Interview with Matthew Hougan, Chief Investment Officer at Bitwise Asset Management | EBC11

Transcript

[Music] Hi everyone. Uh welcome back. We're here in Barcelona for European blockchain convention. I'm Alona Coco at Rebel PR Agency. Joining me again uh this year, Auntie Hogan, CIO at Bitwise. How are you? >> I'm doing well. It's great to be back in Barcelona. >> Super good to have you here. We spoke last year in September. >> Yep. And I believe it was like one of the craziest years in crypto since then. Um, give me a quick rundown of like your highlights of of the past year and like what you know what you uh were mostly uh uh excited about.

>> Yeah, I mean there's a lot to be excited about. Probably the biggest event in the last year from my perspective was the change in the US regulatory attitude towards crypto. We went from a massive headwind where everything was very difficult and borderline illegal to a massive tailwind where we can move the industry forward. And you've seen the result in flows into ETFs. You've seen the result in legislation being passed. Uh and you've seen the result in the industry really orienting around real world applications. The other big change for me, I think a year ago if we were talking, crypto was still mostly a Bitcoin story, at least to the outside world. Inside crypto, sure, we talked about all the different assets and

applications. To the outside world, it was Bitcoin only. The world has woken up to stable coins, tokenization, and the things that you can do beyond Bitcoin on crypto. And I think that is a big change that'll have ramifications for years to come. >> 100%. And also I mean a year ago it was like kind of Europe maybe Latin America leading the way perhaps like you know moving aside the uh control and monopoly the US have had of economy for so long and all of a sudden like you know the country has picked up is is leading the wave again. Very exciting time. >> Yes. Yeah. The world's largest market.

They say about America that they figure out the right thing after they've exhausted every other opportunity. I think that is true here. But I do think it's a fundamental shift. A lot of people wonder if the US will go back to an anti- crypto orientation if there's a new change in administration. I don't think so. That's not what we're hearing. I think there is bipartisan support. I think we made a one-way shift and I think you can just look at how much Wall Street is building on crypto now to see that this has been a fundamental change >> 100%. And then also maybe the nod that the US has given that pushed PayPal forward and even you know uh states coming up with their own uh tokens and potentially the trunk token.

>> Yeah. I also don't think there will be a way back from dust point. >> Yeah. No, no way back. In fact, I think quite the opposite. I think you know uh you mentioned PayPal. I wouldn't be surprised to see the largest banks in the US launch their own stable coins. I we already saw the na NASDAQ and the New York Stock Exchange looking at tokenization. So, everyone who was skeptical of crypto for the last decade has changed their tune and I think it's again a one-way direction. I think it's just going to go from there. >> Yeah. Uh so, you know, we spoke about Bitcoin and you know, how it's been like a concept of Bitcoin market. So, beyond Bitcoin and Ether, what are you mostly um interested in or excited about when it comes to the digital assets in the more institutional uh grade? Yeah, I really think the next

biggest product in terms of institutional adoption beyond Bitcoin is actually diversified baskets. Uh so index based products I think are going to be a trillion dollar plus market that people aren't counting on. The reason for that if you think about the people who have allocated to crypto so far, they're mostly crypto crypto experts. They're people who know about Bitcoin, who know about ETH, who know about Salana. The people who are going to drive the market in the future are people who aren't focused on crypto, who just want three to five percent of their portfolio and they don't have an opinion on how a a layer 1 should be structured or whether it's better to scale through a monolithic blockchain or layer 2 solutions. They just want to own crypto and I think they're going to buy index

based solutions. So I know that's a very tiny sliver of the market right now. I think if we come back next year it'll be 10% of the market. If we come back two years from now, it'll be 30 to 50% of the market. I think that's a big area of growth. >> Wow, that's so interesting. Um, and talking about indexes and bringing the ETFs in as well, you know, as as a more uh digestible, say, financial product for the masses, uh, how do you see that side of of market also picking up? >> Yeah, I mean, absolutely. What we're seeing with ETFs uh, historically is that the flows build over time. Uh that's been true outside of crypto. I think it's going to be true inside of crypto. So I think we've really just seen a down payment. It's worth noting

at least in the US the market still isn't fully open. Some of the largest wealth management platforms are just getting around to approving access to Bitcoin ETFs. So a lot of people are excited that we've seen, you know, what is it? A hundred billion dollars of flows globally. Um it really is just a down payment. I mean I think we'll have record flows in 2025. I think 2026 will exceed 2025. I think 2027 will exceed 2026. If you look at the history of ETFs that come from an ETF background, they grow for like 5 to 10 years. Uh and I think we'll see the same thing here.

>> Very cool. Um anything else you'd like to add? Uh you know, for our viewers to >> No, I would just I would just say to maybe the most important thing I can say is that I think it's the best time ever to invest in crypto. We've removed a huge amount of risk. People don't think about that much, but we've really dialed down custody risk and trading risk and regulatory risk and will the institutions adopt it risk and will sovereigns adopt it. We've dialed down all those risks, but it's still non-conensus. It's still the case that the vast majority of investors have 0% allocation to crypto. So, I think you have enormous upside with dramatically reduced risk. As an investor, that makes me very excited. I think that means

people are going to allocate more to crypto than they did in the past. Again, a couple years ago, we were probably talking about a 1% allocation. I think that's going to be five, maybe 10 in the future. So, it's still early in crypto. We've derisked. I think we have very exciting time ahead. >> 100%. It's really funny for us, you know, being in crypto for so long thinking it is still early on. >> It's so early. It's >> and the industry is moving so fast and like, you know, things are happening so swiftly. It feels like, you know, it's been like quite a decade and Yeah. >> Yeah. We're just in the really exciting scaling part. You know that if you think about an exponential curve, it takes a long time for go from one to two, two to four, four to eight. Um, but we're at

the point where it really ramps up. I think it's going to be fun. It's >> very exciting time. Let's see. Let's see what we're going to be talking about next year. All right. So, for joining us, >> thank you.