CRYPTO 101 Ep. 692 — Are We Coming out of a Bear Market!? & 2026 Outlook with Bitwise's Matt Hougan

Date: November 25, 2025
Hosts: Bryce Paul & Brendan Viehman
Guest: Matt Hougan, CIO of Bitwise

Episode Overview

In this wide-ranging, insightful episode of CRYPTO 101, hosts Bryce Paul and Brendan Viehman sit down with Matt Hougan, the Chief Investment Officer of Bitwise, to discuss the current state of the cryptocurrency markets, whether the bear market is nearing its end, and what catalysts and trends might define crypto’s future into 2026 and beyond. The discussion dives deep into institutional adoption, the nuances of ETF flows, regulatory hurdles, new use cases for crypto, and Matt’s fresh predictions for the coming years.

Key Discussion Points & Insights

1. Are We at the End of the Bear Market? (03:39)

• Matt Hougan’s Thesis: The bear market may not be defined strictly by falling prices but rather by underperformance relative to strong underlying fundamentals.
  • Significant institutional adoption (endowments, sovereign wealth funds) continues to ramp up.
  • "If you look at the fundamentals...they're extraordinarily positive." (D, 03:39)
  • Despite this, price action is lagging, creating a psychological and investment paradox.
• Covered Call Selling: The main sellers in recent markets are long-term holders managing risk and tax exposure, especially through selling covered calls, which doesn't show up as wallet movement but acts as functional selling.
  • "They're writing covered calls...that's the functional equivalent of selling the asset." (D, 05:58)
  • Suggests most weak hands are gone and seller exhaustion is near.

2. How Covered Call Strategies Affect Market Flows (11:35)

• Asset managers like Bitwise facilitate covered call strategies for large holders, often institutional clients.
• These strategies are typically held at institutional custodians and don't involve direct asset sales, therefore, are more tax efficient.
  • "If you sold the bitcoin, you would realize a gain...if you keep holding the bitcoin but you roll an option strategy...there is no capital event to that." (D, 13:14)
• Short-term, this compresses volatility and introduces new market dynamics, but long-term, enhances liquidity and market robustness.
  • "The more ways to access [bitcoin] and the more liquidity...the better it is long term." (D, 14:00)

3. The Institutionalization of Crypto: Boon or Bane? (15:02)

• The hosts reflect on the evolution from "revolutionary" retail-centric crypto to a landscape now dominated by Wall Street titans.
  • "I feel like somewhere along the way...some of that revolutionary spirit has fallen." (B, 15:02)
• Matt’s Reassurance: Institutional products (like ETFs) are gateways enabling millions to ultimately become self-sovereign holders, just as most people start on centralized exchanges.
  • "An ETF is a way in and then you're going to get a trickle of people who...eventually hold it directly." (D, 17:01)
  • Warns against a majority of bitcoin being controlled by institutions/governments, but net effect overall is positive for mainstreaming.

4. Government, Regulation, and Crypto Market Structure (18:30)

• Government actions (shutdowns, SEC procedures) have short-term effects on liquidity and ETF approvals.
  • Solana and XRP ETFs launched during the shutdown due to advanced regulatory feedback, while others stalled.
  • "There's nothing more crypto than getting rugged by a government shutdown on the 99 yard line." (D, 20:00)
• Momentum for new ETF launches—including altcoin funds—is expected to resume in an open government environment.

5. Staking ETFs & Tax Uncertainty (24:36)

• Unclear IRS guidance on whether staking income is "UBTI" impacts institutional and retirement platform participation.
  • "Tax law hasn't caught up...clarity...is just a headache [big firms] don't want." (D, 25:00)
• There’s consensus that regulatory modernization will unlock massive flows when resolved.

6. Basel Rules, Banking, and Crypto Adoption (27:59)

• Basel regulatory frameworks originally made crypto banking impractical by requiring banks to hold cash reserves exceeding their crypto liabilities.
• US and UK interventions are preventing draconian implementations, demonstrating the impact of arcane rules on market functioning.
  • "It just shows you...the scale of the attack vector by which bad regulatory ideas can cripple the industry." (D, 30:46)

7. Upcoming Catalysts: What Will Drive the Next Bull Market? (31:21)

• Major Catalysts:
  1. Regulatory Clarity: Market structure bills (like the Clarity Act) passing in the US Congress could trigger a major rerating.
     • "That might well be the bottom...the catalyst that kicks us into high gear." (D, 31:21)
  2. New Use Cases Emerging in 2026: Beyond Bitcoin, stablecoins, and tokenization—anticipates a dozen new "killer apps":
     • DeFi, decentralized identity, privacy, prediction markets, and others.
     • "There are another 12 killer use cases...going to emerge in 2026." (D, 32:26)
     • Compares to web history: the internet’s potential wasn’t obvious early on.

8. The Demographic Tailwinds for Crypto (37:21)

• Younger generations now own brokerage accounts in far higher numbers; wealth transfer from baby boomers will bolster crypto demand.
  • "The demographics are on our side and they're marching upwards." (D, 38:46)

9. The Rise of Crypto 'Everything Apps' (Robinhood, Coinbase) (40:22)

• Robinhood and Coinbase are best positioned for cross-over dominance as both TradFi and crypto platforms.
  • "I do think something that people get wrong is they're like, TradFi is coming for crypto. I think the reverse dynamic is actually more exciting." (D, 40:22)
• Expectation that these platforms will eventually make advanced strategies, like covered call writing, easily accessible for retail users.
  • "Crypto wants to make the strategies that are available to ultra rich available to everyone." (D, 42:01)

10. Lightning Round: Reviewing 2025 Predictions, Setting Up for 2026

(Major time block: 42:16-56:09)

Recap of 2025 Predictions

• All-time highs for BTC, ETH, SOL: Mostly accurate, but ETH lagged slightly. (D, 43:18)
• ETF flows: Just shy due to bear market pullback—big flows, but below lofty expectations. (D, 43:45)
• Coinbase catching Schwab: Did not flip but firm-level execution remains strong. (D, 44:42)
• Crypto IPOs: Multiple unicorns went public, trend expected to continue with firms like Kraken and Grayscale. (D, 46:13)
• AI agent-launched tokens/meme coin mania: Incorrect; retail hurt by market flushes. (D, 47:00)
• Countries holding BTC: Got close, progress with nations like Luxembourg, central banks engaging. (D, 48:35)
• Coinbase in S&P 500, MicroStrategy in Nasdaq 100: Nailed it; growing baseline exposure for retail. (D, 49:18)
• 401k access to crypto, DOL guidance change: Enormous long-term catalyst as retirement accounts open to crypto allocations. (D, 51:06)
• Stablecoin growth and legislation: On target with new bill passing; assets trending toward $400B. (D, 52:29)
• Tokenized real world assets: Around $30B—directionally right; sector seeing explosive growth. (D, 53:34)
• Bonus—BTC surpassing gold’s market cap by 2029: Still stands by prediction, expecting Bitcoin to move past gold’s (formerly) $18T cap, despite gold’s 2025 performance. (D, 54:49)

Sneak Peek at 2026 Predictions (56:09)

• Bitcoin to rise in 2026, breaking the four-year cycle: "Bitcoin will have an up year in 2026. And I think that’s actually really important." (D, 56:09)
• New killer app(s) will gain escape velocity: Prediction markets, privacy, DeFi, and more.
• Token value capture will dramatically improve: Cites Uniswap’s fee switch as a harbinger of broader token economics evolution. (D, 58:53)
  • "The value capture of tokens will never be worse than it is today...going to get significantly better in 2026." (D, 57:53)

Notable Quotes

"If you look at the fundamentals that are underlying the long term growth of crypto, they're extraordinarily positive...the fact that we're down slightly for the year is actually a severe bear market versus where the fundamentals would have us."
— Matt Hougan (D), 03:39

"Those existing holders who have 100, 200, $500 million of Bitcoin are writing covered calls...That's the functional equivalent of selling the asset."
— Matt Hougan (D), 05:58

"The more financialized [bitcoin] is and the more ways to access it and the more liquidity surrounding it, the better it is long term."
— Matt Hougan (D), 14:00

"An ETF is a way in and then you're going to get a trickle of people who come into Bitcoin through an ETF, learn what it's really about and eventually hold it directly."
— Matt Hougan (D), 17:01

"There's nothing more crypto than getting rugged by a government shutdown on the 99 yard line."
— Matt Hougan (D), 20:00

"There are another 12 killer use cases that are going to emerge in 2026."
— Matt Hougan (D), 32:26

"The demographics are on our side and they're marching upwards."
— Matt Hougan (D), 38:46

Timestamps for Key Segments

• Bear Market Length & Outlook: 03:39–05:21
• Who's Selling? Covered Calls & Institutional Flows: 05:58–07:16
• Market Financialization: Good or Bad?: 14:00–15:43
• Institutionalization & Revolutionary Spirit: 15:02–17:33
• Regulatory/ETF Approval and US Government Shutdown Effects: 18:30–21:08
• Staking ETFs, UBTI Tax Concerns: 24:36–27:20
• Basel Rules and Crypto Banking: 27:59–30:46
• Major Future Catalysts: 31:21–33:31
• Killer Apps Beyond Today: 32:26–35:46
• Demographics and Wealth Transfer: 37:21–38:46
• Coinbase, Robinhood, and the Everything App Thesis: 40:22–42:01
• 2025 Prediction Lightning Round: 42:16–56:09
• 2026 Sneak Peek – Breaking the Four-Year Cycle: 56:09–58:53
• Final Advice for Listeners: 61:01–61:28

Memorable Moments

• Sherwin Williams Paint Analogy: Matt compares Solana’s market cap to that of a major paint company to illustrate the growth potential and current market undervaluation. (D, 23:11)
• Coinbase Joins S&P 500: A marker of mainstream acceptance—every American investor with a retirement fund now has indirect crypto exposure. (D, 49:18)
• Bear Market Technicalities: Matt’s fresh perspective that the real bear market is an underperformance versus sky-high fundamentals, not just price drops. (D, 03:39)
• Prediction for 2026: Breaking the four-year cycle and dramatic improvement in token value capture as the next big crypto narratives. (D, 56:09–58:53)

Closing Thoughts & Takeaways

The episode masterfully balances the macro (institutional and regulatory shifts) and the micro (retail behavior, ETF mechanics, and upcoming product trends) to offer a thorough, optimistic, and nuanced snapshot of where crypto stands at the end of 2025. The hosts and Matt agree: while short-term volatility is high and technical headwinds persist, the long-term structure for crypto, driven by demographics, technological innovation, and incoming regulatory clarity, remains ferociously bullish.

Final Advice (D, 61:01):

“If you're investing for the next few weeks, who knows what happens. Even I'm nervous about the next few weeks. But if you think about where crypto will be in 2029 or 2035, I'm extraordinarily optimistic—that’s how I keep my sanity during these short term pullbacks.”