← CRYPTO 101
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- [00:00]
Matt Hogan
Foreign.
- [00:10]
Brendan
Everybody. Welcome back to another episode of the Crypto 101 podcast. Couldn't be more excited today. You know, Brennan and I have been trading these markets very actively, and it's always good when the markets go up into the right. Brendan, how are you doing today, dude?
- [00:25]
Unknown
Hey, it's like you said, doing great. The markets are going up into the right. And we got a familiar guest today, someone who we really love talking to over here. Someone who's pioneering the space. Couldn't be any happier.
- [00:37]
Brendan
Seriously. Yo. Matt Hogan, CIO, Chief Investment Officer of Bitwise, joining us today. Mr. Hogan, how are you doing today, sir?
- [00:46]
Matt Hogan
I'm doing great, as you said, markets up into the right. We're here to talk crypto. What could be better? Great to be here. Thanks for having me.
- [00:54]
Brendan
You bet. Yeah. Last time we spoke was like, right mid, early April. I think bitcoin was right around 63,000. Here we are, mid November. Bitcoin's 90,000. What has changed? What has changed to get us to where we're at and broken out of the range? And if, and if your one answer for this is the whole episode, you know, there's a lot that's changed, but there you go.
- [01:17]
Matt Hogan
Yeah, no, a lot has changed. I mean, I think it's impossible to overstate the change that happened as a result of the November election. Right. You've obviously seen that be the primary driver of price, but I would argue it's just a tiny down payment on where we're going. The crypto industry faced severe headwinds for the last four years. Sure, the market was up. We were up 400% before the election. That's pretty good over a four year period. But we were facing regulatory lawfare. We were facing difficulty accessing primary banking services. We were facing a regulatory cloud that kept institutions and professionals out of the market. And that's all been swept away now. All those headwinds have become tailwinds. We have a pro crypto White House, a pro crypto Congress. We're going to get pro crypto administrators at the sec. The US Might buy a million bitcoin. You know, I mentioned we have a government agency named after a meme coin. I mean, it's. It's sort of wild to think the change that we've gone through, and I really think the move, as exciting as it's been from 63 to 90, is just a down payment on where we're going.
- [02:28]
Brendan
I love it. I. I think you're exactly right. It's just early innings still, because now we have, you know, nation state sort of game theory starting to play out when you have these, you know, these conversations and you know, Senator Loomis proposing this bitcoin strategic reserve and all these other countries are going to want to front run the US Gov, Right. And they're going to say, well if they're going to do it or if they're even thinking about it, there's going to be other countries that are bigger that are going to be doing it. So we already see maybe half a dozen countries already starting to accumulate with their central banks. I know Bhutan and some countries in Africa are doing this. Could you tell us about how like sort of nation states are thinking about adapting now? And you know, if we think of this as a global chessboard, America makes their move. You know, what, what is the game theory actually afoot here and how big can it kind of get?
- [03:17]
Matt Hogan
Yeah, I mean, it's really hard. The fundamental problem is that people already own 19.7 million of the 21 million bitcoin that will ever exist. That is a, that's a fundamental challenge. So, so as you have governments around the world looking to position themselves in this asset, they have to buy it from other people. And we sort of do have a proxy for what this looks like. Right? Governments own 20 to 25% of the gold that exists around the world. So if we assume that we're going to get to that stage of maturity, governments have to own 4 or 5 million bitcoin. Where are they going to get them from? Right. We won't mine the next million Bitcoin for another hundred years. So they have to find 4 or 5 million bitcoin from existing holders. And the only way that happens, if the price goes up dramatically, I just don't see any other way for that to play out. Now it's possible that this global game theory won't happen. It's possible that everyone will sort of collectively agree not to do this. The problem is it's a classic tragedy of the commons for these global governments, like from maintaining their own individual fiat currencies. They're probably all better if no one allocates to bitcoin. But if you're the first mover and then other people do, the advantage is so massive to you that I think it's going to force everyone to do it. So I think we're going to see potentially an arms race to get exposure to this asset. And again, there's just nowhere to get it from. Right. There's just no more Bitcoin. And I think That's a real challenge.
- [04:55]
Unknown
Yeah. You know, this is a point that I was talking to Galaxy and Wisdom Tree about last week and they brought it up to me and they said, hey, if, if we get a bitcoin strategic reserve, if that's really going to happen, you have to think about the domino effect that comes along with that. Because it wouldn't just be the United States adopting a bitcoin reserve and everyone else just goes, okay, nothing's going to change. You know, every other country would start to see bitcoin as an asset. They would need to be holding it. It would kind of solidify its place. And then you'd have countries all over the world that would be essentially almost forced to have some sort of bitcoin adoption or some sort of bitcoin reserve, maybe bigger, maybe less. And you know, we've already just started to see Brics talk about this and you know, they've, they've mentioned this idea of doing similar things. And so I think that if the United States does it, other countries has to do it. And then if other countries start to do it and the United States, then it starts to become a global standard. If it's a global standard, then companies have to bring bitcoin onto their balance sheet like they do with like Treasuries and bonds and all these other things. And then before you know it, you have countries and the biggest companies and all of, of institutional side, and then you already have retail. And then it's just a domino effect that continues to add up. And it's like you said, you know, there is a set amount of bitcoin, all of which, you know, is, is around right. Of the 19 million that we have right now, a bunch of that is lost. That reduces the supply. More of that is being put into these long term cold wallets. That's reducing the supply more. So where is the bitcoin going to come from? Right, for these, for these governments and for these institutions if they do adopt this. And I think that what that would invoke is the most basic laws of supply and demand. And that if demand skyrockets, or, excuse me, a supply, if supply gets cut and demand skyrockets, then that would just do wonders. And so the prediction that those guys gave me from Wisdom Tree and Galaxy is they said if this happens, we could see $1 million Bitcoin.
- [07:01]
Matt Hogan
Easy, easy. I love that. I agree with that completely. And I know for some people out there that sounds ridiculous. I would argue that the ridiculous things that bitcoin had to do to get to the point where it is today have already happened. The network had to launch, it had to work. It needed uptime. There could be no fraudulent transactions. It had to get over these hurdles, had to have boom and busts and recovery. It needed institutional adoption. It needed an ETF to launch. It needed a pro crypto government to come into the US With a mandate for change. It needed all of these things. The things that you described, Brendan, are like small steps, right? Pretty logical small steps that we have to go from here. I think the highest hurdles have already been cleared. That doesn't guarantee that it will happen, of course, but there are a lot of arguments that push us in this direction. And I do think whether you want to describe it as global game theory, whether you want to describe it as like a Pascal's wager where the cost of doing it is low and the upside is nearly infinite, there are all these reasons to believe. You know, maybe it's 30% likely, maybe it's 50% likely, maybe it's 70% likely. And it does lead to million dollar Bitcoin or more. I think it's more or more.
- [08:19]
Brendan
And the story extends now well beyond Bitcoin. You know, Bitwise has a slew of incredible crypto products. You know, we could talk in depth about each one, but it's now extended beyond Bitcoin. And we see Ethereum, Solana and the whole other sort of cohort of cryptos. Do you think that institutions are warming up to not just Bitcoin, like Bitcoin's got its, its place. We all think, you know, that's, that's pretty secure. We know that the, the trajectory of this. We kind of know the idea is digital gold. But do you think that the institutions, and, you know, you could kind of cut the institution several different ways. There's the banks and the wirehouses, there's the hedge funds, there's the pensions and stuff. But do they start to see the future now? Maybe in light of this new administration, that there is going to be a world in which these decentralized markets like, start to proliferate?
- [09:14]
Matt Hogan
Absolutely. The same exact change that we're all discussing about Bitcoin, from it going from a renegade idea to something mainstream that's being held by institutional investors and central governments. The same change is taking place on programmable blockchains. The same change is taking place with defi, with stablecoins, with tokenization. Those were all sort of ideas, but traditional finance was completely excluded from them or worried about sticking their finger in the water three months ago. Now all that's being removed. You're even seeing things. There's a little known new little followed news story last week, but BlackRock, which already has a tokenized money market fund on Ethereum, expanded it to five additional blockchains, including one blockchain that the SEC has labeled a security. If that's not a sign to me that the BlackRock, largest institution in the world, thinks that this is going mainstream, thinks that these programmable blockchains are moving into the light and that it's sort of where this market is headed. I don't know what is. So, yeah, I'm very excited about Bitcoin as a monetary asset. I think it has a great story. I'm very excited about this programmable blockchain space. I think it's harder in the programmable blockchain space as an investor to pick the winners. Is it Ethereum? Is it Solana? Is it sui? Is it Monad? Is it Layer twos? Is it near? Is it Aptos? That's like really complex. There's much more dynamic competition. But will the space grow? Will tokenization take place? Will stable coins grow? I think absolutely. We're making a step function change there, just like we did on Bitcoin entirely. Yeah, sure thing.
- [11:03]
Unknown
Hey, you sold that car yet?
- [11:05]
Matt Hogan
Yeah, sold it to Carvana.
- [11:07]
Unknown
Oh, I thought you were selling to that guy.
- [11:09]
Matt Hogan
The guy who wanted to pay me in foreign currency, no interest over 36 months. Yeah, no. Carvana gave me an offer in minutes, picked it up and paid me on the spot. It was so convenient. Just like that. Yep. No hassle. None. That is super convenient.
- [11:27]
Unknown
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- [12:01]
Brendan
And you know, there's a. There's a question that was asked. I saw you speak in person at the Ties event. I think it was called the Bridge. It was in New York a few weeks that you were there, right?
- [12:13]
Matt Hogan
Yep.
- [12:13]
Brendan
Yeah, Yeah, I was gonna say, I remember seeing you. I forget if it was on your panel or somebody else's panel, but there was kind of an interesting little debate about crypto. You know, is it an asset class? And I remember there was a guy, Jeff Dorman, who was like, you know, definitely who runs arca was like, crypto is not a new asset class. Like, everything is going to become digitized and cryptoized. And so you, you know, you're going to have tokenization. And so it's like not new asset class. But I was like, but like dogecoin, like, that's an inherently native digital asset. Like, that's a new kind of asset class. Bitcoin's a new kind of asset class. So I think blockchains enable new asset classes, like with these digitally native things, but they're also going to enable other kinds of asset classes to become tokens. And so how do you kind of pair these two in your mind?
- [13:02]
Matt Hogan
Yeah, it's a great question. You know, one challenge we have in crypto is that we're always trying to fit things into binary boxes. It's a risk asset, it's a risk off asset. It's a new asset class. It's. It's just a technology. It's a currency, it's a technology. We're trying to do this forced separation. And the reality, of course, is somewhere in the middle. As an example, I think crypto has a new asset class like characteristics right now because the return profile for crypto broadly is very distinct from the return profile for stocks, for bonds, for gold, and for real estate. Right. If you just think about what's driving crypto right now. We're talking about this change in the administration. We're talking about debt and deficits. We're talking about blockchain technology advancing that has no impact really on what drives stocks or bonds or real estate or commodities, et cetera. So from that perspective, like, if you, if, if your answer to what is an asset class is, is it a new tool in investors quiver to build better portfolios? I would say crypto is the other piece that you're talking about is crypto will dramatically impact the equity market. Right. I think it will rewrite how traditional finance works. I think it will impact the gaming market. I think it will influence the AI trend. So it is also a technology that reshapes these other markets. So it has influence. But I do think it's its own asset class with its own unique drivers at this point in time that, that may change 20 years from now. Right. But at this point of time, it's a unique enough return profile that I think it's right to think of it as a new arrow in the quiver for investors and not just another version of commodities or another version of tech. I do think it's distinct.
- [14:53]
Brendan
Totally.
- [14:54]
Unknown
No, certainly. Man, it's exciting. And I'm curious to get your thoughts on what you think we will see moving forward in the immediate future. I mean, considering the new administration and the trend that we're kind of on right now. You know, is there anything that you're excited to do that you maybe wouldn't have been able to do previously?
- [15:18]
Matt Hogan
Oh, there's, there's so much. I mean, you know, there's so much. It's such a relief. Breathe again. The first thing I would say is, you know, one core trend that I really think is going to be accelerated is institutional investors. Apologize for my dog. Is institutional investors coming into the crypto market. That was happening before the election and it's a megatrend with trillions of dollars of assets at work. But I think it's really going to accelerate. So I'm excited to continue to work with that marketplace. When we ask institutional investors what is keeping you out of crypto for the last five years, the first, the first thing they said was regulatory concerns. We do a survey every year. It's literally the number one reason. So I'm excited for that. On the product side, there's so much more that we can have a conversation with with the sec. There's no guarantee that we will get these things, but we can have a conversation around staking. We can have a conversation around in kind creations and redemptions. I would love it if we could have an ETF that would allow individuals to receive bitcoin in kind if they want, wanted to. I think that would be a huge one. We can have a conversation around other crypto assets and we can have a conversation around baskets long term, particularly outside of Bitcoin. I think index based strategies are going to be a killer app in crypto for a while because like I study the space all the time, but you know, is it Eth, is it Solana, is it Monad, is it Sue? I don't know. Yeah, I just want to bet the field. So I think we'd be excited to do that. Again, there's no guarantee on any of these things. I'm not talking, talking about any specific filing. So we're going to make all those available and then some more, I would bet.
- [17:03]
Unknown
Well, I mean that's the answer that, that everyone wants to hear, right? The idea that there can still be so much more to come and that again, we're just scratching the surface of what is possible. And, you know, hopefully over the next four or so years, we see things that we wouldn't have even imagined previously.
- [17:21]
Brendan
It's going to be a good time to be an ETF Product manager for the next four years. I know they've kind of been on standstill for the past four years, and now it's like, start your engines and get creative. Put on the hat, go to the whiteboard, and let's. Let's start cooking.
- [17:37]
Matt Hogan
That is exactly right. Yeah. You need to do those meetings every three days instead of every month, you know, to get that. That forward. And I do think we'll see things that we aren't even thinking about today. You know, we. We have a skunk works lab here at Bitwise, and I'm sure our other good competitors do as well.
- [17:56]
Unknown
Well, I'm getting goosebumps just thinking about it. I'm getting excited over here. You're gonna have to take a cold.
- [18:02]
Brendan
Shower after this, Brendan.
- [18:03]
Unknown
I'm gonna have maybe more than that, a full reset. But no, you know, we're excited. You know, we really, really are. Do you think that this is gonna allow for more crypto ETFs? Because we saw your. Your application to upload, to uplist the bit w top 10 index as an ETF from a private fund.
- [18:24]
Matt Hogan
Yeah. So I can't speak specifically about that application because it's at the sec, but broadly, yes. I mean, so what I really think will happen, and we've experienced this dynamic over multiple SEC regimes because Bitwise has been working in this market since 2017. What you want is a regulator who's happy to engage in dialogue, not a regulator that says yes. Right. As a reminder, the first Bitcoin ETF was filed in 2014. It took 10 years. I think it should have taken five. But at least there was a dialogue. At least there were questions around like, well, what do you think about this? Is the market really safe and secure? How can you show that it's not subject to market manipulation? Those are the questions you want to get from regulators. So my hope is that when we turn the page, that's the kind of dialogue that we're having that blackrock's having, that Ark is having, that Fidelity is having, that Global X is having. I mean, I love focusing on Bitwise. We're obviously the best company in crypto, all those things, but we also have these very able competitors. And if all of us can have conversations with the SEC about why an ETF would make it safer, more Secure and low cost to own Solana and why that would be a win for American investors. I think we'll make progress. Again, no guarantees, but I think we'll make progress. And that's, that's what I think we'll see in the new administration.
- [19:46]
Brendan
Yeah, and kind of dovetailing off something you mentioned, a couple of things you mentioned earlier about like in kind redemptions and potentially even having like you know, interest bearing products or dividend bearing products that are actually paying out to an individual's, you know, KYC to AML Bitcoin address or something. I mean that would be totally, totally revolutionary and totally technically possible. It's just a matter of getting things just through that approval process. So that'll be really cool. And then also what I think is super interesting and, and obviously you guys do too as well because of your recent acquisition with attestant IO staking inside of potentially an etf. Tell us a little bit as much as you can why you acquired a testant and what maybe could be afoot here generally as a market trend with, with staking and ETF providers.
- [20:37]
Matt Hogan
Yeah, I can even go bigger picture than that. So for people who don't know a testant is a leading institutional staking provider in the Ethereum ecosystem, they're well respected in that space. They stake about 4 billion, 3, 4 billion in assets for a set of institutional investors. If you want to take a 30,000 foot view, there's this idea that sort of financial management is two things. It's on chain and off chain. It's tradfi and crypto. And we actually think it's basically the same thing. Right. Like an ETP is helping investors access crypto through a safe secure package in the manage that they want. An institutional staking service provider is helping institutional investors put their ETH or, or other assets to work to earn yield in a safe and secure manner. Those are very similar businesses. Right. So bitwise on chain solutions, which is what we call the group that is now a testing wants to expand in on chain solutions for investors in the same way we're expanding in off chain solutions for investors. And then as you're hinting they come together. Right. So ETF investors probably want to stake their spot ETH and probably want to in the future maybe stake Bitcoin or do other things. We want to be at the forefront of that. But I do think this acquisition speaks to something that's going to be a theme over the next four years, which is that these two markets are coming together. They're not as separate as people. People think. And I think it's a good example of that happening.
- [22:17]
Brendan
And so as a former, you know, you were the former CEO of ETF.com and I always like to, you know, say past is prologue and, you know, history rhymes and all that kind of stuff. And so do you. What, what are sort of the, the convergences that you saw, you know, with ETFs, they took over the market. Now, you know, sort of, you know, they're bigger than mutual funds and that's really how most markets are traded now and through these ETFs. Like, what do you see kind of in that world from the past that is now kind of indicating you towards where the future is headed?
- [22:47]
Matt Hogan
Yeah, absolutely. Three big things stand out to me. The first is that I think I said this last time. Everyone hated ETFs. I mean, they really hated them. There were congressional hearings about ETFs destroying the American dream.
- [23:01]
Brendan
Oh my God.
- [23:02]
Matt Hogan
They were labeled weapons of mass destruction. In the financial times. Luminaries like Jack Bogle, the founder of Vanguard, called them, I don't even remember, but effectively rat poison squared. And now today, they're the dominant way everyone's investing, right? They're the, they're the apple pie of investing. Low cost, secure. And so the message there is that crypto can absolutely follow that same journey. We're already seeing it with blackrock building in the space, with others building in the space. We're going to wake up five and 10 years ago and you're going to say things like, yeah, they wouldn't even let crypto companies have bank accounts. And people are going to be like, nah, no way. And you'll be like, really? So it can go all the way over. The second thing to learn from that journey is that it will take some tradfi firms a long time to realize it. Some tradfi firms were early adopters, right? BlackRock bought iShares, others like Invesco, built in the space. But even today, there are traditional finance asset managers who have not yet launched ETFs, even though no one's bought a traditional mutual fund, which was the precursor to an ETF in the last decade. So there will be tradfi firms that are giants in this new financial world, like BlackRock. And there will be others who just sit on the sidelines and, and mutter into a mirror that this crypto and blockchain thing is not for real and they'll do it until they go to zero. That will definitely happen. And then the third sort of Lesson from it is there'll be a mix of tradfi winners and crypto native winners. Just like they're a mix of ETF native firms and asset managers that got it and built early. And you're already seeing that. I mean look at the 10 firms that launched Bitcoin ETFs. It's about 50, 50 between crypto native firms and tradfi firms. There are winners and losers in this batch. So far. All 10 are going to be winners. All 10 of them will succeed because the industry is going to be 10, 20, 30, 50, 100 times bigger than it is today. And these early movers are all going to build dominant franchises in the space.
- [25:13]
Unknown
Yeah, I mean one of the things that I've noticed here recently, maybe it's just my trader blood coming out, but you know, one of the things that we've seen here is that altcoin traders have been a little bit more frustrated about altcoins performance against bitcoin. But why do you think that that's the case? Like why is bitcoin doing so well, Bitcoin dominance being so high for such a long time?
- [25:37]
Matt Hogan
Yeah, I mean first this always happens. It's always an altcoin season. It's always later than people, people think and people always get frustrated. So this too shall pass. I think bitcoin's benefited from two things, right? We had the launch of the ETF and we had this massive pile up in debt and that's extended bitcoin season. Right. Those are two catalysts we didn't have in the last. So I think that's extended bitcoin season. But you're starting to see the altcoins rally look as important as the, the, the election was for bitcoin and it was important. It's vastly more important for these altcoins and that's why you're seeing, you saw a huge move this weekend in xrp, you saw a huge move in Cardano. Right. You're seeing Solana rip. Ethereum will eventually have its day, I promise. Not a, not a, not a promise, but I think it will have its day.
- [26:33]
Brendan
Tongue in cheek.
- [26:34]
Matt Hogan
Yeah, but I think that's it. You just had these unique bitcoin specific catalysts this time that extended its season and then you haven't had a catalyst in altcoin that's similar in scale to Defi. You've had meme coin activity driving Solana and Solana's done spectacularly well. But there hasn't been like a X summer. But I think we're going to get a post election year. It's not just a summer. And I think all coins will do, will do really well.
- [27:04]
Brendan
And even like what, what I kind of just you know, think about is just even if, you know, we had a different president elect, we probably still would get a massive bull market. Just being the very fact that crypto's global, right? Crypto is in that, you know, 2025 is the year after the having. If you go back in history, the year after every having is that sweet spot that scarcity starts to kick in. And so we have like just all the makings for you know, a legendary bull run because of just like, you know, the way the ball is like doubly in our favor. So I'm really excited. I think a lot of people from our side, from the institution, from the, the retail side and the hedge fund side from our side and then also like the institutional, like the big dogs like you guys, you all see this as, as well. And when you have that same mentality across all market participants, it's almost like a self fulfilling prophecy. And like, you know, it just is like we're all going to just hold out to sell later and that bubble kind of forms.
- [28:01]
Matt Hogan
I think that's totally right. I also think people look past these patterns because they assume they're incidental, right? Like they look past the four year cycle because that can't possibly repeat. Actually it's driven by like sort of classic economic boom and bust cycles that have existed for 100 years in the economy. It's not that surprising that it's still happening. They look past this altcoin cycle because they forget that the price primary driver of it is like a crypto wealth effect. You need a lot of wealth to build up in Bitcoin before it starts trickling down into these other markets where it has an outsized effect because they're smaller. But look at, I mean, let's go all the way, look at crypto punks over the last two weeks, right? It's gone from 25 to 36 eth. NFTs are dead. No, NFTs are not dead. You just needed a wealth effect and then you have this to follow through. These things are much more persistent than people give them credit for because they don't realize that there are fundamental reasons for some of these cycles that haven't been repealed. Right? They are, they in fact are just repeating.
- [29:03]
Brendan
I love it. And from your, from your kind of perspective and from the data that you're seeing who's buying, I mean the Bitwise ETFs for instance, are these mostly institutions running market neutral strategies? Are they institutions taking directional exposure or is it a lot of retail accounts that are accumulating the so who's buying now and who's buying next? And this goes maybe there's a binary between the ETH and the Bitcoin ETFs.
- [29:31]
Matt Hogan
Yeah, this is great. You know, I'll do a little bit of data and a little bit of anecdote. The data is we just got the 13F filings for Q3. Now these are obviously in Cryptoland, woefully out of date. This is as of September 30th. But what we saw is net institutional ownership of Bitcoin ETFs rose from about 10.8 billion to 12.2 billion over the course of Q3. That's actually pretty good. If you remember, Q3 was kind of eh, like the market chopped sideways. Bitcoin closed about flat. Institutions didn't flee this market, but they didn't, you know, eight in either. They still owned about 20% of the Bitcoin market, ETF market. So the answer to your question is at least through Q3 it was 80% retail, 20% institutional within institutional. It's about 2/3 long only and 1/3 market neutral. That's sort of the answer. I think that that number, the 20% share of Bitcoin ETFs is going to double in the next year. I think there's been a sea change before the election and then accelerated by the election of institutions moving into this space in a significant way. Retail will still be the dominant player still 50, 60, 70%. But I really think once we see the Q4 numbers and the Q1 numbers, you're going to see a dramatic uptick in institutional. And that's based on what we're seeing internally a bitwise in discussions we're having with the space. When you get over into the Ethereum space, I think that's more institutionally driven, although it's still so early in that space space. That remains to be seen. I think the reasons for that is the Ethereum community can gain exposure to ETH and use it in DEFI and other applications. If they own it natively you don't use Bitcoin. Right. So the mix of institutional versus retail I think favors institutional a little bit more in ETH just because it's a better solution for them. So the answer is mostly retail. But in the future I think institutions will make up share.
- [31:37]
Brendan
Awesome. Love it. We got a couple More questions for you. And this is just based on some of the trends that we're seeing as traders right now in the market. A lot of hype around these AI agents, right? These are agents that are coming online with a crypto wallet, and they're trained on large language models and they're, you know, they have the keys to a crypto wallet, they're able to make trades and all that kind of stuff. I'm not sure if Bitwise is studying this or participating in the AI X crypto sort of redux, but what are your thoughts on AI meets crypto?
- [32:15]
Matt Hogan
Such a good question. Of all the topics in crypto, this is the one where Bitwise has the widest dispersion of internal views. Everything from extraordinarily bullish to exquisitely spectacular skeptical. My own view lies somewhere in the middle, which is. I think it's really neat and really fun and interesting to watch. And I suspect it's another cycle before there's like a fundamental thing in that. I bet there's a tradable trend here. But I don't know if we get to sort of breakthrough explosion in this space of AI's really generating IP that resonates at a fundamental level for another iteration. But that's a weakly held opinion. And again, there are people at Bitwise who study this more than me who are very bullish on the space.
- [33:09]
Brendan
Awesome. Well, I would definitely love to speak with them at some point because, yeah, it's getting to be quite interesting what's going on. And the final question is kind of along a similar line and just wanted to kind of get your thoughts personally and. And maybe the firm's thoughts on the meme coin craze, because again, you can't fight the tape. You know, I've been in markets long enough to. To know that, you know, if you're gonna watch something that keeps going up and up and you're not going to participate because you think you're smarter than it, you think you're better, you're going to get humbled. And so I was humbled by the meme coin craze because I said, there's no cash flows, there's no nothing. It's just speculative garbage. It's all going to go to zero eventually. Just watch. And I was that curmudgeon. And finally I was like, okay, wait, what am I doing here? I think I'm wrong. I don't think the market's wrong. I think I'm wrong. And so kind of changed my posture a little and started to understand a little bit about, you know, the attention economy. And like, you know, even when you look at Netflix or Meta, when they were being valued in Wall street markets in the early days, it wasn't about their cash flows, it was about their attention. How much attention, how much eyeballs are they commanding from people? And let's value them off that. And you know, to, to me, the meme coin craze is, is, is such a phenomenon, but it's, it's viral. These are digitally native, sort of very easily shared ideas and pictures you don't have to understand. Like, for like MakerDAO, which is something I've got exposure to. I think it's an incredible. It's got like $160 million of annualized cash flows, but there's been that sort of blocker from the SEC about passing any of those cash flows back to token holders. And so it's, in a sense, been a meme coin the whole time. And so it's like, you know, you have to like, kind of have a sober realization of that, but that won't be the case for a long time because now again, the new regulations are going to start to kind of pare back that risk and make that sort of value transfer more feasible. But, but yeah, long, long winded kind of question of like, you know, what's your high level on the meme coin stuff? And does bitwise have any official view?
- [35:04]
Matt Hogan
Yeah, absolutely. I think you and I have very similar views, which I was also a curmudgeon and this week I've been kicking myself that I didn't buy Peanut, which seems like the most obvious meme coin trade. That squirrel's a hero. And Obviously it's up 10x since I first thought about it. Look, my general take is I think the world underestimates a few themes. I think it underestimates the importance of online communities by a factor of 10 or 20.
- [35:39]
Brendan
Wow.
- [35:39]
Matt Hogan
And I think the traditional world sort of just can't connect with how important these communities are to the people who are participating in them. I think that's a very real thing. And then I think Wall street has been underestimating the importance of retail for the last 10 years, from GameStop on. Yeah, but I think that's a trend. People assume that GameStop was the peak of retail mania, if you want to call it that. And I think it's probably just like a down payment. It's probably like that was the breakout. Yeah. Bitcoin17000. Right. Like, it was, it was, it was a High point, for sure. And now we're down. But I wouldn't short the rise of retail traders. So when you put those two things together, I don't think Meme coins are going anywhere. I think they're here to stay. It's not a market that Bitwise participates in. It's not a market that I have edge in, despite, you know, having called Peanut to my research squad, Slack channel. And. But. But I think it's much more interesting than most people assume. And so it's something that we think about a lot, is the answer.
- [36:43]
Brendan
I love it. Incredible. Well. Well, Matt, was there anything that we didn't touch on that we should have? Things that maybe, you know, Bitwise is working on that you wanted to highlight some things you're proud of? Any, any data, statistics, news bits, personal anecdotes that we didn't highlight yet?
- [37:01]
Matt Hogan
No, I mean, I just congrats to everyone who is focused on this space before the election. You know, it was. It was a challenging period for crypto, and a lot of people stayed at it. And now, now you're being rewarded, which is great. And then the other thing I would just say is I do think the. The future could be wild. I mean, you know, in the past week, we had the bitcoin bill with the US potentially buying a million Bitcoin. We had 18 state attorney generals suing the SEC. Yeah. You know, more can happen than maybe you think. And I think that's something important to keep in mind as we approach 2025.
- [37:39]
Brendan
And it could even happen quicker than you think, too. Yeah, even one of the things, I don't even know if we talked about this yet was the bitcoin options that might even be listed as soon as, you know, this month, this year. And people were thinking this was going to, you know, be drawn out forever. So a lot could happen, and it could happen quicker than you think. So you better not be short this market both with a bunch of leverage or intellectually short this market, of course, you know, never. Financial advice, investment advice, everybody do your own research. Crypto's highly risky, as you guys know.
- [38:11]
Matt Hogan
But.
- [38:11]
Brendan
But don't. Don't take your eye off the ball. Now's the time to lean in, get the reps in, and stay, you know, kind of stay in touch because this is. This is the problem. Prime time for crypto. So, Matt, hey, thank you so much for, for joining us here at the Crypto 101 podcast again. You are, you're always welcome back. It's always such a treat to have you. We appreciate your views, your time and all your hard work and, and efforts that you put into making this industry going from where we were at, you know, 10 years ago to where we're at today. It's just, it's incredible. So keep up all the great work.
- [38:41]
Matt Hogan
Thanks, guys. You too. And it was a joy to be on.
- [38:44]
Brendan
Take care everybody at home listening. Hope you enjoyed. Come back same time, same place next week. We're gonna have some more great guests for you. Take care.
- [39:02]
Unknown
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