Bitcoin and Crypto ETFs Are About to Transform Finance

tokenization, the recent moves in Bitcoin and stable coin is Bitwise Asset Management Chief Investment Officer Matt Hogan. Matt, good to see you. >> Thanks for having me. Great to be here. >> Let's start there though in terms of you know, the increasing usage of the technology. I guess getting more entrenched in financial workflows, not necessarily directly having an impact on the value of the under of the actual coin. So, where do these things fit together? >> Well, I mean it's a huge story, right? Today was a big moment. We finally got to tokenize trades settling over DTCC. That is a big moment worth noting. We've gone to T+0. You know, it's been a 230 years. We started at T+ a week. We're finally there. So, it's a big news. Your question about why it's not impacting the traditional the crypto markets, it's really early. All told, there's only about $300 of assets on chain. There's $600 of assets in the world. That means we have 2000 X to go. If this is as big as we all think it is. If all capital markets are coming on chain, that will eventually impact these assets. It's just we're very early. >> But just like look in terms of the mechanics of it, why must that happen? Like why must the value of Bitcoin go up if people are simply using the chain to store more assets? >> Sure. Bitcoin's a little bit unique cuz Bitcoin really has only one use in the world, which is digital gold. When you're talking about this, you're really talking about the rest of crypto. You start with Ethereum, at Solana, you look at applications like Morpheus or Ave or Uniswap. The core reason there is that you need to burn those tokens to use those blockchains. So, the more people who are moving stocks over Solana, the more Solana is burnt, almost like a stock buyback. Therefore, the value of Solana can rise. It works in that sort of mechanism. >> So, you've just made the case that there is no real good narrative for Bitcoin at this I mean, if it's digital gold, it's not necessarily working that way. It's not an inflate I mean, it's at least for this year, it's not been an inflation hedge at all. >> For sure for this year that is true. I think there's a great narrative for Bitcoin. Look, even if you look at gold for this year, it hasn't been doing that well even though inflation has been running and people have been moving away from fiat currencies. You have to look at these things over long periods of time. Over the last 10 years, Bitcoin's up 16,000%. The dollar is down 28%. That's pretty good. Over the last 3 years it's outperformed the dollar as well. You can't look at these over a short-term perspective. You need to look at a long-term perspective. The story for Bitcoin is the world is increasingly worried about fiat currency. Young people are getting older and wealthier and have more money. The world's going to want a digital version of gold just like we have digital versions of newspapers and digital versions of songs. I think that story is still intact. It just moves over decade-long cycles. >> I mean, the short-term is getting longer. We're almost 2 years from the from the prior peak and I guess I wonder if it's not given how the financial markets have appreciated over that period of time. I mean, what's going on with how many multi-trillion-dollar companies there are? Why an investor might say, I guess I mean, sure maybe it has this theoretical purpose in a portfolio, but it's also maybe no penalty for ignoring it. >> Well, that's certainly been true for the last few years. The question is what type of investor you are. You know, historically Bitcoin has moved in these four-year cycles. It sure feels like the end of that cycle, right? We have bad news now in the market. We have MicroStrategy selling Bitcoins and Bitcoin goes up. We have stretch trading to 75 and Bitcoin goes up. We have doubts about the Clarity Act and Bitcoin goes up. When you have a market that goes up despite bad news, that can be the sign of a turning >> We're talking about going up from like 59 to 64. >> For sure, 100%. Yes, I think we may be at a turning point. I think by the end of the year we could be substantially higher. >> Do you Do you feel like the the profile of the person who owns Bitcoin has changed dramatically? And I'm I'm asking you this because you're citing these four-year cycles historically and maybe I I hate to say this, maybe things are different just because the investor base in Bitcoin is a lot different. You got a lot more institutions. Now you can trade it very easily through ETFs, etc. Um and maybe the younger trader who's looking for or the the a trader in general, no matter what your age, is looking for faster returns, which Bitcoin once provided, are looking elsewhere. There's so many ways to do that, whether it be investing in the DRAM ETF or going to the predictions markets. >> I think that's absolutely right. To an extent, Bitcoin has lost the attention investor, and the marginal buyer is now an institutional investor. But actually, across Bitcoin's 16-year journey, it's been a here series of these stand handoffs. It was digital asset treasury companies like MicroStrategy, and before that it was GBTC, and before that it was retail US investors, and then Asian retail investors. Now we're handing it off to institutions. And when I think when you see Morgan Stanley launching an ETF, BlackRock committing to crypto as a huge part of its portfolio, there's reasons to be optimistic. Look, I think the pattern of returns will be different in the future. I think it will be less volatile, the moves upward less explosive, the moves downward less explosive, as well. Look, I think we're bottoming. We're 50% off the top. Previous cycles, we went 80% off the top. So, is it a changing asset, a more mature asset?