Bitwise's 2026 thesis for crypto

Transcript

People believe Bitcoin is extraordinarily volatile, orders of magnitude more volatile than stocks. But the data, the data doesn't lie. It no longer is. And the reason for that is it's been hugely derisked. We've moved government regulation risk, liquidity risk, ETF adoption risk, a bunch of technical risk. It's been hugely derised and that's reflected in the markets. What's up everybody? Hey, it's LG Ducat here and welcome to the Milk Road Show. The daily crypto show that knows the eggnog is spiked, the markets are thin, and somehow this is when the boldest predictions get made. It's the holidays, liquidity is weird, and everybody's pretending they're not checking charts, which makes it the perfect time for predictions. Today, we're joined by the team at Bitwise, breaking down their biggest calls for the year ahead. From

Bitcoin breaking the four-year cycle to ETFs soaking up supply, crypto equities beating tech, and why 2026 could look very different from anything this market has seen before. As a reminder, these episodes are pre-recorded maybe a week or two in advance because I'm finally some getting some time off to continue looking at the charts. Today's episode is brought to you by Chain Link, which links web 3 to Wall Street, Bridge, send stablecoin payments instantly, simple, global, friction free, and reserved ETFs, the onchain equivalent of ETFs for the final time this year. Welcome back to Milk Road, Matt Hogan, and Ryan Masmusson. Gentlemen, great to chat with you again. One final ride for 2025. The year that could have been but kind of was. [laughter]

>> So good to be here. What an introduction, too. That was uh that was next level. >> That was incredible. That was topnotch. >> Are you guys eggnog people? I need to >> Yeah, >> you are. Oh, man. >> Are you anti- eggnog? >> I just can't do it. I try. Every year I'm like, this is the year I'll do it. And I take a sip, but I'm like gh like I just cannot cannot stomach it. It's just makes me feel weird, man. >> I almost can't fathom that. That's uh that's that's new information. I'm processing that during this chat. >> Matt, it's December 19th. How much eggnog have you had or is it not? Is you save it?

>> Good question. We just bought our first thing. So, I've had specifically one one glass like almost a shot glass full of eggnog. You can only do a little. I see people drinking these cups of eggnog. That's gross. But you can do you can do a shot a shot glass of eggnog if you want. >> A shot glass. Okay. So, a moderate amount of eggnog. That's the most I can do before I I need to throw up. So, [laughter] speaking speaking of throwing up, let's talk about Bitcoin and Ethereum uh and everything that's happened [laughter] in the last couple of months. Gentlemen, you've put out some fantastic predictions. You got 10 crypto predictions for 2026. And actually, to make this show a little bit more organic, I didn't really look at them beforehand. So, that I'm going to be reacting personally to these uh candidly as we do the show. So, let's

get right into it. Ryan, I've got your thread from Twitter here. Prediction number one, Bitcoin will break the four-year cycle and set new all-time highs. Bitcoin has historically moved in four-year cycles with three significant up years followed by a sharp pullback year. 2026 should be a pullback year. Uh we don't see that happening. Tell me more about that. Yeah, I'd love to love to kick it off. I mean, look, everyone's focused on Bitcoin's four-year cycle. Again, previously we've operated in this world where you have three strong years followed by a pullback. So, everyone's wondering if 2026, which would be that pullback year, is actually going to be down or up. We think that it's very important and that it's very likely that Bitcoin has an upear in 2026 and finally breaks free of this four-year cycle. We

think that there's a number of reasons why this would happen. And I would just note that if Bitcoin ends the year down in 2025, which currently is, that may already break the four-year cycle. But but nonetheless, I do think that there's a bunch of systemic and fundamental reasons why Bitcoin should break the 4-year cycle in 2026. And we're in this, you know, prolonged bull market that's driven higher by a constant bid from institutional investor investors, regulatory clarity and adoption and momentum and new ETF launches and you know favorable fiscal policy and and all those things that should push the market higher in 2026. On the other side of the equation, the things that have

previously caused these massive pullback years in year four of the cycle are no longer as big of a factor in our opinion now as they were four, eight, and 12 years ago. Those are things like builtup leverage in the system. We had a lot of leverage washed out in October. We think that we're relatively low leverage today in the in the ecosystem. Another thing that's historically caused these big pullbacks is the lack of regulatory clarity and therefore a proliferation of unregulated crypto companies. Think of Mount Gox, think of FTX, which have ultimately led to poor practices that wound up with investors losing their money and therefore markets crashing in this major unwind and pullback. And so we think that those things are less of a

factor as well as the having, which is another thing that a lot of people blame the four-ear cycle on. math would just tell you that every four years the the having becomes less of an impact than it was the prior four years and the four years before that. And so if you boil it down, we see a lot of positive momentum from institutions and regulation and ETFs and institutionalization of crypto. And then on the other side, we don't see those huge black swan risks hanging out there that could cause this reset in 2026. So that that's my take on it. Would love Matt if you have any other thoughts on that that I didn't hit.

>> Yeah. No, I think that's right. I think look, the four-year cycle is a dead man walking. It's gone. It just doesn't know it yet. Uh it's being replaced by a 10-year grind higher. And the simple reason was what Ryan said. The factors that drove the four-year having are no longer that important. What's important is regulatory progress, institutional adoption, etc. The four-year cycle was not like a law passed down from God. It doesn't need to happen. It happened because of specific reasons. Those reasons are no longer relevant. And we have much bigger forces in institutional demand, regulatory progress, the debasement trade, government spending.

Those matter more than Bitcoin having at this point. And so we think regardless of what happens this year, I don't want to break this cycle the wrong way, which is what Ryan said we're doing. I think next year is a positive year. It's an up year. And that's why the second half of this prediction is we'll set new all-time highs. >> This is the biggest year ahead for crypto, AI, and the macro. But the real moves aren't in predictions. Join Milk Road Pro today to see our live portfolio, buy sell signals, and the AI investing portfolio which launches in January. The link is below. How do you guys come up with these predictions? Is it every is it they have to have a unanimous agreeance across Bitwise?

Everybody has to say yes or it's majority or it's it's just the two of you guys. >> It's a great question. We have a whole process that Ryan runs. We get input from multiple people at Bitwise as well as people external to Bitwise. we come up with like 80 things that might happen and people vote. But at the end of the day, it's a nuclear key thing, which is to say that both Ryan and I have to agree this has a high probability of happening. So both Ryan and I are are are in lock step that the four-year cycle is dead, that we'll move to new all-time highs, but we do get input from everyone at Bitwise. We have 140 people.

It'd be silly not to talk to them. >> Got it. Okay, that makes sense, too. And you guys nickname you guys named this current I guess cycle the mainstream cycle. And I'm assuming that means institutional, right? Cuz for me as like a retail person, I was like last time was the mainstream cycle where everybody was talking about Bitcoin and and ETH and and all the other crypto assets. But I feel like this is more institutional based. Correct. >> Yeah. I think it's just more uh yes institutional based but I think just when we think about mainstream it's these concepts of stable coins and tokenization and prediction markets just being everywhere you look in your day-to-day life whether you're an individual consumer a corporation or a financial institution yesterday SoFi one of the largest fintexs and banks uh in

in the US is rolling announced they're rolling out a stable coin uh Robin Hood's going allin on poly market Larry Frink and Paul Atkins are talking about tokeniz ganization every single uh chance they get. You have the uh this commerce secretary and Scott Essent stable coins and tokenization, Fed governors talking about stable coins. Like all of these things are what we view the mainstreamification or the mainstream era of crypto. And then on the consumer side, it'll just make its way into your everyday life. I don't think it'll be that long before you're in your Schwab account and or or your JP Morgan account or your Wells Fargo account and you're trading crypto assets. You're trading stocks, you're using stable coins, you're earning yield in DeFi and through vaults. And so I

think that's really the the mainstream cycle. I was watching CNBC yesterday and they spent 15 minutes talking about prediction markets. I think that's, you know, a a key point of this is that it's just everywhere you look now in every single different uh avenue of of life. And so I think that's what we mean by the mainstream cycle. Yeah. >> I'd hate I I don't want to bring up prediction markets again around Matt, okay? We have a dark history there. [laughter] >> Brutal. Brutal. I'm coming back strong on prediction market. >> Come back. Yeah, we'll do a separate show about that, Matt. A non non- bit wise show. There's a you'll be not affiliated to Bitwise for that appearance. It'll be just you independently. Let's jump to this next one. Speaking of Bitcoin and and of things that are pretty volatile, Bitcoin

prediction number two, Bitcoin will be less volatile than Nvidia. I mean, listen guys, that's that's a pretty bold prediction, especially that uh AI is is the the the hottest topic, right? That's everybody's talking about. We have we even at Milk Road we've created an entirely other show and newsletter and everything about AI to cover this shift. But you guys are saying that Bitcoin will at least be calmer in a sense in terms of fluctuation for investors. >> Yeah, there there are a few things to this that I would love to point out. The first is look at that chart. Bitcoin's in green. It's already calmer than Nvidia. One of my favorite things about crypto is things that people believe are true because they used to be true but are no longer true. I think there's a lot of alpha in sort of exploiting that anchoring bias. People believe that

Bitcoin is used by criminals. No longer true. Was true. No longer true. There's alpha in that. People believe that Bitcoin is not held by institutions. Was true. Today, Harvard, the Abu Dhabi Sovereign Wealth Fund, other institutions all own Bitcoin. People believe Bitcoin is extraordinarily volatile, orders of magnitude more volatile than stocks. But the data, the data doesn't lie. It no longer is. And the reason for that is it's been hugely derisked. We've moved government regulation risk, liquidity risk, ETF adoption risk, a bunch of technical risk. It's been hugely derisked and that's reflected in the market. So we think there's a lot of alpha in uh realizing that. And then the other thing

I would say is just objectively from where I sit 2026 has more risk in AI than it does in Bitcoin, right? There are all these concerns about the AI bubble of circular revenue. There's push back from a Bernie Sanders is saying we should ban AI or something, right? There's there's there's more risk in that ecosystem than when I look at Bitcoin and ask myself, will the government print more money next year? Yes. Will liquidity conditions uh become looser? Absolutely. Will institutions keep buying Bitcoin? Yes. I just don't see as much risk in this ecosystem as I do in the AI ecosystem. I'm bullish on AI, but there's a lot of debate, discussion, concern, CDS rates spiking

on on Oracle debt. Uh I don't see that in Bitcoin. I just see sort of slow positive trends of regulatory progress, raising concern about the debasement trade, institutional adoption. I don't know. I see I I I think this trend that we've seen the last few months is just going to continue and feel pretty strongly about this prediction. >> I like that. Okay. And that kind of lends to the the prediction number three, which is ETFs will purchase more than 100% of the new supply of Bitcoin, Ethereum, and Salana as institutional demand accelerates. Kind of like what you're saying, Matt, right? Is that people are people still have this misconception that it's like, hey, institutions aren't they don't own any any crypto and that couldn't be further from the truth. And you guys you guys have are front row center with that.

Obviously with your ETFs you're seeing, you know who's buying and and I've asked you guys in the past on recent episodes too, like tell me about that institutional demand going into 2026. So I feel like this is this is barely even a prediction. This is like a this is this is you guys know that this will happen. Ryan, is that true? Like people are people you know that this almost to a fact that this is very likely to happen. >> Yeah, I would be shocked if this didn't happen. And similar to Bitcoin being less volatile than Nvidia already in 2025, this is already happening. You know, crypto asset prices are broadly set by supply and demand. And one of the reasons that we're so bullish about the long-term outlook for crypto is that we think demand from institutional

investors will continue to outpace supply for years to come. We've seen that happen already since ETFs launched back in January 2024 with Bitcoin and July 2024 with Ethereum. And anyone who has read anything about economics knows that if demand outpaces supply, that means price goes up. And we've seen that play out. We've seen something like 2x, which you have here on the table on your screen, of Bitcoin being purchased by ETFs versus new Bitcoin being produced since the ETFs launched in January 2024.

And in that time, the price of Bitcoin is up something like 95%. So, it's a relatively simple equation. And to your point, we spend every single day at Bitwise doing tens of thousands of meetings a year with institutional investors. And what I can honestly say from those conversations and what you can see when you look at flows into Bitcoin, Ethereum, and Salon ETFs is they are allocating more and planning to allocate more to crypto in the future than they have today and they have in the past. And that is why we believe that this fundamentally will happen as institutional demand accelerates and that will drive prices higher.

>> I like that. I like that a lot. And I'm just going to go right to prediction number four because it kind of it kind this one kind of sucks the other two into it a little bit which is crypto equities will outperform tech equities. Do you guys mean this from like is this is this a a veiled shot at like a potential AI bubble or is it just simply that it's like even you know totally Nvidia and Google and everybody could go up another 20 or 10 or 20% but even Bitcoin going back to all-time highs and then going above that would be a 30 40 50% return. Maybe Matt, you can you can take this one and explain a little bit for me.

>> Yeah, I mean it's it's more the latter. Look at that chart, right? It's been doing it. Uh if you think about tech broadly, what are the areas that are growing the fastest? AI is growing extraordinarily fast and crypto is growing extraordinarily fast. I mean, this is just a market where the underlying industry is growing at something like 60% per year on average. It's a great market to build a company in. And then the the reason specifically we think it will continue or at least I think it will continue or maybe even accelerate in 2026 is we're seeing crypto now integrate into the real world. Right? We're seeing the growth of stable coins. We're seeing the growth of tokenization. We have Coinbase launching prediction markets. We have uh you know figure doing a lot of very interesting

things. We have Circle doing extraordinarily well. Um those are all trends that I'm just very confident in will grow significantly. We could see stable coins double next year, right? That wouldn't surprise people. What other industry are you talking about 10, 20, 30 billion dollar companies where their underlying market could double next year, right? They're just the the world discounts this for some reason that's not clear to me. They're like crypto somehow we don't believe it. Scott Bessant is telling you that the stable coin market will 12x over the next three years. much of that value will acrew to companies building stable coins. They're part of like it's just not that it this is not an extraordinary prediction. This is one of the fastest

growing areas of tech. Investors will reward it. Valuations are still compressed. >> We're pretty bullish. I think it's just a good story. >> Mhm. I like that, too. And we actually have another episode that I recorded yesterday with Kyle, our our co-owner. Uh his hard prediction is a $500 billion stable um stable coin market cap for next year, which would be a 70% increase. So definitely a line there. Some some shared uh shared alignment I think between Milk Road and Bitwise and obviously probably a lot of other people in the industry. But that's a good that's a good way to zoom out. And I'm interested in that part Matt too about a lot of that value will go to stable coin companies, right? And I think that's a that's a theme we're keen to explore in the new year as well is, you know, how

can how can people capture that value as well right? >> Um okay, let's let's keep moving because we have a lot of material here. Oh, uh oh, prediction number five. We're back to Poly Market. I didn't realize this. Okay. Poly market open interest will set a new high all-time high surpassing 2024 election levels. Uh and Ryan you wrote here we see a massive surge in activity due to new users because it's going to be opening up in the US new investments uh and new markets as well. I like this guys. I mean it's you know even poly market's one of those things where it's it's even bled into into the episodes that we do with you guys right. It's it's it's hard to ignore at this point you guys have a lot of conviction. Is it what are the chances that that prediction markets are a bubble though?

Is is that even possible at this point or is it is this a foregone conclusion that these things are here to stay? >> Yeah. Well, I think two things are true. One, uh we can we can you know we know that LG didn't look at these because earlier he said, "Oh no, not prediction markets again." And here we are. I knew this was coming. So, it made me happy when you when you pulled this up and were genuinely surprised. Uh and the second thing that is true is that prediction markets are here to stay. If you think about online betting and sports betting and just overall the the way that consumers want to uh you know put out their opinion about different events in the world with money that has always been stocks and then it's been sports betting which has grown at a phenomenal pace online through uh sports

betting apps like DraftKings and the like and then you have prediction markets. So this isn't a trend that just started with prediction markets even though a fun fact that prediction markets have been around for over a hundred years. they've been outlawed for many many years uh and re you know recently and and now you have poly market coming back into the US and so you have doors opening to one of the largest online gambling or betting uh markets that's growing at a phenomenal pace a tens billions dollars market you also have poly market with a huge capital infusion from ICE which is the parent company of the New York Stock Exchange you can imagine those two worlds converging both investing in stocks and betting on prediction markets and then you have new markets. I was a

big believer that uh that this chart here, this giant spike in open interest heading into the 2024 US election was going to be the top for poly market until the next US election in 2028. But you can see here at the second end of the chart that it's steadily and slowly been growing. It's kind of broke out of that 100 [snorts] million open interest range up above 200 million. And that is growth in other categories like sports, like business, like pop culture. And you have the midterms coming up. You have the Super Bowl coming up. You have the FIFA World Cup coming up. I think all of those things, the fact that it's bleeding into other markets and taking market share from sports books and draft kings and the like will push Poly Market higher in 2026. I think it'll be higher

in 2027. I think it'll be higher in 2028. And I think these are here to stay for the long term. A very important bet on Poly Market right now. How many gifts will Santa deliver in 2025? I don't even understand. Is this the world population? Is that what this is supposed to be? I don't even understand what this has. It has 800 almost $800,000 of volume, but 93% probability of between 8.2 and 8.3 billion. So, I'm assuming that that's the world's population. >> Great work, Santa. He's a busy man this year. Uh, anyways, jokes aside, no, Ryan, I I I I love that take. Matt, are you um will you be part personally partaking at all in Poly Market once it's live in the US?

>> Oh, 100% 100%. I cannot wait. Look, people have opinions about things. They want to bet on them. We'll look back at this spike like we look back at the 2013 Bitcoin spike to a thousand. We'll be like, "Oh, that was cute." Um, this is going much much higher. I think this is a a decade long trend. We're we're very bullish. >> Okay. Very cool. Yeah, just to dig underneath that. I want to do well on my bets, too. I know where you're going with this. I want to do >> Are they going to be publicly shared on this show or are they going to be This is You're not going to tell us.

>> Let's do it. We'll do We'll do a whole I'll do a a 10 bets for 2026. I'll take a look. We'll do it. >> Listen, Josh Shapiro is at 3%. He's move. That's a 3x from when you first said that, >> Matt. That's that he's he's moving. He's up there with The Rock now. Him and Rock are him and The Rock are tied at 3% each. still 1% below Camala Harris. H >> how's Wicked doing? That was Matt's other call. >> Ryan, come on. >> That's I can't Yeah. Um here, let's look it up. Movie 2025 this guys. >> Uh >> it's m I think Yeah, I think after those horrible opening weekends or the second weekend was bad, it's it's very clearly Minecraft. I don't think Avatar has much of a chance at this point. There's only

10 days 12 days left in the year, so it need an astronomical opening. But yeah, looks like it got flipped pretty good. When did it When did it die off? Oh, it's it wasn't even >> I think Thanksgiving >> not even in this chart. >> Yeah, I think the Thanksgiving release it didn't do. I don't know if they they had those the two stars had like some very bizarre online interviews. I don't know if that helped the uh I don't know if that helped the the the case for this. Um >> even Peter Lynch got some bets wrong. It's it's all good. It's all good. [laughter] >> I like that. All right, let's go. And I I guess you know we need a we need a poly market specifically for your predictions as well. I think that'd be a lot of fun. Maybe we can maybe that's

the future of prediction markets too is a lot easier for people to spin them up on their own. Prediction number six. Stable coins will be blamed for destabilizing an emerging market currency. Okay. So what do you guys mean specifically by this? Who wants to take it? >> Yeah, I'll take this one. Look, we love to throw in a spicy prediction every once in a while. This is one that fits that bill. Everyone talks about stable coins being so good, which they are. They make payments cheaper. They make the world global. You can move money at an instant for a fee of a penny. For the poor people who are in countries with high inflation, they can escape that into the relative stability of the US dollar. That is a great story. But the flip side of that story is if you're a

government in one of those countries experiencing high inflation, the last thing you want is people escaping your currency into the relative stability of the US dollar. And I think what we're pointing at in this prediction is that stable coins are now big enough to matter. And there are countries that have high inflation, Nigeria is one of them, where stable coin use is extremely high. And we're starting to see push back from folks like the IMF, from folks like uh European leaders, and indeed from these emerging market countries that are sort of ringing the alarm that hey, wait, maybe we don't want to dollarize the world on stable coins. So, we're very bullish on stable coins. I think that, you know, nothing stops the train. But I do think next year is the year that you'll have the reactionary

push back from a few countries that say, "Hold on, you're messing with our economy, right?" And um yeah, I think they'll be blamed for destabilizing at least one emerging market currency next year and they'll have to push through that um that sort of negative story. >> Stable coins are the biggest use case in crypto right now. But let's be real, using them on chain is still way too complex. That's exactly the problem Bridge is solving. Recently acquired by Stripe. Yep, that's Stripe. Bridge helps businesses send, store, accept, and launch stable coins instantly. Explore the future of global financial infrastructure at milkroad.com/bridge.

Sure, tokenized financial products are the future, but there is a big sticking point. They all need to speak to each other. This is a tough problem to solve, but chain link does exactly that. It's the universal language for financial markets, linking Wall Street to web 3, banks to blockchain, and so much more. See how chain link is linking the world by going to milkroad.com/chainlink. What would be the application through which people are using are acquiring the stable coin? Is this because like a coinbase becomes available? I guess it already is available in many countries. Like is that what you're predicting or like like what's the method I guess?

>> Yeah. So so almost in all these emerging market currency countries um with high inflation there are local apps that make it very easy to switch from the local currency into stable coins, right? And then they execute the interest action on local currency markets. um you're seeing these have extraordinary growth rates in a lot of countries uh in Argentina, in Mexico, in uh in Nigeria. There are all these really interesting companies that do this and I suspect that some of them will get push back. Um it's not just Coinbase, they're they're local sort of entrepreneurial efforts because there's so much demand. If you're in a place where your currency is devaluing by 25% a year, it's really urgent to get out of

that, right? That is really painful. You feel that on a monthly basis. And so um it is a huge use case. Of course, stable coins won't be to blame. The real thing to be blamed is people mismanaging their economies, right? And abusing their currency. But they won't blame that because that would be blaming themselves. They will instead blame this external force which is stable coins. >> And but and then if people get mad with the US dollar, they're going to go to Bitcoin. Right, Matt? Bitcoin is the ultimate stable coin. Yeah. >> In the end, that's where we end up. >> Uh and and and and clearly you guys are bullish on uh I guess onchain vaults aka ETFs 2.0 will double uh in assets under management. Okay. So this maybe explain

this one to me a little bit. Maybe Ryan, we can go to you. Explain this to me what you mean by by this one. >> Yeah, happy to. I mean most people uh who are listening to this have heard of vaults. A lot of us probably use them. And these are things like Morpho or other vaults on base or other blockchains. And really the way that we think about vaults are that these are just onchain investment funds like ETFs where you deposit your assets and then curators or fund managers in traditional terms go and deploy the capital across different DeFi lending pools and market making strategies and the like to generate yield. I think a lot of people haven't heard of these outside of the crypto world. they wouldn't really know what they are, especially the investors that Madden I speak to every day. But I

think two things are going to happen. One is a result of the October 10th crypto crash, which in part was due to and related to the unwinding of several vaults that turned out to be operated very poorly with poor risk management by the investment fund or vault curators. I think that's going to lead to highquality curators entering the space in 2026. I think high curators entering the space will draw in a lot of capital and that will help the space grow and and not only reach its prior all-time highs of about 8 to n billion in aum but but surpass that and and double somewhere around 20 billion. But I think the other thing that's happening as well

is that interest rates are coming down. Investors need to find other sources of stable yield or lower risk yield. And as you have high quality curators coming into the space, that means that the risk management is going to be elevated, which reduces the risk of investing in these strategies. And there's a great opportunity to generate yield across DeFi. I mean, there's a reason that some of these vaults are generating 6 7 8% compared to the high yield savings account or a money market fund that's down around 3 to 4%. And that difference is going to drive capital into these strategies. So, I think there's a great opportunity for uh high quality creators to come to the space. I think Bitwise is really interested in this space as well.

And so, maybe there's a bit of a of a tease there. And this is the evolution of bringing traditional investment funds and infrastructure on change. And that's the whole ETFs to.0. Now, Matt's the ETF guru, so maybe I'll I'll let him cap that one off because Oh, yeah. Sorry. Tell us his the thing about ETFs is that uh when they launched, people were very skeptical of them. They were like, "Mutual funds are fine. We don't need ETFs." And I think one of the things that ETF people realized was it's not the end of asset management history. Like we will innovate beyond mutual funds into ETFs. Now the crazy thing is everyone looks at ETFs and like this is it. ETFs for the next thousand years.

And we're bullish on ETFs, but it's not the end of asset management history. When you go to a a a decentralized world, a blockchain based world where people can self-s sovereignly custody their own assets, asset management becomes about IP, intellectual property, and not about physically taking possession of assets. And vaults allow you to do this. I think this is a a trillion dollar market at some point in the future. Not next year, but I think this is the next iteration of how asset managers work. And the same way we think about like Black Rockck as an ETF shop and Bitwise as an ETF shop and PIMCO as an ETF, we're going to think about those as vault managers in the future. Um, I think that is the direction of travel.

It's a really big trend long term that's just getting off the ground. >> I like that. Okay. Okay. That's a nice preview. And again, I feel like this is a nice another one of those that reflects probably a lot of the meetings that you guys have as well, right? So that's why I also appreciate having you guys on because we get a bit of that that knowledge. Um, all right. Prediction number eight, Ethereum and Salana will set new all-time highs if the Clarity Act passes. Nice. I mean, let's hope so, guys. I mean, that's I feel like that's a pretty long road, especially I'd say even more so for Salana. I don't know why Ethereum, it feels like we've already seen it bounce from even this year, we saw it bounce off the lows, 1500, 3x almost to 5,000, but Salana is one of those where I feel

I don't know. I feel like this is this is one that that's a little harder to convince people. Tell me about a little bit more about the conviction there. Well, look, if if the Clarity Act passes, it's fat complicated that the whole world is moving on chain. You have the chair of the SEC saying all US stocks will be tokenized in the next couple of years. You have every major asset manager moving in this direction. You have other regulators in other markets pushing people there. The last piece of the puzzle to sort of guarantee that future is this fundamental piece of market infrastructure legislation because right now sort of crypto's pro-regulatory status is a castle built to some degree on sand, right? It's built on the fact that we have a pro- crypto SEC, pro- crypto regulators. But

in a new administration, if we get a violent swing in American politics, you could have a return of anti-crypto regulators. And the largest institutions aren't going to build for this blockchainbased future until it's a foundation of concrete, right? That's what they need to build. The Clarity Act will have that. If it passes, it's all systems go on our blockchainbased financial future. And that means you're talking about markets measured in hundreds of trillions of dollars. And from my perspective, the two leading blockchains that support that, there's no way they don't go to a new all-time high. If we have this allclear signal that look, hundreds of trillions of dollars are moving on chain, then the

current valuation of something like Salana sitting well below hundred billion dollars looks crazy, right? If it doesn't happen, if we're still in this sort of regulatory muck, then I think it's less certain. There are worlds in which these assets get to new all-time highs and there's worlds in which uh they sort of suffer. Uh and I don't I'm not saying if we don't get the Clarity Act, it's a terrible year. I'm just saying if we do get the Clarity Act, I think the market is too large and too certain to hold these leading assets down for long.

>> Oh, is that supposed to happen soon? Right. Isn't that at the top of the list? >> What does soon mean in Washington, LG? Um look, it was supposed to happen this year. Uh David Saxs, the cryptozar just put out a tweet yesterday that said he thinks it will happen in January. I think he put out that tweet in part because crypto was worried it was never going to happen. The US government might shut there's so many unknowns. Never bet on anything certain in Washington except that Josh Shapiro is undervalued on Poly Market.

>> The I guess there's no odds yet for on poly market for the Clarity Act in 2026, but it's currently at 3% for 2025. Very doubtful. They're focused on uh I think the end of this week they're focused on something a little different. Let's just put it that way. >> They're focused on going skiing. Yeah. Watch >> I was going to say they're Yeah, there's probably market odds on something a little bit different, a little bit more scandalous, but that's that's definitely not that type of show that we're true. >> Uh let's go to prediction number nine. Half of Ivy League endowments will invest in crypto. So, this is one this one's really interesting. This is something I don't feel like I know very much about. Um, and Matt, you mentioned this already that Harvard uh has investment invested. Why would I mean I don't really understand how Ivy League

uh I guess endowments work or how their investing works. Maybe you guys can kind of disambiguate that for me a little bit. >> Yeah, sure. Ryan, you want me to take this one? >> Yeah. Yeah. >> Yeah. >> This is this this a Matt Hogan one, right? Ryan's like shaking his head. Uh uh look, the these these endowments control huge amounts of money, right? uh tens of billions of dollars and they're permanent capital vehicles. They're investing for the long term to support their institutions. When you look at Harvard, we can see from 13F filings that this year they dramatically increased their allocation to Bitcoin and to gold via ETFs. More Bitcoin than gold, but Bitcoin and gold. Bitcoin is now their largest single liquid position

in a ticker. That's a remarkable fact. uh they're doing it because if you're looking after money for the next hundred years, you're worried about debasement, right? Debbasement is one of the biggest threats to something like the Harvard Endowment. And so they're hedging that by owning Bitcoin and by owning gold. They're not the only one. Brown University also doing it. And so we just think that this is going to ripple through these uh long-term investors as debasement concerns rise and as crypto goes more mainstream. Now the thing that this uh the reason we included this as a prediction is it's the they're sort of like uh the opinion leaders of um of of the institutional crowd, right? They're

the influencers of the institutional crowd is one way of thinking of of of endowments. As an example, the reason hedge funds are big today, hedge funds weren't always a big part of the asset management mix. The reason they're big today is that for a while, the Yale endowment was the most important investor in the world from an influencer perspective. They had this guy David Swenson. He delivered very high returns. He did it by allocating a huge chunk of the portfolio to hedge funds. Once he did it, every other institution followed suit. they wanted to build the quote unquote IV portfolio or the Swenson portfolio and that included a huge allocation to hedge funds took them from like tens of billions of dollars to trillions of dollars. And so the reason

this is important is if we get a majority of the Ivy's allocating to Bitcoin, it's an allcle signal for every institution to both consider it and probably do it because they want to follow the Harvard model. They want to follow the Yale model. They want to follow the Brown model. Again, they're the influencers of the institutional crowd. This is more important than the amount of Bitcoin or crypto they'll buy. It's really about signaling that insurance funds, pensions, endowments, public plans should follow suit and add this to the allocation mix.

>> It's very interesting, Matt. I really don't know much about that, but um interesting. How was it? Why is this yours? Are you Are you an Ivy Leagueer? Is that Is that why? >> No. No. Uh I went to a small liberal arts college in Maine. Uh, no. This is this is mine because uh I am older than Ryan and I remember the Swenson era. Um, and I mean this guy was a rock star. He was untouchable. He wrote a book that was a New York Times bestseller. Everyone wanted to have a Swenson style portfolio. And when I say that it created the hedge fund boom, I don't mean that it was a 5% contributor. I think the reason hedge funds are a big deal today traces directly back to

Swinson. It really was a massive influencer moment. And so when I initially proposed this, Ryan was like, "Who cares? They control like less than hundred billion dollars. It's a bigger deal that Morgan Stanley just approved Bitcoin ETFs." From an from an absolute perspective, 100% true. But in terms of what can onboard most institutional capital, if you had to pick one thing to happen, it might in fact be this. This is the allclear signal to bring these people in and it was mine because I lived through that Swinson experience uh VCB hedge funds and I know how important it can be. I would just add to that like I think these are the type of things that most

participants in the crypto industry don't think about when they hear the terms the institutions are coming or institutional adoption or they see a tweet about Harvard buying Bitcoin they're like oh cool all right I don't really know why I should care about that but seems important like there's so many secondary and third you know and other effects that come from these types of signals that are so important and Matt's right when we had talked about this I was like I feel like this shouldn't really be in there and then he kind of unpacked everything as you just did and you start to think about like wow this is a uh you know a shot heard around the world type moment and the secondary effect of that is absolutely massive and we talk to CIOS of endowments and pension funds and one of the things that

they talk about all the time is in why they're waiting to allocate to crypto or bitcoin uh is is three things it's regulatory clarity we're getting that it's access in investment vehicles we now have that with ETFs literally two years ago, Harvard having its single largest liquid holding in a Bitcoin ETF was not possible. And now, two years later, it is their single largest liquid holding. So, we now have those ETFs. And the third thing those CIOS talk about is career risk. Why would we be the only ones investing in crypto in Bitcoin for our endowment or our pension fund? And if it goes down, then we get fired.

We're going to wait till we see others doing it. And now we have that signal with Harvard, with Brown. we think it'll be more IV leagues next year that also start allocating. So that is where you start to see the real momentum in the next title wave of institutional capital follow that initial wave are through things like this. So I'm really bullish about this one and I think these are the type of things that a lot of people don't think about when they think too short-sightedly about uh crypto and about the impact that institutions coming in and ETFs launching will ultimately have on the market. ETFs provide investors with a structured, disciplined, and diversified approach to crypto, which is cool, but the world is moving on chain. We need a crypton native equivalent. That's exactly what Reserve's decentralized token folios

bring to the table. Reserve ETFs are rule-based baskets of crypto assets packaged into a single token, like Coin Market CMC 20, crypto's version of the S&P 500. Go to milkroad.com/reserve to find out what's on offer. We're definitely, I think, at like institutional headline fatigue in crypto, right? I think that that's and it's not it's I think it's it's less because those things are important, but more because we're so short-term headline driven in crypto that it's just like we're like, okay, you know, I remember I was saying earlier on a different show that I I remember when Fidelity said, "Let's put you got to put 1% your portfolio is Bitcoin." And that's like a year and a half ago. So, at this point, I think you're right, Ryan. It's like you see like Harvard, you're like, "Okay, like whatever." Like a school, good for them. And you don't

realize unless you know this stuff that you guys were saying, you don't know how important that is, right? Like you don't understand the significance that it's like, wow, look who has finally come to the table and publicly buying some of this stuff is Harvard and why that's so vital from this kind of trend center perspective, Matt, that you're you're painting for us. Um, okay. Prediction number 10. Here we go. More than 100 crypto linked ETFs will launch in the US. How many ETFs does Bitwise have right now? How how many do you guys have? >> 40. >> That's good. Something like that. 30 or so. Yeah.

>> The amazing thing is two years ago we we would have known that answer exactly and now there's two there's so many it's hard to keep track which is incredible. >> Mhm. How how many of these are launching on Bitwise out of the hundred that you're predicting? >> Can't say. Can't say. >> We've been pretty busy. I feel like we've been launching one a week. That that pace won't continue. But look, we have a lot of ideas. There's a lot still left to cover. There's single assets still to cover. there are large number of inst uh index type strategies still to cover and then um you know the industry will do not bitwise the industry will do things like 2x and negative -2x leveraged uh products as well. So we're still early in the phase of growth on the ETF format.

>> Got it. Okay. Okay. Very cool. Well excited for you guys. And if ever you want to reveal another XRP style ETF, please come back on the show uh and give us the exclusive. And you guys have one bonus prediction here to wrap us out. Bitcoin's correlation to equities will fall. Interesting. So, this is something we cover a lot on the show, especially the last couple weeks, is that, you know, is this is this really what crypto wanted was to be so heavily tied to the economy, right? And kind of move with it. So, you guys were saying that you're finally going to see it take off and soar on its own. Correct. >> Yeah. I think I think as you look into 2026, the factors that matter most for Bitcoin, there there are macro factors that matter that influence the stock market. What happens at the Fed level

matters, what happens from liquidity matters. But I think what matters more is regulatory progress, institutional adoption, and crypto specific factors. I think those will be relatively more important in 2026 than in 2025. That's the chart of correlations. You can see the relatively elevated versus historical norms. I don't think we'll go back to zero, but I think we could be closer to 3 or 0.25 than we are to 04. The thing that's important about this LG is that you have to stack our predictions, right? You're looking at we think we'll set new all-time highs next year driven by institutional demand. So price will go up. We think volatility will be down. It'll be less volatile

than Nvidia. We think correlations will be down. The combination of good returns, lower volatility, and lower correlations is magic for portfolio allocators. It's magic for institutional investors. So, we think crypto is just going to be a great asset for portfolios in 2026 because it's going to have those three characteristics. >> I like that. I like that a lot. Ryan, anything to add to that? >> I was uh just maybe one one aneote. I agree with Matt there. You have to stack these predictions to really get an outlook for what 2026 and beyond is going to how it's going to pan out.

Yesterday I was meeting with an RA that managed several billion dollars in their investment committee and we were talking about these exact things. The outlook for price appreciation of Bitcoin driven by regulatory clarity, institutional demand and a favorable macro outlook. We're talking about volatility continuing to fall as markets get deeper and more institutions come into the space. And we're talking about the likelihood that correlations will fall and actually remain relatively low. People look at that correlation chart and they they see that it's up at 0.5 and they think like, "Oh, that's very highly correlated." But the reality is the 0.5 correlation is low. People love assets that have 0.5 correlation to other assets in their portfolio because you get the benefits of diversification.

What I was talking about with this investment committee yesterday, which is really interesting, was that if you told them, "Here's here's this asset where you have the potential for high returns, you have falling volatility, and you have low correlation to other assets in your portfolio," they would jump all over it. They would load that up in their portfolio and smash the buy button. But then you say, "Hey, it's Bitcoin." And they're like, "Whoa, I don't I don't know. Like, is this is it real?" And so it's like if it was any other asset, people would just be so excited about it. And because it's Bitcoin, it has this bad reputation. And I think there's actually alpha in that because eventually that reputation will fade and the ghosts of Bitcoin's past will have

been so far in the background and be replaced by these things like lower volatility, lower correlation and you know sustained positive returns. I think then people will come around endowments, pension funds, RAAS, family offices and will continue to adopt Bitcoin as a core holding in their portfolio. So I think it's really important to stack these and the outlook for Bitcoin given those three factors is incredible in our opinion not just next year but you know for the next decade and beyond. >> I have one final question for you guys. Um you know I've spoken to you maybe four or five times now on the show. You guys are are my my gurus for hey here's what the institutions are doing. here's what they're interested in and and that's reflected in the products clearly that Bitwise works on and puts out and the research you guys put out, right?

It's it's a lot of really strong knowledge based on what's actually happening behind the scenes. Are institutions FOMOing right now? Is this a FOMO driven development for them to be buying into this to be la other people launching ETFs? You guys were early, but not everybody was, right? Everybody's ETFs. Is this a FOMO or is this a we finally have a green light moment? Yeah, I'm sure Matt has has uh some insight to add here as well. I'll just maybe an anecdote around why I think it's not a FOMO moment is that we've launched a Salana staking ETF about 6 weeks ago and the price of Salana since then it has fallen by 35% or so. Yet in that time, allocators have

pushed more than 700 million of capital into the Salana ETF. It's one of the most successful ETF launches of 2025 based on those metrics and the metrics that matter. And so I think that's a good example of the price is falling 35% and you're seeing nearly a billion dollars flow into these ETFs. That is just counterintuitive. Nobody would expect for that to happen. And you can imagine what happens when price and momentum starts going in the other direction. So that's like an anecdote of where I see this not being a FOMO moment specific to uh you know Salana and that use case. But Matt would love to hear your thoughts.

>> Yeah, I think that's right. The nuance that I would add is they uh do fear missing out on the next decade in crypto. I mean they missed out, right? price went from a dollar to $100,000 and they didn't allocate in part because they couldn't, in part because they didn't understand it, in part because there were all this reputational risk. They missed out. Uh I think they're they they sort of are FOMOing in that the nuance that that links that view with what Ryan said is that their view of missing out is measured over the next decade. Like they see another 10 or 20x.

If you see another 10 or 20x, who cares if it's down 20 or 30%. Right? Like that. That's why you see these persistent inflows into things like BOL or things like BITW or BITB even when the price goes down because those 20 or 30% pullbacks are painful to those of us who have been in the industry, but to them they're like, who cares? Did you care when Bitcoin fell from $1,000 to $300? It was like painful. But people were betting this thing's going to 100k. So they were buying, right? The long-term the same thing is happening.

So yes, they fear they're missing out. Yes. But their fear is that they're missing out over a decade long trend. And that's why we see that persistent buying that what that Ryan is talking about. I like it. Probably one of the biggest mistakes in crypto is to never think big enough, right? Is I think probably a lot of people when Bitcoin finally got to a,000 or $10,000 are like, how could this ever 10x its market cap already? It's doing so well, right? and you just got to zoom out and and see that see that bigger picture. >> Gentlemen, uh thank you so much for all your thoughts today and all your thoughts this year. We'd love to welcome you guys back many more times in the new year and and continue this this wonderful uh I guess content series that we do with you guys every couple weeks.

I think it's great. Uh always some of our most popular episodes and uh wishing you guys very happy holiday season. >> You as well. Thanks for having us, LG. This was a joy for 2025. We'll do it again. >> Can't wait. Want insights on what's moving crypto markets and how we're [music] trading each event? Subscribe to our channel and join the Milkro Daily and Pro Newsletters and start investing like the top 1%. [music] This show is for educational purposes only. Nothing we say is financial advice. Investing is risky. Never invest more than you can afford to lose.