we saw previous alt cycle. So, it's like a it's a more differentiated alt cycle, but I don't think it's dead at all. Like, I think high quality projects will do well. I don't think they're overvalued. I just think people will be more uh distinctive, and I say that as someone who runs an index fund, so I should hope for a rising tide, but I actually think people are going to pick and choose winners in the space. Um and that we're already through the bare market. I think that's probably the most important piece. >> Yeah, I I I think so too. I think we're doing a lot of healing. Um regulatory risk is coming off the table which is opening up a brand new set of new buyers. And I agree with you that you're going to have halves halves and have nots. The one thing I've been looking at though um is a structural gap in our market structure right now. And frankly, that's the lack of futures. Right. So the tokens that you mentioned, the proponents of them have futures. They're just getting off the ground. um we didn't have them because of some regulatory shenanigans I would say during the last administration. Um but what I'm watching uh are futures because if you have these tokens with futures they can obviously avail themselves of the generic ETF listing standards and I also think that as institutions are coming into the space they can't like regulatory risk is gone but they really can't go long or short because it's just too volatile and so with those futures they can start hedging and trading basis but anyway what do you think about my thesis? I I think it's massively true. I make an analogy to the bond market where you have on ther run bonds which are the current liquid market and off therun bonds which trade at a discount because they're not the focus of the of the market. I think you have uh you have crypto assets that have ETF and futures that have this institutional onboarding which is the marginal buyer and then you have everyone else. And if you're everyone else, >> good luck. I think you have to go like to the far end of the DGEN spectrum before you find an everything else that will do well. Like you have to go to privacy coins which attract just a completely different audience. But everything else needs those futures. They need the ETFs in order to get this institutional market because if you're an institution, why are you going to go outside that right? You're just not like you get fired. Um and they don't want to get fired. So I think that's a big deal. >> Yeah. One of the great opportunities and characteristics of this cycle is the regulatory derisking that we're seeing in the postgender SEC. Uh and Gendler terrorized us as you know for for years. He's out of the picture. And so now we're starting to see some real regulatory innovation whether it's DATs, whether it's ETFs, etc. We saw the Genius bill uh the Genius Act come out which really legitimizes stable coins and provides that foundational legislation to for stable coin and I think stable coins are going to be massive but now we're kind of stuck with this clarity act thing. Um would love to get your take on clarity uh which is for those of you who aren't tracking this is the market structure bill. this will provide clarity um I guess every pun intended uh so that so that people can actually you know institutions especially can operate in the space because they'll understand the legislation the regulation and be very clear um do we is this a what's going on with the bill uh and what does it mean for markets >> yeah it's it's getting uh it's it's a complex bill uh there are things that the crypto industry wants there's things that the banking lobby wants there's things that Republicans want and things that Democrats want and we're trying to get to a point where the bill is okay enough that no one is angry enough to meet it. Um the the most recent iteration there was a lot of hope around January 15th when there was a markup of the bill. Uh but then both the crypto industry and the Democratic side came out and basically said this is unworkable. If you look at poly market the odds are slightly above 50%. I think we're trending in a positive direction. The administration has delivered on most of its core promises on crypto. So absent a prolonged government shutdown, I'm modestly optimistic about clarity. I do think it's really important though. The mental model I have for why it's important in the market is what clarity does is it puts a legislative sort of foundation on this proc crypto regulatory tilt we've had under Atkins versus Gensler. Right? Absent having legislation, that pro- crypto regulatory tilt could flip again if we have a change in administration. If you want to go into a nightmare world, imagine Elizabeth Warren as the next chair of the SEC and you can think of sort of what's at stake. If we have legislation, it's cemented and people can build in this market. I suspect what we'll see from a return perspective is if clarity passes, investors will pull forward a lot of value into assets tied to stable coins, tokenization, and DeFi because they'll assume, look, this is the way all finance is going to work for the next 10 years. Wall Street's going to build on this. If clarity doesn't pass, they'll have to wait to see if those get real world traction. Because if they get real world traction, even a change at the SEC 3 years from now won't be able to unpeel it, right? If everyone is using stable coins, it'll be like when everyone was using Uber before it was really legal, right? the regulations will bend to fit, but the the the shape of the curve will be slower because people will insist on that real world traction before they believe it is here to say and sort of free of the the Warren style risk that we could see in three years. >> Yeah, you know, I'm kind of in the same spot. I I think that clarity is a throttle and if clarity gets passed, that throttle is going to be, you know, pedal to the metal. everyone's going to be racing because that's going to be the rule of uh rule of the land for probably close to forever. Um because legislation is really freaking hard. Um but kind of to your point, we're going to be in a good spot either way, I think, because the difference between the Gendler era and this era was that Gendler focused on strategic ambiguity. He didn't want to define anything. He wanted to keep us guessing. If we tried to like step out, he'd whack us when we go to court. Um, and so it was it was a period of strategic ambiguity. Whereas these two guys, uh, Chairman Celig, Chairman Atkins, they're going to be working together and they're going to be delivering pretty decent clarity about what they see as which. Maybe somebody sues them, maybe they don't, but we're going to have a framework. And then to your point, it's hard to put the toothpaste back in the tube if we get that adoption. So I think if we do get a clarity uh, law passed, I think markets are going to take off. If not, I think there's still I I personally think it's a great setup for crypto. Um, >> yeah, >> but I still think we're gonna be okay. >> I I totally think that's right. I mean, just to put a a sort of Mchavelian view, Larry Fates most profitable ETF is a Bitcoin ETF. Do you think that uh any administration is going to completely undo there? Like there's no way like there's just no realistic way. And that's true across Wall Street. They see the profits being made in stable coins. NIS is building on tokenization. We're not going to go all the way back. I just think it's it's more a matter of if the curve is like this or the curve is more like this. I think clarity will determine uh that to some degree. But I I do think we're in a bullish trend either way. >> Yeah. And when I was on Wall Street, I don't think people realize just how much power Black Rockck has as the biggest really buyside player. You know, if Black Rockck calls you up and says, "Hey, do this." You you jump. You say, "How high?" Um because they pay you so much. They're the largest wallet. Yeah. >> And so the fact that Larry is is going just so aggressively into tokenization and crypto, >> you know, I I think he's going to bring the whole street with him uh based on my experience. >> Totally agree. Fade to conflate. Yeah. >> Yeah. Yeah. 100%. All right. So, let's pivot to your company. You guys made a big announcement yesterday and you announced the partnership with Morpho. Uh, and I want you to explain what Morpho is, but you spoke about Vault and you know this is a new innovation could be the next kind of ETF if you will. Um, can you explain what you've done, what a vault is and what value does it give end users? >> Yeah, sure. Absolutely. I think vaults are the next big iteration of asset management. So I think this is akin to the launch of ETFs in 1993 or akin to the launch of index funds in the 70s or actively managed funds in the 20s. I think it's that kind of scale. What a vault is you can think of it as non-custodial asset management. So the way it works is you as a user would deposit money into a vault. The vault would be managed by a company like Bitwise which would decide where to allocate it according to certain rules to serve some investment purpose. In the case of the first vault we launched, that investment purpose is to generate what we're hoping to be a four to 6% yield by lending money into overcolateralized loans on Morpho. Morpho is a lending protocol where you can borrow or lend against collateralized positions. So you deposit Bitcoin, you can borrow a stable coin against that to do whatever you want to lever up in the market or use it in any form. It's a big fast growing wellestablished protocol. Vaults are like a layer on top of that that add asset management expertise, risk management, protocol management, uh sort of moving funds around, monitoring liquidity, takes care of all of that for you. So this is our first iteration of Vault. Uh again right now most vaults are focused on this idea of lending and yield but the concept of a vault is can be applied to anything right it's non-custodial asset management as an asset manager you contribute the IP and the risk management and then you allocate on behalf of investors um I think it's really I think it's I think it's absolutely massive I wouldn't be surprised if Black Rockck and others are doing vaults in another 12 months I think that's the direction of travel here >> so can We just walk users through the user experience. Typically, you want to buy an ETF. Uh you can look at the ETF. The there's a perspectus. Um you know, it has different investment parameters. You just go into your brokerage account and you buy it. Uh why would you want to use a vault instead of just go to your your ETF products? >> Yeah, I mean the vault is cryptonative uh for one, so you don't have to move money in and out of the crypto ecosystem to uh which is which is helpful for many people. Um two, it's transparent. you can see where your money is at all times, which is not true even in ETFs to a degree on an intraday basis. It's not true. Um, and in mutual funds, it's not true at a very systemic level. Um, as you know, uh, so you can monitor that in in real time. And then it's also non-custodial. You're not turning your money over to an asset manager. You're controlling your money. The way it works is akin to picking an ETF. That's not like a bad mental model. You can go at Morpho and look at the available set of vault curators, uh, which is what they're called. I'm not sure that's what they'll be called long term, but that is the term of art right now. Um, and you can see the yield that they're targeting and generating. You can see how they're targeting that, where they're allocating, what their risk standards are, and then you can look at the brand that is doing that. Right? One of the big advantages Bitwise brings is eight years of track record in a regulatory setting um of managing assets. So, um it's really not that different, right? It's actually not that different. It's just more transparent. It's cryptonative. It's non-custodial. You can see your assets. It's onchain. Um and for those reason, I think it appeals to a significant audience. Look, I don't think Joe Advisor is going to allocate into the space tomorrow, right? This is right now. It's for sort of cryptonnative institutions but over time as more of the world is tokenized I think this will be the primary way people invest. >> Got it. So when you say non-custodial um the the end user is actually holding on to their their assets at the entire time. So this is not necessarily aum for you per se. >> It's their it's their capital um and you're the adviser of that capital. So they're saying hey you know Bitwise is going to is going to has figured out everything uh within this vault. um it's it's my capital and they're going to be administering it for me >> and their withdrawal parameters and and and times and and and things you know you can get it out over certain periods of time but you can't get it out in certain periods of time. So there they're limitations but yeah it's dematerialized asset management. I mean you can't use regulatory it's not the same thing. It's in a different regulatory structure. So I don't want to imply that we're a a regulated fund manager in the vaults arena, >> but but one sort of common law or common word perception of it is sort of dematerialized asset management where the asset manager is more contributing IP >> uh than they are, you know, physically trading with with J or whatever. >> Totally get it. Yep. And uh do you think that's going to be you said crypto institutions is it also going to be a retail product? I mean it already is non native space >> 100%. Yeah, absolutely. So um uh that that is the existing user of vaults is mostly retail. We think cryptonative institutions are going to become the next marginal user and then from there it will start to blend into trady. >> Super interesting. And how do you see the space evolving in the future? I mean, I imagine that when you layer in things like agents, I mean, you could see almost vaults turning into NFTts in a way where they're unique and bespoke for every individual with like utmost customization. Is is that how you think about it? And maybe like liquidity will concentrate around a couple. How do you see this vaults? I mean, is this just going to be ubiquitous? There's going to be millions of vaults for every single human on Earth. Like, how's this going to play out? Yeah, I think there will be millions of vaults because the marginal cost of launching one is extraordinarily low compared to a traditional fund structure and because they can be customized in many ways. I think there will be a power law distribution. Maybe an analogy that makes sense is like going to sweet greens and getting a salad. You can infinitely customize the salad, but most people pick like 10 or 12. Uh I think that's going to be true in vaults as well. That's what we see in other asset management areas. So it does allow that infinite uh distribution. I think you'll see that and that will appeal to some people, but I do think big brands and big names and a select big vaults will have certain advantages that acrue most of the assets. Uh I I don't think it'll be that different from how the ETF world played out, right? There are 8,000 ETFs. Most of the assets are in the top 100. >> Yeah. >> H to see something like that because it's hard to differentiate. >> That's how it always works. Um >> that is Yeah. So, of the big the big boys, uh, of the of the the kale Caesar salads, the the the prefixed ones, which, uh, which ones do you think are going to be the the biggest one? Like, what types, you know, if you're going to have a top five vault, like what would be the biggest strategies do you think? Just straight up yield, like max yield would probably be one. I >> I think it's going to be uh like like three spectrums of yield. So, I actually think min yield is going to be pretty significant. There's a lot of money in crypto that wants yield but doesn't want very much risk, right? People need that anchor. So, I think min yield actually is going to be a pretty interesting category. >> I think max yield on the other spectrum is also going to be interesting. And then I bet there'll be something in the middle. You can think of it as like treasuries, investment grade debt, high yield debt. Um, we won't use those terms, but I imagine that that's about our breakdown uh happens. And long-term, look, I think we're going to expand. I think the world will expand beyond yield. There is no reason you can't run the equivalent of an equity mutual fund in a vault-like structure. Um, whether that's with crypto assets or tokenized equities, it is just a delivery mechanism for IP. So initially yield in in low, medium, high and then uh over time I think more traditional like long only style strategies will start bubbling up in the vault space. We're we're not even in inning one. We're in the preseason of vaults. Um >> spring training >> spring training is probably is the right word. Yeah. >> Yeah. I think that's right. Well, that's that's really interesting. And so when you step back uh from from a firm strategy perspective over time, do you think that vaults are just going to eat ETFs? Are they going to live in tandem? Are you gonna have ETFs in in your vaults? Like how's that going to come together? >> Yeah, great question. I I think over time vaults will eat ETFs, but that time frame is something like 30 or 40 years. uh you know when I was CEO of ETF.com we made a famous prediction I think in uh 2010 that ETF assets will surpass mutual fund assets by the end of the decade and they didn't uh they're just now getting there. Uh existing asset management doesn't go away. It just sort of uh slowly loses its dominance as a new generation evolves. But if someone's in their 20s, what do I think they'll be investing in in their 40s? I think it will be vaults. Um, right. I don't think they'll be putting money into traditional ETFs. I think they'll be using vaults and tokenized assets for 100% of their exposure because it's just a much more efficient vehicle, but it will take a while, right? These things uh crypto thinks it'll happen tomorrow. That's not what we saw in ETFs. Um, and I don't think that's what we'll see in vaults, but you'll start to see them take the increasing share of net new assets over time. Yeah, I've been out there saying just the size when it comes to tokenization. Um, you're a fiduciary, I'm a fiduciary at my shop. Given the choice, if there is sufficient liquidity, I have to buy the token every every day of the week because I can risk management on the nights and the weekends and when China invades Taiwan on a Saturday night, blah blah blah. So, I think on the tokenization front though, it's not going to be this slow steady drip. I think it is going to be a slow steady drip until there's sufficient liquidity then it goes parabolic overnight. Um because you have no choice you're fiduciary you have to buy the token. >> Yeah, absolutely a great point. I couldn't agree more. Um and and I think I think the the drip is solving very unique problems. The drip is not like my father using tokenized uh assets. It's solving very unique cryptonative problems or nights and weekends problems and perfecting the mechanism there. But it absolutely reaches an inflection point where it does go parabolic. I completely agree with that. >> Yeah. And so I think one of the reasons for your success is that you've taken this clunky operational crypto experience and you've made it very easy um by launching ETFs. You put this wrapper on top and I just go to my brokerage account and I buy a bit wise ETF. Piece of cake. Um let's just move back to the ETF side of things. Um would love to know about your strategies. um which strategies are working, which ones are not, and then as you move forward, how do you see the ETF complex evolving? >> Yeah, great question. So, so far in ETFs, what's primarily been working is single asset products, Bitcoin ETFs, Ethereum ETFs, Salana ETFs, those have had scale. My view is that over time, what works is multi-asset products. And there are two reasons for that. First, the ability to get single asset products outside of the ETF rapper is going to improve, right? Charles Schwab is famously trying to allow you to buy it directly. Fidelity is trying to allow it directly. Robin Hood will eventually get there as well. So, I think the the single asset ETP, as much as I love them, as much as they're a big part of our business, is a temporary fix. But multi-asset products, as you know, is how everyone invests in every other category. It's how they invest in stocks. and how they invest in bonds. Those could be index funds. They could be thematic products, rules-based strategy, active strategies. I think that that is ultimately the growth uh area of the market. The the core reason I joined Bitwise is it launched the first crypto index fund and I looked at what at the time was a trillion dollar industry and thought, well, index funds would probably be about a quarter of that. It's like a $250 billion TAM. Now, that's close to a trillion dollar TAM. uh we still have the largest index fund but it's a billion dollars which is crazy to me. I think that that category is hundreds of billions of dollars over time. So what's working is single asset. What I think will work is multi-asset both index and active and um you're going to see us orient our business to to serve both. I don't think single asset is going away uh in the next couple of years but I think the long-term trajectory is multiasset. >> Uh don't disagree there on multi-asset. I would probably argue that we're also going to see the introduction of non-crypto assets into that multi-asset portfolio. How do you think about that? What what type of sectors you going to see? Tech ccentric like how how will that play out? Or do you think it goes single asset crypto, multi-asset crypto, and then blended over time? How's that going to play out? >> No, completely blended. I mean, the first place that's going to play out is something like thematic exposure to stable coins and tokenization. If you want exposure to those things uh and you just buy crypto assets, I'm not sure you're getting it right. Right. If you don't own Circle, if you don't have exposure to PayPal, if you don't have exposure to private, uh Tether, uh you may be missing where the value occurs. So, I think within crypto, you're going to see this blend of crypto assets and crypto equities. But then more broadly, look like the the Mag Seven isn't the Mag Seven. It should at least be the MAG 8 with Bitcoin in there. And you could argue with ETH in there. The Q's aren't technology exposure without ETH and Salana. I think investors have this artificial divide between crypto assets and equities. You're just talking about exposure to the growth and how the value of cruise can be different, but there's no real reason why the Q's can't be replaced with uh the Q's plus the leading crypto assets or the MAG 7 can't be the MAG 10 with Bitcoin ETH and sold. love it. >> Uh, and I think you're going to see that in the next couple of years for sure. >> You just slipped in a word uh and you said private markets. Now, really interesting space right now. And if you step back for investors, I've been watching this closely, 81% of companies in the US with over $und00 million in revenue, they're private, which is kind of crazy because most people can't access the fastest growing companies uh in our economy and it contributes to the income inequality divide, blah blah blah. How do you see your products playing a role in private markets? And is this the moment we've been waiting for where, you know, we saw what Robin Hood did by tokenizing some private equity? Do you see how do we get your clients or, you know, is there a way that you're going to see the blending of private and public markets with vaults and with your ETFs going forward? >> Yeah. Oh, wow. What a great question. This is an area I think about a lot. Look, I'm a Jack Ogle investor. My starting point is to own everything. And as you mentioned, if you just own public equities, you're missing a lot of everything, right? You're missing some of the fastest growth. You're missing diversification. So, I really want to solve this. >> I think we've seen people chip around the edges and I haven't seen a perfect solution. Um, I think some of the ETFs that have a small amount of private exposure have actually done a pretty good job. uh we saw the effort with DXY which was private only and I don't think they quite communicated that uh perfectly to investors. >> I don't actually have the solution but I do think about this almost every day and so trying to figure out how to do that is something that's on my to-do list for the next year. If anyone has amazing ideas, please please uh please let me know. But I think we have to solve this problem because again most investors are missing out on some of the highest growth areas and despite our efforts to get more public companies, this problem is not going away. Um so I think we do have to solve it. I don't have the perfect solution quite yet. >> Yeah, I think Chairman Atkins is on a mission to make public markets great again. He keeps saying that. So hopefully, you know, he's taking the right actions to bring that 81% down. Um, yeah, >> one last question on ETFs that's been plaguing me is that there are certain ETF types that I think are awful products. And I'll give you an example like ETH. I'm a massive buyer of ETH. I'm a huge fan of that ecosystem, but why would I ever buy an ETF that does not have yield or staking? And there's been this issue because of this with ETFs. You have daily liquidity requirements. If people redeem, they have to get them out. But you can't, for those who don't understand, if you stake something, you're making around a 3% yield. And right now, people are leaving it on the table. Why? Because if you redeem it, then you can't pull it out of staking, per se, because there's a bonding curve. Right now, it's kind of low, but you never know. It's been weeks, been months, so you can't really plan that. Do you think that this conundrum is going to be solved and are people going to be able to to buy total return products going forward where they can actually get the yield the the native yield associated with some of these crypto assets be it soul or or ether or otherwise? >> Yes, I do think it's going to be solved. There's one other additional problem which I'll I'll raise at the end. But for some assets, we've we've solved it. In our Salana ETF, B Soul, we stake 100% of the assets and are are generating something like 7% um and and are pretty proud of that. In ETH, it's harder because as you said, uh the queue to exit can extend to like 45 days. It's worth noting ETFs have solved this before. They're bank loan ETFs which settle like in a millennia. Uh and they figured out how to make those work. So I do think there are solutions to it particularly as regulation improve and maybe you can start to use liquid staking tokens or maybe you can have agreements with market makers to sub in liquid staking. There are solutions to it that need regulatory improvements. I think those will be solved. There is another gating factor which is there is some tax uncertainty around staked income and I think that will be resolved one way or the other in the next year. So, two years from now, do I think most ETH ETFs will have staking? I do. Uh, there are already some that have staking. We we we stake ETH ETFs in our European business. Um, I think these problems will be solved. The reason people would buy it right now, and I agree with you, it's an inferior product, um, the reason you would buy it right now is if you have assets that are a brokerage only and you want exposure to ETH, then like your choice is ETHW or nothing. And maybe ETHW is better than nothing. But I agree you're missing out on the yield. Um but I I think we'll solve it in the next year with regulatory progress and and some tax certainty. >> Yeah. Cool. Um la last question for me. So you've seen this pivot from a lot of the you know crypto used to be you know a lot of focus you know craziness on crypto Twitter. You're you're great to follow on Twitter for those who are not following you already. >> Thank you. >> But that retail hot bowl of money seemed to gone you know into metals and and out. Um, you know, you guys are very famous for having like hundreds if not thousands of meetings with your clients. Want to just understand like sentiment generally. You know, are they giving up on this crypto thing? You know, for me, it feels like the cal before the storm in a good way. Um, I I think the the setup is really really strong, but we just love to hear the sentiment out there, you know, from from your clients and where you think where they think the world's going and it does it align with where you think the world is going, you know, or is it this like major buying moment because sentiment is bad, fundamentals are great. Like what are you hearing out there and how do you feel about it? >> Yeah, absolutely. Yeah. The the stat we love to throw around is 15,000 meetings a year with institutional investors, which is incredible. The the the thing about those meetings is they're just strictly bullish. So on the institutional side, it is literally just a matter of time. Uh assets are already flowing. You can see that in ETFs and they will flow at an accelerated rate going forward. I haven't had an institutional meeting that wasn't extraordinarily positive in well more than a year. So they are not experiencing this negative FOMO or this this negative sentiment that we see in retail crypto. >> Yeah. The the other side is that retail crypto is really depressed, right? I mean, it's worth noting Bitcoin was down what, 5% last year and the fear and greed index was at all-time lows. It was it was max depression. Um, and part of that was that the altcoin market was in a fullblown bare market. So, so this was more like 2022 or 2018. >> It'll come back, right? Uh the sentiment in crypto retail was not great in 2022 and it was zero in early 2019. Uh if you remember that time period where Bitcoin had been down and then fell further from 5,000 to 3,000. People threw up their hands. They rage quit on Twitter. The same things we're seeing right now. It will come back with prices. The driver of prices though will be this institutional uh money coming into the space. I I'll leave with one more statistic from my 15,000 meetings. Our average client uh allocates after eight meetings with us. Um which is brutal for my business. Uh but a fun fact because as you know uh financial advisors and institutions don't meet monthly. If you're lucky they meet quarterly. And so for people who weren't ready to buy the Bitcoin ETF when it launched and just started meeting with us, they're just now getting around to launching. That's why the wirehouses are approving Bitcoin ETFs now because we're at like that eighth meeting, right? They are now at the point where they're willing to allocate. So, I'm very optimistic on the institutional side. I think retail will catch up. I think it's just a matter of time. >> Sounds good, man. Uh any final thoughts before we uh we call it? >> No, I think this is a unique opportunity in very rare moments in crypto where the fundamentals are ahead of price. I think we're happen to be in one of those moments right now. You can see that in Bitcoin chasing gold. You can see that in stable coins and real world assets at all-time highs. While ETH, Salana, Chainlink, and others are not near all-time highs. You can see that in the spike of each transactions. As a long-term investor, fundamentals are ahead of price is beautiful thing. Um, that doesn't guarantee we're going up, but I'm pretty excited about what the next couple years brings. >> Me, too. And Matt, how can people connect with you? >> Yeah, you can find me on XMatt_hogan. It's spelled funny. H Ou T- an N. So, uh you can know it's me or uh reach out to us at Bitwise. I write a weekly memo called the CIO memo. You Google that, you can sign up for it. It's always short about 800 words because I know your time is precious. So, those are two ways to man. I really appreciate you coming on today and uh we will catch you next time. Ladies and gentlemen, Matt Hogan, chief investment officer of Bitwise Asset Management. 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