← CRYPTO 101
CRYPTO 101
Ep. 664 The Future of Crypto ETFs & Top Predictions for the Rest of the Year with Bitwise's Matt Hougan
00:55:36
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- [00:00]
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- [01:55]
Bryce
All right, all you good, wonderful citizens of CRYP Nation. Welcome back to another episode of the Crypto 101 podcast. I'm your co host, Bryce, as always, joined by my good buddy Mr. Brendan. How are you doing, brother Bryce?
- [02:09]
Brendan
It is a fantastic week for the crypto markets. Everything's looking good. We're getting all sorts of positive news and we have one of. Maybe I'm biased. I don't even know if I'm allowed to say this. It's kind of like picking a favorite child. But what I would say is one of our Favorite guests to have back on the podcast. So overall good over here?
- [02:27]
Bryce
No, that's awesome. I agree. I agree. Mr. Matt Hogan, CIO of Bitwise, joining us today to chop it up. How are you doing today, Matt Bryce.
- [02:37]
Matt Hogan
Brendan, thank you so much. I'm. I'm proud to be your favorite child, so I'll take that as a win. I'm doing great. Yeah, it's a great time for crypto. I'm really excited for the second half of the year, and I'm fired up for this podcast as well.
- [02:50]
Bryce
No. Hell yeah. There's a lot of crazy stuff. I think the most recent sort of big, groundbreaking news. Well, there's a lot. There's a lot that just got piled in this week, but the fhfa, the, the federal housing sort of finance agency for crip, for, for the overall mortgage industry, not just for crypto, but for. For the US Mortgage industry, just said that people are going to be able to. Eventually they're getting guidance that folks who have crypto will be able to use that in their qualifications. So that'll be less sell pressure. Real quick, hot take on that. Is that a positive for the industry? Is that a sort of. Did it get overblown? Is that as big as people think it really is?
- [03:28]
Matt Hogan
I don't think it got overblown. I think it's positive both from a market structure perspective and from a. What it says about bitcoin perspective. Right. From a market structure perspective, it does mean less selling by whales who don't need to access their money. They would rather maintain their bitcoin exposure than sell it. And they'll now be able to do that. So that's a win. But the bigger win is it's just a sign that bitcoin is moving into the big leagues. It's acceptable collateral for the largest institutions in the world to look at and consider valuable. It means that those institutions no longer discount it as going to zero. And that is. That's a big statement. It's a huge swing from two years ago. It's. It's the direction of travel. I love to see it, and I think it's very positive.
- [04:16]
Bryce
Now, from zero to one, that's the biggest step. That's the hardest step. From nothing to something. And that's what we've become.
- [04:22]
Matt Hogan
That's exactly right. And previously they were saying, we can't count this because it's going to be worth zero. We have no idea if this will have value five or ten years from now. And one way to interpret this is we now have an idea that this will have value five or ten years from now. That's what the government is saying. That's what the largest financial institutions are saying. And that's a sea change. That is a big, big deal.
- [04:44]
Bryce
Yeah. And there are a lot of sea changes everywhere we look. And one of the things that I think it maybe got announced last month or the month prior, but it was part of your Hot 10 predictions for 2025 that you gave at the end of last year. One thing that I thought really stood out in there that actually already end up came coming true was the Department of Labor relaxing their guidance on allowing crypto into 401ks. So kind of, you know, did you have some insider info on that one? That was a very specific sort of call out that happened months after it was.
- [05:21]
Matt Hogan
It was a specific call. No, that one stuck in my craw last year because crypto doesn't necessarily come from the traditional finance industry. And, and I did before I came to crypto full time almost eight years ago. And what, you know, if you come from traditional finance is that retirement market is massive. That's eight or nine trillion dollars. And for the first time really in the Department labor history under the last administration, they came out and said, you shall not buy Bitcoin. If you're a 401k provider and you let your users buy bitcoin, we're going to knock on your door, audit you, and make your life a living hell. And I had never seen it before and it just seemed like a ridiculous thing for them to say you can buy some crazy investments in 401ks, right? Things that are much wilder than crypto. And for them to single out Bitcoin, it just annoyed me. So I thought with a new administration coming in with a more positive crypto regulatory environment, that they were going to reverse this. And remember, it's a big deal. I mean, again, 8 or 9 trillion dollars plus most Americans save money every week. If 1 or 2 or 5% of that goes into bitcoin goes into crypto, that's going to reduce volatility, it's going to further legitimize the asset class. So I really wanted it to happen. It was a very specific prediction. And, and I'm so glad that I checked off the box, both for me and more broadly for what it means for crypto going forward.
- [06:47]
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- [07:38]
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- [08:06]
Brendan
Yeah, I mean, it is super exciting to see all this happening, actually, before.
- [08:11]
Bryce
You, before you move on. Just to give folks the sense of scale for 401ks in America. And Matt, I think this was your stat. I don't know whose stat it was, but I think it was like $8 trillion in 401ks in America. And it's like if we get 1% of that, that's $80 billion. That would completely skyrocket the market cap of crypto. If even just 1% of 401ks popped in.
- [08:35]
Matt Hogan
That is right. And then make it 2 and a half or make it 5%. It's a lot of money. And again, it's the money that people save every week. Every week. Like, a lot of people wonder why stock markets have had this persistent upward move for the last 30 years with very little pullbacks. Part of it is, yes, the Federal Reserve jumping in, but part of it is that most Americans save money every week that automatically invest into stocks. And boy, I think that would be transformative if and when a portion of that comes into the crypto market. And I think we took the first big step.
- [09:09]
Brendan
Yeah. And I think it's just a matter of time until we get there. We're starting to see that a lot of advisors are upping what they think people should have in terms of crypto exposure from, you know, before it was zero, then a half a percent, then 1%, then we all remember the one to three. Now we're starting to see 5% come in and I think that that number is just going to continue to grow. And it's a cool thing to see the tradfi markets and the tradfi investors begin to understand that having a little bit more exposure to this is actually a really helpful thing given Bitcoin's track record. And for everyone that's listening in, you know, maybe this is your first time listening to one of our podcasts with Matt. Don't forget, you know, again, like we said earlier, he's one of our favorite guests. We're not going to go back and redo the whole first podcast. So if you want a full background on Matt and what he's doing at Bitwise in a really solid introduction, make sure that you go to some of those previous episodes so that we're not just double dipping and asking the same things over here. But Matt, that kind of those in.
- [10:12]
Bryce
The show notes as well.
- [10:13]
Brendan
Yeah, great call. We'll put those down in the show notes. And Matt, I guess, you know, in the meantime, catch us up to date on what you've been working on since we last chatted.
- [10:23]
Matt Hogan
Yeah, it's been, it's been quite a, quite a stretch. There are probably two vectors we've really been progressing. You know, one, we've been pushing forward on more and new products. There are a lot of new ETFs that we've launched, whether they're option income ETFs or whether they're Bitcoin, treasury ETFs. There's, there's ETFs that we filed and hope to launch, whether that's Solana staking ETFs or our index fund moving into an ETF structure. And then the other big thing, and we can, we can take the conversation however you go, is we've just been out there meeting with the largest wealth platforms and talking to them about the role of crypto in the portfolio. Absolutely. What you guys said, the conversation's gone from 1 to 2 to 5%. And in many cases it's gone from no crypto to yes, we're open to crypto. So it's really been two pushes. It's been a product push and then it's been a just a distribution and education push. And I have to say the market is warming up to crypto even faster than I expected. You know, six months ago, it really has. It's become a game changer. It's no longer a risky, unknown asset class that they don't want to deal with. It's an asset class that they know they have to deal with. And, and it's. It's been great.
- [11:45]
Brendan
You know, you just said that you were out there meeting with a lot of the, the largest players in finance. Can you tell us any more about that? Again, we never want to get you in trouble over here, but, you know, who have you been speaking to? What have they been saying behind the scenes? And like, what does the future of crypto and blockchain tech look like from some of these behemoths in the tradfi space?
- [12:09]
Matt Hogan
Yeah, There are probably two directions in which. That's interesting. One, you know, we talked about how even after Bitcoin ETFs launched, many of the largest wealth managers in the US couldn't buy them because their platform wouldn't let them. Whether that's Wells Fargo or Merrill lynch or Morgan Stanley or UBS or Raymond James. These are like the largest concentrations of wealth in the US they control something like 20, 30 trillions of dollars, and they wouldn't let them buy these Bitcoin ETFs. So one thing that's been really true over the last six months is one by one by one, like sort of dominoes, they've all opened up to the market. I've been going around giving speeches at their conferences, we've been talking with their research teams, and I think it's fair to say at this point, 80% of them are now open. And I think six months ago that was something like 20%. So it's been a real shift, and that's going to take years to translate into flows in a major way, but you'll start to see that coming in and it'll provide a tailwind for many years. The other thing we're really seeing, which is incredible, is all the largest firms on Wall street now want to get involved in crypto. Whether that's from custodying crypto assets or launching stablecoins or. Or trading crypto assets. Just doors that were closed to us in the past are now open. And I think you see that JP Morgan wants to launch its own stablecoin and is allowing its clients to trade bitcoin. Five years ago, they said they would fire anyone who talked about Bitcoin. So it's a remarkable transformation. And you just see it. You know, we've already given four examples on this podcast, and I'll give it.
- [13:56]
Bryce
A Fifth, and I'll give it a, you know, you guys were speaking about like, you know, financial advisors and wealth managers that are allocating to crypto. And I just saw a gentleman, I think his name is Rick Edelman, who one of the largest, I think maybe the largest independent registered investment Advisor with over $300 billion in assets that he advises. He set a 40% allocation to some combination of crypto is advisable in some capacity for risk seeking, you know, growth minded individuals. Did you see this note? And have you ever had conversations maybe with that sort of, you know, whether him or his team or like that, that industry?
- [14:41]
Matt Hogan
Absolutely. Rick's, Rick's a good friend of mine.
- [14:44]
Bryce
That's awesome.
- [14:45]
Matt Hogan
And we, we had this conversation. I'm sure it didn't just spin out of a conversation I had with him. I'm sure he had it with multiple people. But we talked about this disconnect between what sort of crypto thought leaders say, which is you should have 2 to 5% and you should rebalance diligently, and what they do in their personal portfolios, which is they have 30 to 40% crypto and they just let it run. And Rick had the guts to go out and say this publicly. It's worth noting that if you model it out, there are ways to de risk the other parts of your portfolio as you add crypto risk. So I know in my personal portfolio I have way more than 5% crypto, but the bond side of my portfolio is very conservative. Right. I have effectively money market funds, whereas a traditional investor would have long dated treasuries. But I don't want to take long dated borrowing risks to the US Government. So I have a conservative bond portfolio and then a lot of crypto. I do think what Rick is saying is designed to stretch people's minds. Right. Again, you started with it was like half or 1% and now if you're not at 2 to 5%, you're almost short Bitcoin. And Rick is saying, hey, look over here, this is what I think people should do, which is 40%. Most people won't get there. But I do think he'll pull people further along the spectrum, which is great.
- [16:16]
Bryce
Is it fair to say that the ETFs are kind of the mechanism that allowed somebody as reputable as, as Mr. Edelman to actually go out on a limb and say something like this? Because Prior to the ETFs, this would have been an unthinkable opinion. Now with the ETFs in place and maybe you could speak to some of the, you know, milestone, landmark successes that these ETFs have reached now, make it like this is now possible. And it really comes down to the ETFs. And for those, again, who haven't seen those earlier episodes, you know, Matt was The CEO of ETF.com way back when, so knows this world very intimately.
- [16:51]
Matt Hogan
Yeah, absolutely. The ETFs made it push button easy to gain exposure to crypto, and they also de. Risked it for people a lot. Right. Unless you're very savvy, there are some personal technical security risks to holding your own keys or accessing it through an exchange like Coinbase. And the ETF just made it push button easy. It also gave this stamp of regulatory approval, which a lot of people needed to give them the comfort to jump into this space. And as you mentioned, these ETFs are just enormously successful. Right. The most successful ETF launch of all time are the Bitcoin ETFs. They took in $37 billion in year one. They've taken in about $14 billion so far this year. I think they'll end the year closer to 40 or more. They've just been a game changer. And a fun fact about the ETFs. I may have shared this last time, so forgive me if I'm repeating, but they're bought by everyone. Right. You can buy an ETF and the Abu Dhabi Sovereign Wealth Fund owns the same etf, and nine of the ten largest hedge funds own the same etf. You have the access to the same tool that the most sophisticated investors in the world are using at the same price. It's really an incredible offer. It's a wonderful thing about these products.
- [18:10]
Brendan
Yeah. It's been astonishing to see how well all of the Bitcoin ETFs have done. And a lot of people are looking at this and they're looking at them breaking records and they're asking questions like, is this sustainable? And I guess that's my question to you, like, can the Bitcoin ETFs hold the heavy level of inflows that we've seen over the last year and a half, or maybe even increase that going into the future and outpace what it's already done? Or is this a situation where we've squeezed most of the inflow capital out at the start and that since we've squeezed most of it out of the bottle, like it's expected to slow from here?
- [18:46]
Matt Hogan
No, I think it's going to accelerate from here.
- [18:49]
Brendan
Wow.
- [18:49]
Matt Hogan
You know, I just mentioned that within the last six months, we've seen the largest wealth account platforms go from not allowing these ETFs to allowing these ETFs, and that opens up trillions of dollars of market exposure. I also think, and you guys might have had this experience that if you talk to most people who are in crypto, they didn't stop the first time they bought Bitcoin. That was like putting their toe in the water. And then maybe they put their whole leg in the water, maybe they jumped in, whatever. But usually people tend to add to their exposure over time as they grow more comfortable with the asset. So, you know, we think, we think Bitcoin ETFs will set a new record for flows this year, and then we think they'll set a new record for flows next year. The closest analogy that I have is in is Gold ETFs, which launched in the US in 2004 and they had eight consecutive years of increasing flows as people got more and more comfortable with them. So that's a great stat. I think this is a train that runs for a long time.
- [19:53]
Bryce
That is a great stat. Just shows sort of like every, you know, year after year after year, people get more comfortable and like the wealth effect kind of grows and liquidity, like liquidity begets liquidity. And I'm curious, like some of these wealth managers or these platforms, banks, like, there's got to be some level of like minimum sort of time that they allow these ETFs to even trade before they consider the bringing them on the platform. I imagine there's some degree of like looking at all these different factors if they are liquid enough, if they have enough trade volume, tight enough bid ask spreads. Could you kind of like talk about from the perspective of like a, a platform, like what needs to be, what boxes need to be checked basically before their clients could like trade these things.
- [20:39]
Matt Hogan
Yeah, you wouldn't believe it. I think the last due diligence package we did for a major top four wirehouse had 650 pages of questions. So there's questions?
- [20:51]
Bryce
Not even of answers?
- [20:52]
Matt Hogan
No, no, the questions and the answers. I apologize. 650 pages. The, the, the, the number of boxes are significant. You talk to the big ones, which are, they want them to have been on the market for a while. So now we're 18 months in. Maybe we've satisfied that we want them to be liquid with tight spreads. So people get the execution that they want and aren't surprised on the backside, but they want to know a high level of details about how things are custody. They want to know a high level of details about how things are traded underneath the hood. Right. They want to de risk every element of this investment that they can outside of the return, which isn't. They're obviously not in control of whether Bitcoin goes up or down, but they want to be sure that these ETFs are proven and tested in the market. And I think the fact that we're seeing these approvals shows you that they're, they're, they're gaining that confidence. Yeah.
- [21:45]
Bryce
And, and even on those approvals, I think the most recent one is the staking for Spot Ethereum and Solana by one of the competitors of yours that are in the marketplace right now. Can you, can you tell us a little bit about why staking has kind of had such a, a sticky sort of history with the sec? Why it hasn't been able to get pushed through at the same rate as some of these other things? And, like, what does this mean kind of going forward?
- [22:12]
Matt Hogan
Yeah, absolutely. And we're all friends, so friendly competitor.
- [22:16]
Bryce
Is friendly competitor at this. Was it Osprey funds who let me or Rex?
- [22:21]
Matt Hogan
I think they're, they're, they're, they're sister companies, so Osprey and Rex, I'm not sure what filed under, but yeah, we want to beat them in the market and see them succeed. Those can both be true. Yeah. So, so on staking, I think there have been. So for a while, under the Gensler era, Gensler, which was the last SEC commissioner, he didn't want any ETFs, and so he was sort of forced to allow spot Bitcoin ETFs and spot Ethereum ETFs because he was sued and lost in court. And so you could think of him as doing the minimum required amount that he was forced to do almost from a legal perspective. And staking was something else. Right. He didn't want to allow staking ETFs because he thought that staking would turn the crypto asset into a security and he wanted to regulate that. So it was just no way to go. But we haven't had staking ETFs yet under the new SEC. And the complication there has actually been. There have been a few, but one of the biggest has been on the tax side. And so I know this is deeply boring, but getting tax approvals and opinions to allow these ETFs to stake and still be in compliance with other securities laws just has taken a lot of work. The SEC has been highly engaged in that process and people have been pushing it forward and there are various ways to do this. It's worth noting that the Rex is going under the 1940 act, which is different from the 1933 act that most people are pursuing. Part of that is maybe a simplification of those tax arguments, I'm not sure. But that has been the real hold up. It's real like meat grinder, lawyer, legal, tax work behind the scenes. I don't think there's been any sort of, you know, big picture crypto philosophical debate. It's really been this sort of grindy regulatory process.
- [24:13]
Bryce
And it seems though that there's lots of traction, which is good because we're seeing more approvals, we're seeing more discussion or discourse and you know, you know, I think a lot of these SEC meetings are public and I'm scrolling through Twitter and seeing some email chains that look positive and announcements and you know, feedback sort of public discourse that they're all putting out. So it looks good. And then the Bloomberg guys, which we all know and love, just came out with some odds on altcoin ETFs that are very high, strikingly high for this year. And so again, I don't want you to comment on any applications that might be active for you or anything like Brendan said, that could get you in trouble. But we want to know generally. I mean, the Bloomberg guys had this pegged anywhere between like 60% on the low end for some altcoins and 90% on the high end for some altcoins. Likelihood of getting ETFs this year, your thoughts?
- [25:07]
Matt Hogan
Yeah, I saw the 90%. Boy, I hope they're right.
- [25:10]
Bryce
This will be big.
- [25:11]
Matt Hogan
We're, we're very optimistic a bitwise, as you mentioned, I can't speak about our specific filings, but we're optimistic in the direction of travel for the reasons that you discussed. I will say that there's probably a two phase thing for people to watch. The first is if we get Solana ETFs, which are the next ones up for review from a calendar perspective, that would be a major win and a signal that we're likely to get more than that. Right. Because Solana ETFs would sort of be a pretty big step from Bitcoin and Ethereum, which were well established with large regulated futures markets trading alongside them. And Solana is not that. Right. It's smaller, the futures market is smaller. And so it would be a major step. If we get that, I think then we cascade to get a few more assets which is probably why Bloomberg is so optimistic. How far it goes. You know, whether we get to some of the. We've seen some very, very altcoin filings, we've seen Bonk filings and Pengu filings. I have my doubts whether we'll get all the way down that spectrum. But I think if we get Solana, we're likely to see a handful of the largest crypto assets and coverage of 80, 90% of the market.
- [26:27]
Brendan
Why do you think that the Bitcoin ETFs have been so much more successful than the Ethereum ETFs?
- [26:34]
Matt Hogan
Yeah, I think one reason is that Bitcoin has been more successful than Ethereum. So ETFs are just sort of an expression vehicle. And even crypto natives have not been that excited about Ethereum until recently. I do think the zeitgeist has changed with the changes at the Ethereum foundation, with the PETRA upgrade and sort of the faster shipping cadence, with the institutional orientation. So I think to a degree, Ethereum's got its mojo back and you're starting to see that reflected in price, and you're starting to see that reflected in flows. Ethereum ETF flows are up substantially over the last six weeks or so. So a lot of it was just, look, Bitcoin was in its perfect market, right? With rising concern about debt and deficits and the US Dollar's role in the world, with institutional adoption of Bitcoin by corporations and sovereigns around the world. It had all these catalysts, and so people were very happy to go along for that ride. ETH didn't have those catalysts. It's now starting to get them again. The change at the foundation, the growth of Stablecoins, the launch of Ethereum treasury companies, like it's starting to get signs of that momentum. So if I were a betting man, I'd bet that Ethereum ETF flows will be pretty good in the second half of the year. But I think that's the primary reason. It was just bitcoin season more than it was ETH season. There are other reasons you don't have staking, you don't have these things. We can talk about those. But I think that was the biggie.
- [28:05]
Brendan
I think that that's an important piece of clarity because I've seen people and I've talked to people that have said, well, I'm nervous about these future altcoin ETFs because Bitcoin seems to be the one that's really gaining all of the attention and a lot of the traction and Inflows. And I'm nervous that because of the way that Ethereum has performed and the Ethereum ETFs have performed, I'm nervous that altcoins are going to follow the performance of the Ethereum ETF specifically, just because it's the only other ETF that we've seen counter to bitcoin in the crypto market. And I think you offer a really good perspective here and saying, hey, there's a. There's a bit more to it than just saying Bitcoin ETF behaves this way, altcoin ETFs behave that way. I think that there is a lot more that goes into that and we even see that sentiment within the crypto space within crypto Twitter like we see it circulating around.
- [28:55]
Matt Hogan
Yeah, I think that's exactly right. And it's also worth noting, just because they haven't done well yet doesn't mean they won't do well in the future. I do think eth ETFs will do well in the future. I think some of the altcoin ETFs will do exceptionally well, but it'll be reflective of the stories of the asset themselves. Right, that's going to be the driver. If you as a crypto investor are not excited about this asset, then the institutional guy at Raymond James is not going to be excited either. Right. He's less excited than you. So you have to travel that direction to imagine the sort of inflows. But I think many of these will be, you know, they'll end up being multi billion dollar ETFs, which is a huge success.
- [29:38]
Bryce
I think that's a great point. I also think it's a great segue to a lightning round that I've envisioned for us. And so Matt, for everybody listening, writes these incredible weekly CIO memos. They come directly to my email inbox. You could, you know, go on his website and all that kind of stuff. But these are great. So I want to do a lightning round. I've got the titles here for you. So you have to memorize each title and every single time that you've written it and all that kind of stuff. But I just. The high level sort of idea behind each one of these. Right. And so about six weeks ago, you wrote a memo called the Case for Diversified Crypto Exposure, kind of along the same lines that you've just been talking about right now. So. So what's the high level behind the Case for Diversified Crypto Exposure?
- [30:24]
Matt Hogan
Yeah, look, a lot of people are bitcoin only. That's how they came into the market. Maybe they bought the bitcoin etf. But we all know that crypto does more than just create digital gold. You can use it to move stocks, you can move it to move dollars. We call those stable coins. I think eventually all assets will move over crypto Rails and they won't all move over bitcoin. And you want to diversify your crypto exposure to capture everything blockchain can do and probably own stocks as well. I make this analogy in that piece, which I'll share here to the Internet in 2004. Like if you went back to 2004 and you wanted to invest in the Internet, you might have bought Google, which was the dominant company in the dominant paradigm, which was search. And you would have done great. It's up almost 8,000%. But the Internet's more than search, right? It's also shopping. That's Amazon, it's video, that's Netflix. It's lots of different things. And actually Netflix is up 100,000% since 2004. Right. So Google was a great bet. Netflix was an incredible bet. And I wanted to make that point about crypto. And I'm extraordinarily bullish on bitcoin. But crypto is more than bitcoin, right? It's stablecoins. It's real world assets. It's deep in its defi. And I bet there's some Netflix amongst that exposure. So why not, why not capture the whole opportunity set and don't just, don't just bet on one thing.
- [31:48]
Bryce
God, that's a, that's. That should be required reading for everybody listening. I completely subscribe to that same view. And I love that, that sort of analogy there's. Okay, so your one that was about four or five weeks ago was called Wall street and crypto are getting married. What's that one all about?
- [32:07]
Matt Hogan
Yeah, you know, I think that was around stablecoins. And you know, we had this circle IPO among other things. So there have been a bunch of factors in this stablecoin story, but we've seen Wall street realize how big a market crypto is via stablecoins. I've shared before that Tether, the largest stablecoin company, makes as much money as Goldman Sachs. And Goldman Sachs doesn't like that because Tether has 135 employees. What that means is Goldman Sachs.
- [32:39]
Bryce
How many does Goldman have?
- [32:41]
Matt Hogan
He's like 30,000 or something like that. That's crazy, right? Completely crazy. But what that means is Wall street wants a piece of it and you can See this in various ways. You can see this in J.P. morgan, bank of America and every other major bank wanting to launch a stablecoin. You can see it in the Circle IPO, which was 8x over subscribed, priced above the range that the offering people said at $31 and then proceeded to 8x. Right. Since it's launched and it's trading in the 200s, in two years, every wall street company is going to be a crypto company. Right? There's a saying about the Internet or about mobile. Like when mobile first launched, there were mobile companies. Now there's like, what is a mobile company? It doesn't make sense. Every company is a mobile company, every company is an Internet company. Every Wall street firm is going to be a crypto company because that's the way money and stocks and bonds and crypto assets and private trusts and all those things, they're all going to move over crypto rails. And so that was the point I was making in that piece.
- [33:47]
Bryce
I love it. Couldn't have said it better. And then one of the other ones that you wrote was called what circles IPO means for crypto investors. But we just doubled double down on that one. So we're gonna skip that one. This was a great one. More return with less risk. Kind of talking about bringing crypto into the portfolio. And this is coming from a cfa some. Actually somebody who wrote, wrote some textbooks for the CFA too.
- [34:10]
Matt Hogan
Yeah, absolutely. This is the big one. You know, the classic way of studying bitcoin's role in a portfolio is to take a portfolio of stu stocks and bonds and add some bitcoin. And when you do, what you see is the volatility of the portfolio goes up a little, but the return goes up a lot. And so the argument our crypto people have always made is like, just add a little bitcoin, it's like hot sauce. It makes the overall portfolio tastier long term. But the funny thing about how many of us in crypto manage our portfolios, as we were discussing, is we don't just add crypto. Crypto is a high risk piece of the portfolio. So we add crypto and then we remove risk elsewhere in the portfolio. Maybe we take our equity exposure down or maybe we take our bond portfolio and make it safer, make it money market funds instead of long term bonds. And when you do that and you model it out, you get this incredible result which is you get more return and less risk historically. And that's not supposed to exist in finance. Right? You're not supposed to Be able to get more return with less risk. And there's no guarantee that you will in the future, but in the past you've been able to do that because crypto has so much upside potential. If you add it in, but then de risk your portfolio a little bit, you end up in a better place. And I just think most people don't think about that. They just think about adding it in to the status quo. But you can add it in and take risk off elsewhere and you get this. This beautiful mix. Yeah, I really love that piece. Yeah.
- [35:45]
Bryce
And then your most recent or one of your most recent pieces that, that'll conclude this lightning round was an homage to David Foster Wallace, I believe, called this is Water or what the Hell is Fiat? What's that one all about?
- [36:00]
Matt Hogan
That's right, yeah. Dave Foster Wallace, obviously incredible author, gave a commencement speech at Kenyon College. He told this parable about these two fish. So two young fish were swimming along and this older fish passed them by and said something like, hey boys, how's the water? And the two fish kept swimming. And then after a while, one of the fish turned to the other and said, what the hell is water? And the point is that if you're surrounded by a certain environment your whole life, you overlook some of the most important things. Like a fish might not understand that it's in water because they it hasn't imagined the rest of the world. And the point I was making is unless you're 85 years old, you've only existed in a world of free floating fiat currencies. The US went off the gold standard in 1971. And so you've assumed that this is just the natural way of things, that governments print money, that there is natively inflation, that central banks decide sort of how the economy goes. But maybe people are waking up to the reality that there's this alternative approach where that's not true, where we don't have arbitrary financial rules, where there is maybe a bitcoin standard or a gold standard. And I think people want exposure to that. So I was just trying to use that analogy to wake people up till we've been swimming in this fiat pond our whole lives. And that doesn't mean that it's the only way the world can work. There is this alternative approach that's existed through most of history. Agree.
- [37:28]
Bryce
Love it. Yeah, it's. It's one of those things like people say to me, like sometimes, like, oh, like I'm too late to, to bitcoin, I'm too late to crypto. I was like, would you ever say that about, like, I'm too late to money? Like, no, you're always going to want to be earning money or like, I'm too late to the Internet? No, you're always going to be wanting to get more online. It's like just a technology that's going to be more and more and more pervasive. Like money's a technology that's become more pervasive over time. The Internet, it's like this is just kind of a new technology. Like you're, you can never be too late to crypto.
- [37:57]
Matt Hogan
That is. Yeah, I love it.
- [38:01]
Bryce
What do you think of that, that lightning round, Brendan?
- [38:04]
Brendan
I like it. In fact, I got another lightning round if we've got time for it.
- [38:08]
Matt Hogan
I love.
- [38:09]
Brendan
Maybe we'll make this a new segment. But, you know, just going over some of these predictions that you've had for the year, kind of going back to some of these, I was reading through them last week when we were putting the whole podcast and the outline and everything together and I was like, man, you know, some of these things are already coming true. Like, you know, like what Bryce said earlier. Like, does he have some sort of insider information? Does he know, is he a time traveler here? But no, you know, looking at the first one here, you know, Bitcoin, Ethereum and Solana will hit new all time highs and bitcoin will eventually be trading above $200,000. That was written in December. Fast forward, you know, January, both bitcoin and Solana hit new all time highs. Ethereum is not quite there, but things are well on their way. Any thoughts on, on that one?
- [38:56]
Matt Hogan
Yeah, absolutely. Appreciate that. Look, we still think all three things can happen. I think bitcoin is at an extraordinary point. We're extraordinarily bullish and we think it's, we do think it's going to end the year above 200k. It tends to have late in the year significant runs and, and we think that will help pull up the altcoins as well. So, yeah, we've already gotten part of that prediction. Right. I think we're going to end the year with all of that. Right. I actually feel more confident on Bitcoin 200k now than I did in December when I made that prediction.
- [39:26]
Bryce
I like that, I like that, that framing as well. Brennan, is he more confident or less confident on these predictions today?
- [39:33]
Matt Hogan
That's right.
- [39:34]
Bryce
That's a good one.
- [39:34]
Matt Hogan
More confident on that one. I'm feeling good.
- [39:37]
Brendan
Well, this next one you've already talked about, so we'll still give you an opportunity to talk about it. But the Bitcoin ETS will attract more flows in 2025 as they did in 2024. More or less confident?
- [39:49]
Matt Hogan
Yeah, more confident. They've had a good start to the year. They're not quite on pace mathematically to get to the flow level, but the approvals we've seen at those national accounts which I talked about are going to pay off in the second half of the year. I think we get there, I really do. I think we end at 40 billion.
- [40:06]
Brendan
Or more, especially if we see a really strong rally come towards the end of summer, fall, winter like we normally do, easily gets us there.
- [40:14]
Bryce
So yeah, FOMO juices going again.
- [40:17]
Matt Hogan
Totally agree. Yep.
- [40:19]
Brendan
Let's have one big Santa Claus rally.
- [40:23]
Bryce
And all the cyclers, all the four year cyclers, which maybe I'll ask you your opinion after you do your lightning round, but all the four year cyclers are saying, you know, July to October, right. Should be a big sort of top in the market. November or something like that.
- [40:36]
Matt Hogan
So October, October, November for sure. That's, that's what the, that's what the history says. Look, I think it's setting, I think it's setting up really beautifully. We see available supply constricting, demand accelerating. It's a pretty good setup.
- [40:51]
Bryce
Pretty good setup.
- [40:53]
Brendan
Yeah. I was just looking at supply and most people don't realize how much the supply is squeezing, but the demand is getting just eaten up. Whether you look at these treasuries, I mean there's treasuries popping off left and right, there's the ETFs that are accumulating, retail is buying en masse, you know, countries and governments and everyone wants their hands on this, even companies now. And while you look at the supply, the supply is shrinking. If you look at the amount of supply on exchanges, it's something that we've looked at over here. If you look at the supply at OTC desks or in these OTC desk, those are shrinking pretty drastically as well. And so when you have these over the counter desks and you have these exchanges seeing less and less crypto year over year at a pretty substantial rate while demand is increasing like it's, it's something to pay attention to. It's like a serious thing, so.
- [41:46]
Matt Hogan
That's exactly right. Yeah, there's, there's a squeeze coming and yeah, on exchange supplies are at multi year lows. And as you mentioned, ETFs, companies, governments, they're buying, you know, five to 10 plus five times the available new supply. Right. There is. There is a. I think there is a supply shock coming. That's part of why I'm confident about that second half year.
- [42:07]
Brendan
Yeah, it's a crazy concept to think about. And again, everyone, if you haven't looked into it, maybe we'll cover it on the rundown one of these weeks, or. I know we've covered in the past, but definitely worth looking into. Getting back to this. Prediction number three was that Coinbase will surpass Charles Schwab as the most valuable brokerage in the world and its Stock will hit $700 per share.
- [42:30]
Matt Hogan
Yeah, we are still very bullish on Coinbase stock and we think it'll eventually flip Charles Schwab. The challenging part for us with this prediction is Charles Schwab stock has done pretty well as well. It's up 22%, which is an incredible run for a traditional finance stock over six months, and we didn't factor that into our equation. So if I'm being honest, I'm not sure we'll get the Cross until 2026. But I do think Coinbase will do well and it'll outperform Schwab. It already has this year. It's just, man, I didn't count on Schwab doing quite so well.
- [43:10]
Brendan
Fair enough. Prediction number four, and this one's really unique given the current circumstances, but 2025 is going to be the year of the crypto IPO, with at least five crypto unicorns going public in the US.
- [43:25]
Matt Hogan
Yeah, this one's a gimme. We should have said like seven to 10. I think we've already had three. We've had eToro, we've had Circle. Look, I think there is a huge queue lined up. And the other thing about way Wall street works is that if something works, they do it again. And Circle is the most successful IPO in the last five or six years. That means they're going to do it again and again and again. So we're going to get 5 to 10 more unicorns by the end of the year. Year. I feel. I feel like we nailed that one. I've already put that in the win bucket, even though we haven't quite got to five yet. But we definitely will.
- [44:01]
Brendan
Yeah, now I think we definitely will. And they've been performing just phenomenally so far this year. Prediction number five, tokens, launched by AI agents will spearhead a meme coin mania that is even bigger than 2024. More or less confident?
- [44:19]
Matt Hogan
Less. I told you before the show that there's some that we just missed. You can't get them all right. You know, Ted Williams batted.400 and we still talk about it. So this one, we're just wrong meme. Coins died and agentic AI is delayed. So this is a dream deferred, and that's okay.
- [44:40]
Brendan
I think people would be probably more concerned if you got all these completely right with 100% accuracy. People would be a little bit more concerned than if everything wasn't perfect. So.
- [44:51]
Matt Hogan
That's right.
- [44:52]
Brendan
It's a part of the markets. Prediction number five is, or, excuse me, prediction number six is that the number of countries holding bitcoin will double. How are we doing there?
- [45:02]
Matt Hogan
Yeah, we're doing pretty well on that. There have been, I think, two or three, so we were at nine to start the year for framing. And so we're predicting it gets to 18. There are two or three that have come out publicly and said that they are, and then there are three or four that are highly rumored and we're likely to learn about in the second half of the year. It's going to be close to that 18 line. Whether we're at 16 or at 20, I'm not sure. But the direction of travel is correct. Countries adopting bitcoin is a real trend and it is accelerating, and we think it will accelerate for years. So this one is on track and we'll see if we can just get across the line or if we'll be right below or above it.
- [45:44]
Brendan
All right, prediction 7. Coinbase will enter into the S&P 500 and MicroStrategy will enter into the NASDAQ 100, adding crypto exposure to parentheses, nearly every investor's portfolio.
- [45:58]
Matt Hogan
That's right. Already happened. Coinbase made it in May and actually MicroStrategy made it in December. Shortly after we made the prediction, I.
- [46:06]
Bryce
Heard MicroStrategy also got added to the Russell 200. Or was it there?
- [46:11]
Matt Hogan
Yep. Yeah, absolutely. I'm an old index guy, so I know a lot about how they work. So this one we felt confident in. But it is important to note it does mean every American basically has exposure to the S&P 500 in their retirement account. Now, they all own Coinbase. Right. They all have crypto exposure. So this is, this was a big win for crypto. And, and, and one we got right spot on.
- [46:36]
Brendan
Well, number eight, you've already talked about as well, but the U.S. department of labor will relax its guidance against crypto and 401k plans and enabling billions of dollars to flow into the crypto market.
- [46:47]
Matt Hogan
Yeah, Got this one Too really excited about that. And I think this is a multi year flow story. Right. This is again 8/trillion dollars in assets that now will have a chance to invest in bitcoin. So excited. And crypto.
- [47:02]
Brendan
Yeah, well spot on again, you know, prediction number nine and then we'll do 10 and then we'll pass it back to bryce. But prediction nine says the stablecoin or stablecoin assets will double from 400 billion as the US passes a long awaited stablecoin legislation in some for look at.
- [47:21]
Matt Hogan
Looking good on that one. Yeah, the Senate has passed the Genius act and it looks like it'll make it through the House and it looks like it will get signed ideally within the next month or so. And I do think it's going to cause a stablecoin gold rush. Right. You know we mentioned all these firms coming in. I think it's going to be significant.
- [47:41]
Brendan
I have a quick question before we move on there. I've seen people talk about even if I, Scott Basin said that if this gets passed, the stablecoin market cap could hit 3.7 trillion by the end of the decade.
- [47:56]
Matt Hogan
Yeah.
- [47:56]
Brendan
I've seen people talk about what that would do for the crypto market and have differing opinions. Some people said hey, if the stablecoin market cap gets to for almost 4 trillion all of crypto would explode in terms of price and valuation and see a lot of growth. I've seen other people say well that's not necessarily the case because this is just for stablecoins and Treasuries and that doesn't impact crypto. What are your thoughts?
- [48:18]
Matt Hogan
Yeah, I'm more on the former side. Look, first of all, it's worth noting, it's incredible that the government is predicting like 10 to 12x growth in an industry over the next three or four years. These are not crazy. These are not YOLO DEGEN investors. The Secretary of the treasury saying this thing's going to 10x pretty wild. Look, the reason it's so positive for crypto is if there's $4 trillion in stablecoin assets, that means that almost every American has a crypto wallet and is authenticating onto websites using that wallet in the same way that crypto native people do today. And if that's true, every American is one step away from DeFi, they're one step away from buying bitcoin, they're one step away from Ethereum and these arguments about crypto not mattering have gone away. I think that's an enormously positive bullish. I think it means crypto is moving into the center of how finance works. So count me on the bullish side of that.
- [49:14]
Brendan
All right, and the final one here, and I guess we got a bonus that's kind of included in with this. But the value of tokenized real world assets, or RWAs, will surpass $50 billion as Wall street embraces, or excuse me, as Wall Street's embrace of crypto intensifies with the bonus prediction of saying in 2029 Bitcoin will overtake the $18 trillion gold market and trade it above $1 million per Bitcoin.
- [49:43]
Matt Hogan
That's right, yeah. So, so we're, we're bullish on RWAs. This is the summer of stablecoins. But next year will probably be the summer of other assets moving on chain. You already see it in Kraken and others launching crypto based stock markets. So we're extraordinarily bullish and the numbers are tracking to make that true. And then. Yeah, to get to your earlier cycle question, Bryce, look, we think this cycle actually extends through the end of the decade. And we think that because this is a cycle where crypto goes mainstream, where Wall street embraces it, where it finally crosses the chasm, we think that's a multi year trend and we think it ends with bitcoin being on par with gold. If there is anything I would change on that, Brendan, it's that gold's value has gone up. So now it should say something like $1.2 million for Bitcoin because gold's rallied as well. So. But we still think we're tracking towards that end. If you think about how far crypto has come in the last five years and then you extrapolate out five more, you can think about just how different the environment would be. And I think we're looking at million dollar bitcoin by then. I could be wrong. Just a prediction, but I think we're tracking in that way.
- [50:55]
Brendan
Yeah, it really is an exciting time to be in the crypto market and we are constantly seeing all these new features come to fruition. And I think myself and Bryce, we were watching the Robinhood announcement at ETCC this morning and even they came out and they said, hey, we're going to be launching tokenized products, tokenized stocks through their platform and they're going to be building that out. I think they said that they're going to be launching with 100, building it up to a thousand. And they were talking about even allowing traders to have either 24, 5 or 247 access to these tokenized Stocks, which is offering a whole new take on like it re. Reworks the entire way that we think about the markets and what's possible.
- [51:49]
Matt Hogan
Completely. Right. It's one of, you know that, that game with nine dots and you try to connect them with four lines. Oh yeah. And you can't do it if you stay within the box. But if you stretch outside the box it becomes really easy. I feel like we've been living in this world where we accept that stocks trade 9:30 to 4, 5 days a week. It's sort of crazy. Like imagine that was a different service. Imagine your email shut down at 4pm and then it booted back up at 9:30 in the morning. Like what, what are you talking about? It's completely insane. I think Robinhood is just front running the inevitable, which is, look, money wants to move instantly, frictionlessly, globally, 24, 7, 365 and that's going to be bitcoin. It's going to be dollars, it's going to be stocks, it's going to be bonds. That's the direction of travel. We can't have this 9:30-4 email system that we've had in finance for so many years. I think it's just over. And I think Robinhood's announcement's a big shot across the bow and I think you'll see other people follow in their footsteps. We're moving past this, this archaic world into a new digital future.
- [53:02]
Bryce
Yeah, the archaic world where risk management is also done, you know, like you said, via email threads and like Excel spreadsheets between these large balance sheets. And it's just, it's wild. And now everything, you know, risk exposure and management is going to be on chain. And I mean we're already here coming up here at the allotment of the time that we've scheduled together. But I've got so much more I wanted to ask you already because a lot of the on chain stuff that you guys are doing, particularly with Maple Finance is really, really cool. Can you give us like a high level of what you guys are doing on chain?
- [53:38]
Matt Hogan
Well, I'll just, I'll just give you a taste of the long term vision which is that we think the direction of travel for asset management, which is our business is on chain. Right. We think that it dematerializes into an on chain world. And so we're trying to be, we're doing experiments in that space now to prepare ourselves for that. One experiment is we run a big staking business for Ethereum. We stake about three plus billion Dollars of eth. You mentioned experiments accessing the services that Maple provides and types of returns that they can provide into our alpha core. People think of this world as sort of separate. There's like traditional finance and then there's on chain finance. And the reality is there's just finance. And so we're trying to think about what happens when those two cross over. And you're going to see more sort of on chain online experiments from us in the future.
- [54:33]
Bryce
I love it. That's incredible. And kind of as a last wrap up question for folks that are in the audience, whether they're, you know, retail investors or maybe, you know, working at some institution and they want to get exposure to, you know, Bitwise's products, obviously learn more. What's kind of the best way. Like for instance, you know, full disclosure in my brokerage account, I own some bitwise ETFs. I like the, the own B ETF I think is really interesting because if you it, it has exposure to all of these different corporate treasury bitcoin things. And so it's not just micro strategy, it's not just meta planet. It's kind of a combination of, you know, dozens of different corporations that have at least a thousand bitcoin on their balance sheet. But where can people kind of learn more and get exposure?
- [55:22]
Matt Hogan
I love it. Thank you so much. Yeah, huge fan of as well. So I appreciate the support. Yeah. Come to bitwiseinvestments.com you can see our, our list of products or you guys were nice enough to mention my CIO memo. If you go to bitwiseinvestments.com CIO memo, you'll get in your inbox once a week most weeks. My thoughts on the market. And as you guys know, I try to make them as concise as I can so they're relatively easy to read. So that's bitwiseinvestments.com CIO memo. And yeah, would love to meet more people out there.
- [55:57]
Brendan
Certainly. And you know, I have a funny story before we close out here, Matt. I was talking to my dad last month and he calls me up and it's funny, he started out not being a fan of the crypto market. He didn't like the fact that I worked with it, you know, like the prodigal son. Yeah, well, he came around to it. He came around to it. He's owned bitcoin for years now. And he called me up last month and he's like, brendan, I think I want to get access to the bitcoin ETF like some exposure there. And I don't know which one to choose. I'm going to do all my research. I was like, oh, well, you know, I can help you out. He's like, ah, you know, I have people. I'm just going to figure out which one's the best and just do it. And I said, okay. So I ended up calling him back a couple of weeks later. I said, hey, you know what? What Bitcoin ETF did you get? He goes, oh, I got this one called Bit B. It's from someone called Bitwise.
- [56:45]
Bryce
Let's go.
- [56:45]
Brendan
And I just think that they are the best. They have good fees and this and that. And I said, I couldn't agree more. I said, I really like those guys. And I said, I was, there's. We're not going to put anyone under the rug here, but there are certainly, I think, better ETFs and there are worse ETFs in terms of like, fees and security and some other stuff. And I really wanted to make sure that he got himself and everyone to get themselves into one that they can trust and that they're not overpaying for. And he called me up and he said that and put a big smile on my face and you guys were on the list, you know, here we are a month later now.
- [57:21]
Bryce
But yeah, we're gonna have to send him this episode.
- [57:25]
Matt Hogan
I love that so much. That means a lot. I appreciate it. That's. That's why we build the products we do. That's an incredible story. Thank you for sharing that, Brent.
- [57:33]
Bryce
Yeah, that is super cool. And yet, like you said, not all products are created equal, especially the Bitcoin etf. So you guys are kind of experts in crypto asset management. You've been doing it for a long time. So you guys have the proof of reserves. You guys give back a portion of your profits to the bitcoin core developers. And it's just do a lot of incredible stuff for the community. So we're excited.
- [57:58]
Matt Hogan
Thank you so much. I love it. Yeah. And you guys as well. So fun to. So fun to catch up.
- [58:04]
Brendan
Yeah.
- [58:04]
Bryce
Well, Matt, I'm sure we'll speak to you again sometime, hopefully later in the year after we break that $40 billion inflow mark to Bitcoin ETFs. Maybe we could pop a little champagne. But until then, we hope that you have all the success in the world with your products and your business lines. And until next time, we'll see you soon. Everybody at home watching. Thanks for joining us. We'll see you back same time, same place next week with some more killer guests.
- [58:42]
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