← CRYPTO 101
CRYPTO 101
Ep. 634 How Money Managers are Viewing Crypto in 2025 with Bitwise's Head of Research Ryan Rasmussen
00:24:56
Loading summary
Transcript34 lines
- [00:00]
A
Foreign. Ladies and gentlemen, we are joined by Ryan Rasmussen. He is the head of research at Bitwise Asset Management. Ryan, welcome. And it's great to have you.
- [00:19]
B
Great to be here, Brendan. Excited to chat with you.
- [00:21]
A
Yeah, this is an exciting one. We love hearing from the Bitwise team. We're always seeing you guys on X and in the news and you're making a lot of really good headlines. I know we just got to talk to your buddy Matt Hogan a few weeks back, and it's always a pleasure, but this is the first time that we have the great pleasure of talking with you.
- [00:42]
B
Yeah, well, thank you so much. Appreciate the kind words.
- [00:45]
A
Yeah. Before we get too deep in here, you know, let's just talk about yourself for a second because you've been working in finance for, you know, really a while now, but you've transitioned into the crypto space. And so, you know, we've got to know what stood out to you, what made you kind of make the transition full time into crypto.
- [01:05]
B
Yeah, it's always fun to talk about kind of the journey that people have taken into crypto. I feel it's different, different for everyone. But, you know, for a long time I spent time in the traditional asset management space, worked at a large asset manager. And there was a point in, in 2017, 2018, 2019, where I just continued to find myself going deeper and deeper into crypto in my free time. And at some point I kind of 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. I came across Bitwise, realized they were a company that was kind of taking a professional approach to asset management and, you know, on top of crypto products. And that to me, really resonated given I was already in the asset management space. So made the jump in early 2021 to join Bitwise. It's been a wild ride since then, but it's been really, really great to be a part of this fast growing industry. And I think once you, once you work in crypto, it's hard to. It's hard to want to go back to any other industry.
- [02:11]
A
Yeah, it really is. Especially when you kind of look at the adoption curve. From just the past year alone, it felt like we were just very slightly sloped. And then as this year kind of hit, we went parabolic with that graph. And adoption has just become so widespread and so real. And you all are one of the really forefront players when it comes to this stuff when it comes to Bitcoin ETFs and Ethereum ETFs. And as we'll talk about a little bit later, our on, you know, there's more ETFs that are being filed and there's a lot of stuff that's happening on the tradfi scene that I think a lot of people just need to be made aware of.
- [02:52]
B
Yeah, I, I think that's right. It's been so incredible to see the transformation of the industry in 12 short months. Just to set the stage for that, I guess at this time last year, bitcoin was trading under 45,000. Today it trades above 100,000, kind of crossing that big psychological benchmark last night. But it wasn't just the price that's changed. The rhetoric in D.C. was very anti crypto this time last year. I think J.P. morgan had just testified at a congressional hearing that he was deeply skeptical to crypto and that if he was in the government, he would close it down. And then you fast forward to today. We have a pro crypto administration in dc. We have a changing of the guard at the SEC to go from anti crypto to pro crypto. The President Elect of the United States just tweeted about Bitcoin crossing 100k. So I think that transformation in and of itself is probably a good, a good hyperbole for how the entire industry has moved over the past year.
- [03:51]
A
Yeah, it definitely is funny to see that a year ago there was talks about shutting down bitcoin and making it not allowed. And then you fast forward to today and it's like, let's create a bitcoin national reserve, right? And let's make this thing mainstream. Let's ease up on adoption. And the dynamic, kind of the viewpoint of it from a regulatory standpoint has con has really done a complete 180. I mean, it could not be any more inverse or backwards from where it was at this time last year. And the cool thing is we're really just getting started. You know, a lot of these, 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. And so we're looking at, you know, hopefully the next couple years as pretty positive for the crypto markets. But would you say that you all are seeing the same thing, saying, hey, there could be some positive things to happen to crypto, you know, over the next several years?
- [04:48]
B
Definitely. You know, we spend a lot of time because we do sit kind of at that crossroad of traditional finance and crypto. We spend a lot of time working with regulators in dc. Our team spends a lot of time kind of boots on the ground in D.C. talking to policymakers and regulators. And we're already seeing a bit of a shift in the stance towards crypto at regulatory agencies like the sec. And I think you that's reflected in the number of filings you've seen come across the desk over the past couple of weeks for other assets beyond Bitcoin and Ethereum. We kind of hit this point heading into this year where Bitcoin was the only thing that anyone thought would be possible to wrap in an ETP anytime soon. And then you had Bitcoin ETFs, which were the most successful ETF launches of all time. They've gathered something like 32 billion in assets since they launched back in January, which is about six times the largest ETF launch to date prior to that. So it's just a massive success. And then you had Ethereum ETFs, which came in July. And since then it's kind of been this. They had this like, halo effect around those two assets where they're the only ones that we thought we'd be able to touch from a regulatory perspective and kind of the only ones that the SEC was signaling we'd be able to touch from a regulatory perspective. But I think you can see in those developments over the past few weeks of these different types of products that are, you know, being filed for around other single asset ETPs that we're seeing that stance change in in D.C. already. And we're pretty, pretty excited about the continued likelihood of that changing in the next six 12, 18 months and really excited what that'll open up the doors to from a product perspective.
- [06:28]
C
What is Dax, are you tracking all our cars on Carvana Value Tracker on all our devices? Yes, Kristen, yes, I am.
- [06:35]
B
While I've been looking for my phone.
- [06:36]
C
For in Dax's domain, we see all. So we always know what our cars are worth.
- [06:41]
D
All of them?
- [06:42]
C
All of them. Value surge trucks up 3.9%.
- [06:46]
D
That's a great offer.
- [06:48]
C
I know. Sell, sell, sell. Track your car's value with Carvana Value Tracker. Today.
- [06:57]
D
New year, same great savings. All in the Fred Meyer app. Get Sugardale ham portions for $0.87 a pound with your card and an additional $25 purchase limit one. Then get organic asparagus for $1.99 a pound with your card and a digital coupon. Shop these deals at your local Kroger today or Click the screen now to download the Fred Meyer app to save big today for Fred Meyer. Fresh for everyone. Prices and product availability subject to change restrictions apply. See site for details.
- [07:27]
A
Yeah, I mean it certainly does open up the doors to a variety of different options. You know, we are seeing some of these new ETF filings. We're already seeing specific projects put forth upgrades and stuff that they might not have been able to do before. And we're excited to see what the future holds. But I want to take a step back here and dive into the position of head of Research at Bitwise. What does that entail on the day to day basis for you?
- [07:56]
B
Oh man. Every day is different here at Bitwise and probably for most people that work in the crypto industry, we spend a lot of time at Bitwise and particularly on the research team, educating our clients and potential investors about Bitcoin and crypto more broadly. I would say a lot of our job over the past few years has been to convert non believers to believers when it comes to crypto. And of course that can be challenging at times because many people are skeptical, particularly many traditional investors who haven't gone down the crypto rabbit hole from a technology perspective like many of us have. And so we spent a lot of time on the educational journey meeting with clients in their offices, giving presentations at lunches and dinners or in their office to their, to their group of advisors and investors, talking about what is Bitcoin, how does it work, how do you value it? What is this technological breakthrough that we talk about when we talk about blockchain and distributed ledger technology? Normally it starts there, then you end up moving down the educational journey a bit and start talking about, okay, what is Ethereum, what are smart contracts, what are defi applications and stablecoins? And it kind of goes on from there. So we spend a lot of time on the educational side of things here, Bitwise. All of our educational material of course, is available for free because that's, we think it's really important to make that available as it's kind of part of the first step. But on the flip side, we also spend a lot of time on products. Here at Bitwise, we've launched about 30 products over the past few years, been around since 2017. And we have everything from index based passive products to these trendwise strategies we just launched earlier this week, which trade on a signal, signal based approach or they, they are momentum based strategies that trade in and out of Bitcoin futures or Ethereum futures and US Treasuries based on Moving averages. And so we're starting to see kind of more of an active side of the, of the product suite. And so we spent a lot of time on that here bitwise. And then I spent a lot of time, as I mentioned, just going around with our distribution team and meeting advisors, kind of where they play and in talking to them and answering all their questions about crypto. So it's a lot of that. And then of course I dove into, I dove into X and I dive into the crypto ecosystems as much as possible to stay on top of what's going on.
- [10:14]
A
Yeah, when you're talking to nonbelievers, maybe trying to convince them, maybe talking to people who are genuinely interested and I want to even call them a nonbeliever, what kind of research or data do you like to kind of use to go over with them to help familiarize them with the process and really show them like the benefits of all of this? Like how, what data and research do you use to kind of convince them?
- [10:40]
B
Yeah, that's, that's a great question. I think that for most traditional investors, they take two approaches to, to understand crypto. If they invest in gold, then understanding Bitcoin and seeing the, the value of adding Bitcoin to a portfolio isn't as, as difficult for those that maybe don't invest in gold. Of course, Warren Buffett's famous for hating gold because it doesn't produce cash flows. Right. So you have some investors who say, great, bitcoin, digital gold, okay, that's fine, but we don't actually invest in gold, so why would we have bitcoin to our portfolio? And from that perspective, we kind of approached it from a data driven side of things where I say, look, adding this asset which has Global Liquidity trades 24, 7, 365, has a low correlation to the other assets in your portfolio, like equities and bonds, and is volatile but has the potential for high returns. That's an asset. If you remove the fact that that's crypto, if you remove the fact that that's bitcoin, that's a type of asset that almost every investor would love to add to their portfolio. So 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. It reduces your, or it increases your Sharpe ratio. It barely impacts your volatility if you size it appropriately and then it gives you a huge potential upside. So we approach it from that perspective and I think when Most of these institutional investors see the data driven side of how adding a 2, 5, 10% allocation of Bitcoin can impact your portfolio to the upside without really having as much of a detrimental risk to downside as many people assume. That's, that's one side of things. And we really start to see the light bulb kind of turn on when we show them that data. On the other side of things, with assets like Ethereum and Defi applications and other programmable blockchains, you can approach it from a cash flow generating perspective, which, you know, every investor that we speak to loves cash flow generating assets, right? They invest in tech stocks, they invest in all kinds of equities that generate cash flow, kick off dividends, have buybacks. And when you look at projects like the Ethereum or Solana or whatever the programmable blockchain or Defi application is, those are projects that generate cash flow. Users have to pay fees to use those platforms to use those applications. And those fees in many cases accrue to token holders, whether it's through a burn mechanism, which is kind of like a built in buyback, or through a staking yield, which is like a preferred dividend. And so when you start to, I think, put it in the terms they're used to when it comes to traditional investments, you can remove this, this filter that many investors have on that kind of skews the way they think about crypto. And if you just think about it as a technology investment, if you just think of it as a portfolio diversification perspective, they start to look like really attractive assets.
- [13:27]
A
Yeah, it certainly does. And I love the revenue point and how these protocols really are bringing it in, because we do see that with a number of projects. The team over here was just looking at a rather newer one called Pump that Fun, which has been one of the big contributor to creating these meme coins. But just last month, in the month of November, they did $93 million in revenue. They've done over 200, I think 50 million this year alone. And this is a relatively new project. And then you look at some of these bigger ecosystems like you've mentioned, I think Tron has done over like 1.8 billion in revenue this year. Ethereum's also done over 1.8 billion. Solana has done something like 300 million in revenue. And these are, you know, real crypto protocols. And I think that that is an aspect that tends to get overlooked and that people look at cryptocurrency and they go, oh, it's magic Internet money, or this or That I can't look at things as simple as revenue, when in reality you can. You know, you can look at revenue, you can look at activity, you can look at, you know, trading volumes and all these different things. And I think that is probably one of the more convincing things for at least people like myself.
- [14:39]
B
Yeah, I totally agree. You really do see the interest in crypto come alive when you start to talk about how these are revenue producing assets. These are high growth, early stage tech projects that are using innovative disruptive technology like blockchain technology, like smart contracts, like stable coins and NFTs, and then finding different ways to monetize those different types of products and innovations. And I think again, if it was any other kind of industry, people would be chomping at the bit to invest. But cryptocurrency kind of has had this bad rap for the past seven, eight years. And finally we're kind of shedding that skin. And I think that you're going to see a lot more investor attention and demand to get exposure to this type of technology, this type of assets now that we have a more clear regulatory outlook for the industry in the US.
- [15:29]
A
And it's almost like a diversity pick for a lot of these, these money managers. They're now looking at crypto and almost we're seeing kind of a shift where they're recommending, you know, 1%, 2%, 3%. And I think we're going to see a lot more from that because it is so different. And you kind of made a good point about this when we were talking about the difference between, you know, stocks and crypto and gold and all these different assets out there. It's good to have something like crypto that is universally accepted and global and it's 24, 7 and decentralized and you have global liquidity and all these things. And I think that's a big reason why we're starting to see other money advisors and asset managers look at this and say to their clients like, hey, it's not a bad idea, especially with what we've seen just be the roller coaster that has been inflation over the last five years, up and down these crazy swings, say, hey, it's not a bad idea with everything that's happened in the world to look at crypto. And maybe, you know, we're not saying 50% or 20%, you know, maybe us crypto investors can, can justify that. But for these tradfi houses, they're looking at it and saying, hey, a couple percent is a fairly reasonable thing and that's Becoming a more popular opinion from what we've seen.
- [16:43]
B
Yeah, I think that that's right. One of the really important things that we talk to investors about when they, when they're looking at how much do we allocate in our clients portfolios to crypto and how should we allocate it? A lot of the questions we get now today are it's not just Bitcoin, now that there's Ethereum ETPs available, or perhaps there's going to be other types of crypto assets that we should be investing in. Crypto equities, for example, Coinbase, MicroStrategy, Bitcoin miners. Those are the kind of things that investors are looking at. And one of the continual questions we get is how much should the allocation be and how should it be split? And it's another area where we like to take a data driven approach. And if you get anywhere from 1 to 10%, you really get the benefits of adding crypto to your portfolio. Because of that lack of correlation, it really adds the diversification benefits, which of course diversification is one of the most important pillars of investing in portfolio management. And so a lot of that conversation goes from okay, 1 to 10%. You should constantly, or at least on a regular basis, rebalance the portfolio. Because crypto has those boom and bust cycles historically. You want to make sure that you're rebalancing the portfolio probably on a quarterly or biannual basis and then it's okay to diversify within the crypto sleep. Maybe you want to do 33% Bitcoin, a third Ethereum and a third crypto equities through a crypto equities index fund. Or perhaps you want to go 50, 50 Bitcoin, Ethereum or take a market cap weighted approach. But most investors in traditional industries or assets asset classes don't pick one winner. They kind of take a broad based basket approach that helps make sure that they capture the upside of a sector without being tied to any one particular asset. And we think that's going to continue to be a trend in the crypto industry.
- [18:26]
A
Yeah, it certainly is intriguing. And one of the other things that we saw seeing come out here recently is just the addition of a lot of new crypto ETF applications. And I know that Bitwise has filed for a couple of them. I know you're also kind of limited on what you can and can't say. But you know, what can you tell us about these, these new Altcoin ETF applications? And I guess also can we expect to see more over the course of 2025.
- [18:53]
B
Of course, happy to talk about these. Really excited about what, what's in the works. Of course I can't speak to any particular filing that's active with the SEC for compliance reasons, but more broadly, 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. If you, if you think about why ETPs and ETFs are so important, it's because that's how most investors access many different types of asset classes. Most investors, if they want exposure to gold or some other kind of commodity or to a broad based basket of equities, they use ETFs. Right. It's, it's, they're low cost, they are easy to handle from a tax reporting perspective. They fit into your workflow. And so we're super excited about the potential for new ETPs to come across the board. I think what we'll see next is single asset ETPs like Bitcoin, Ethereum, but probably other assets in the top 10 crypto assets by market cap, maybe Solana, maybe XRP, who knows, maybe Avalanche or others that are kind of in that higher market cap ban. They have more liquidity and it's more likely those markets are at a stage where we can see products making their way through the approval process. But I also think we're going to start to see once we have enough assets that are wrapped in these indexed approach, we have a Bitwise 10 large cap crypto index which we've been running since 2017 and that tracks the top 10 crypto assets by market cap and rebalances on a monthly basis and screens for a bunch of eligibility requirements that you would see in traditional indexes, liquidity, security, all kinds of things like that. And so I think we'll start to see crypto based products that look a lot like traditional products coming to the market. And we're super excited about that. Maybe we'll have staking based ETPs here in the US like they do in Europe. Right. As we kind of see this regulatory catch up happen over the next year or two. So we're super excited about what's going to come to market.
- [20:53]
A
Yeah, I mean you, you basically answered the second question I was going to ask which is just, you know, what goes in to researching these ETFs because there's so many thousands and thousands of cryptos that are out there and you know, it has to be a little bit of a difficult process to really narrow all those down. But you made some good points looking at market cap and, and some of those other metrics. The final question that I have for you is when we're looking at just bitcoin supply right now, and that has been a big, big talking point. When we look at supply on exchanges, when we look at just total supply that might be active and circulating, it seems as if that is getting reduced more and more and more as ETFs. And you know, maybe it's governments or just other sources just acquire more Bitcoin. You know, what do you view like that whole supply situation? Because the way that I guess I kind of view it is that supply is being taken out, put into longer term storage, especially through the ETFs. I imagine through government adoption it would be a more long term storage approach as well. I can't really see them day trading, crypto day trading, bitcoin. But as the supply is seemingly being reduced, we're seeing the price of bitcoin appreciate. So I don't know, have you guys come across anything along the lines of Bitcoin's supply situation?
- [22:15]
B
Yeah, I think it's the beauty of a supply constrained asset like Bitcoin. You have this asset that has a limited supply, it has a reduction of new supply entering the market for the next 115 or so years. And at the same time you have growing demand like we've never seen before from the ETFs, from corporations, likely from governments and from institutional investors. And all of that just creates this beautiful setup which I think we're seeing reflected in this run up in price currently that we've seen. But also, you know, it impacts our outlook for the price of Bitcoin in the future when we see this tidal wave of demand sitting out there and kind of coming towards the, the falling supply. And so, you know, I do think you're right that many of the investors kind of getting into bitcoin, if they're governments or pension funds or passive investors, those are long term investors generally speaking. Now I think a lot of retail investors perhaps have a more short term outlook in many instances. And certainly we're seeing a ton of adoption of these ETFs from hedge funds who are likely using the ETFs as one part of a multi legged trade. And so I think that's probably a bit more short term action. But that's the beauty of these ETFs they allow all different types of investors to get in and out of Bitcoin or get in and stay in, in Bitcoin without having to go through the process that some of us went through three, four, five years ago, trying to, you know, mess with offshore accounts and trying not to lose your seed phrase, you know, and trying to figure out where X Bitcoin is in whatever wallet. This just simplifies the way to get that exposure. And so, yeah, from the demand and supply relationship, I think Bitcoin has an amazing setup. We continue to see more and more demand. We have yet to unlock a lot of the institutional capital that would want to access crypto. Whether that be wirehouses like Morgan Stanley, Merrill lynch, bank of America, whether that be pension funds, endowments, corporations, governments, many of them haven't started yet, allocating. And so we think it's, it's still early, but it really is that simple when it comes to supply and demand. Huge, huge inflow of demand coming, very limited supply, supply is shrinking, and that leaves us with a pretty positive outlook.
- [24:30]
A
Yeah, I mean, the sky's the limit here. We're just getting things started and hopefully we got a great year for crypto across the board to come. So, Ryan, we appreciate you coming on. Where can people follow what you're doing and what Bitwise is doing?
- [24:47]
B
Oh, well, thanks again for having me, Brandon. Love the podcast. Excited to, to talk with you and hope to come back in the near future. I'm on Twitter or X at Rasterly Rock. It's kind of a, a poorly thought out pun on Game of Thrones that I came up with before. I plan to be publicly tweeting about, about crypto, but nonetheless, that can be fine. Found at on Twitter at Rasterly Rock. All of our information and educational materials and everything about products and whatnot is on the Bitwise website. We have tons of information there. Portfolio simulation tools, correlation tools. Matt Hogan, our CIO we spoke about earlier, writes a CIO memo every week, which is short, you know, less than five minute read on what's going on in the crypto market. So I would urge people to, to sign up for that and, you know, follow along the journey. We're excited for where crypto's headed.
- [25:36]
A
Well, we appreciate it, Ryan. Thank you so much for joining us. And we'll have to have you back on here soon.
- [25:43]
B
Looking forward to it.