CRYPTO 101 - Episode 634: How Money Managers are Viewing Crypto in 2025 with Bitwise's Head of Research Ryan Rasmussen

Release Date: January 2, 2025
Hosts: Bryce Paul & Brendan Viehman
Guest: Ryan Rasmussen, Head of Research at Bitwise Asset Management

1. Introduction and Background of Ryan Rasmussen [00:00 - 02:10]

In the opening segment, hosts Bryce Paul and Brendan Viehman welcome Ryan Rasmussen, the Head of Research at Bitwise Asset Management. Ryan shares his professional journey, transitioning from the traditional asset management sector to the burgeoning crypto industry.

Ryan Rasmussen [01:04]: "I realized this was going to be a transformational technology that was really going to impact the financial industry. And I decided I wanted to make the leap full time into the crypto world."

He joined Bitwise in early 2021, drawn by the company's professional approach to crypto asset management, aligning with his extensive experience in traditional finance.

2. Transformation of Crypto Adoption and Regulatory Landscape [02:10 - 04:48]

The conversation shifts to the dramatic changes in the crypto landscape over the past year. Ryan highlights the surge in Bitcoin's price, crossing significant milestones, and the shift in regulatory sentiment.

Ryan Rasmussen [02:52]: "At this time last year, Bitcoin was trading under 45,000. Today it trades above 100,000, crossing that big psychological benchmark."

He underscores the change from a predominantly anti-crypto stance in Washington D.C., with notable skepticism from financial giants like J.P. Morgan, to a pro-crypto administration. This shift is evident in the SEC's evolving attitude towards crypto ETFs.

Brendan Viehman [03:51]: "We're really just getting started. A lot of these positive policies and things that you mentioned, they haven't even really fully gone into effect yet because the new administration isn't even in office."

Ryan anticipates continued positive developments for the crypto markets in the coming years, fueled by supportive regulatory frameworks.

3. Future Positive Developments and Industry Outlook [04:48 - 06:27]

Ryan delves deeper into the optimistic outlook for crypto, citing Bitwise's proactive engagement with regulators and the influx of ETF filings for various crypto assets beyond Bitcoin and Ethereum.

Ryan Rasmussen [04:48]: "We've launched about 30 products over the past few years... We're starting to see kind of more of an active side of the product suite."

He emphasizes the anticipation of more diverse crypto products entering the market as regulatory barriers lower, paving the way for broader investor access and institutional participation.

4. Ryan Rasmussen's Role at Bitwise [07:26 - 10:13]

Post-advertisement, Ryan outlines his responsibilities as Head of Research at Bitwise. His role encompasses educating clients and potential investors about cryptocurrencies, developing and managing a diverse range of crypto products, and staying abreast of industry developments.

Ryan Rasmussen [07:56]: "A lot of our job over the past few years has been to convert non-believers to believers when it comes to crypto."

He highlights the importance of educational initiatives, such as presentations and free educational materials, in demystifying crypto for traditional investors.

5. Strategies to Convince Non-Believers and Data Used [10:13 - 14:39]

Brendan inquires about the methodologies Ryan employs to persuade skeptics about the merits of crypto investments. Ryan discusses a data-driven approach, demonstrating how cryptocurrencies like Bitcoin can enhance portfolio performance through diversification and low correlation with traditional assets.

Ryan Rasmussen [10:39]: "Adding this asset which has Global Liquidity trades 24, 7, 365, has a low correlation to the other assets in your portfolio... Just because it's bitcoin, just because it's crypto, you shouldn't ignore the benefits."

He also draws parallels between crypto assets and traditional cash-flow-generating investments, highlighting the revenue streams from platforms like Ethereum and Solana.

Ryan Rasmussen [12:30]: "Ethereum or Solana... those are projects that generate cash flow. Users have to pay fees to use those platforms... it's like a preferred dividend."

This dual approach—emphasizing portfolio diversification benefits and cash-flow generation—has been effective in shifting investor sentiments.

6. Crypto as Portfolio Diversification and Allocation Strategies [14:39 - 18:26]

The discussion moves to the strategic allocation of crypto within investment portfolios. Ryan advises a balanced approach, suggesting allocations between 1% to 10% depending on the investor's risk appetite and investment goals.

Ryan Rasmussen [16:42]: "You get the benefits of adding crypto to your portfolio because of that lack of correlation... it's one of the most important pillars of investing in portfolio management."

He recommends regular portfolio rebalancing to mitigate the inherent volatility of crypto assets and advocates for diversification within the crypto space itself—allocating across Bitcoin, Ethereum, and crypto equities.

Ryan Rasmussen [17:30]: "Maybe you want to do 33% Bitcoin, a third Ethereum and a third crypto equities... they take a broad-based basket approach."

This methodology aligns with traditional investment strategies, ensuring that investors can capture sector-wide gains without being tethered to a single asset's performance.

7. ETF Applications and Bitcoin Supply/Demand [18:26 - 24:30]

Brendan probes into Bitwise's involvement with new Altcoin ETF applications. Ryan expresses enthusiasm about the potential inclusion of diverse crypto assets in ETF structures, mirroring traditional asset classes.

Ryan Rasmussen [18:53]: "We're really excited about the potential for more types of assets outside of Bitcoin Ethereum to be wrapped in this ETF wrapper and available to many investors."

He anticipates the approval of ETFs for top-market-cap cryptocurrencies like Solana, XRP, and Avalanche, alongside the development of indexed crypto products akin to traditional market indices.

Ryan Rasmussen [19:45]: "Maybe we'll have staking based ETPs here in the US like they do in Europe... what's going to come to market."

Addressing Bitcoin's supply dynamics, Ryan highlights the asset's limited supply coupled with increasing demand from institutional and governmental entities. This supply-demand imbalance is a pivotal factor driving Bitcoin's price appreciation.

Ryan Rasmussen [22:15]: "A lot of that conversation goes from okay, 1 to 10%. You should constantly, or at least on a regular basis, rebalance the portfolio."

He underscores Bitcoin's unique position as a supply-constrained asset, making it an attractive long-term investment despite short-term market fluctuations.

8. Conclusion and Follow-up [24:30 - 25:42]

As the episode wraps up, Ryan shares ways for listeners to stay connected and informed about Bitwise's activities. He encourages followers to engage with Bitwise's educational resources and subscribe to their weekly CIO memos for market insights.

Ryan Rasmussen [24:46]: "All of our information and educational materials and everything about products and whatnot is on the Bitwise website... sign up for that and, you know, follow along the journey."

Bryce and Brendan express their appreciation for Ryan's insights, hinting at future collaborations.

Key Takeaways

• Regulatory Shift: The past year has seen a significant transformation in regulatory attitudes towards crypto, moving from skepticism to support, particularly in the U.S.

• Institutional Adoption: Increased interest and investment from institutional players, facilitated by the introduction and success of crypto ETFs.

• Diversification Benefits: Cryptocurrencies offer unique diversification advantages due to their low correlation with traditional asset classes and potential for high returns.

• Educational Endeavors: Bitwise places a strong emphasis on educating investors about crypto fundamentals, enhancing understanding and fostering broader adoption.

• Future Prospects: Continued growth and diversification in crypto products, including Altcoin ETFs and staking-based investment vehicles, are anticipated.

Notable Quotes

• Ryan Rasmussen [01:04]:
  "I realized this was going to be a transformational technology that was really going to impact the financial industry."

• Ryan Rasmussen [02:52]:
  "At this time last year, Bitcoin was trading under 45,000. Today it trades above 100,000, crossing that big psychological benchmark."

• Brendan Viehman [03:51]:
  "We're really just getting started. A lot of these positive policies and things that you mentioned... we’re looking at, you know, hopefully the next couple years as pretty positive for the crypto markets."

• Ryan Rasmussen [10:39]:
  "Just because it's bitcoin, just because it's crypto, you shouldn't ignore the benefits that you get from a performance and portfolio performance perspective."

• Ryan Rasmussen [18:53]:
  "We're really excited about the potential for more types of assets outside of Bitcoin Ethereum to be wrapped in this ETF wrapper and available to many investors."

For more insights and updates from Ryan Rasmussen and Bitwise, follow him on Twitter @RasterlyRock and visit the Bitwise website.