# Institutional Crypto Adoption Accelerates Despite Regulatory Delays

**Podcast:** The Milk Road Show
**Published:** 2026-08-13

## Transcript

The number one surprise for me over the last month, I've been spending a lot of time with the largest wealth management platforms in the world, right?
Whether it's a Wells Fargo or the UBSs or the Stiefels, et cetera.
The most surprising thing to me about those conversations is just this recognition that those ships have turned slowly towards crypto.
And they really don't care about this short-term price.
Is it time to buy crypto or is the bear market going to last a few more months?
Is the Bitcoin bottom in or are we going to see new lows this summer?
And how long do we have to wait to find out the answers to these questions?
Hello and welcome to The Milk Road Show, the podcast that knows that the Clarity Act is sort of dead, but sort of still alive.
But whatever it is, it's definitely not clear.
I'm your host, John Gill, and today is Wednesday, August 12th.
And today we are joined by Matt Hogan of Bitwise.
Matt is the chief investment officer at Bitwise.
Ryan Rasmussen.
the head of research, was supposed to join today, but could not because he's in London on work.
So I will troll him on Twitter about that later.
These are some of our favorite guests here at Milk Road.
So make sure you like and subscribe.
Share this episode with somebody who's going to enjoy it.
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So keep an ear out for more information about them later in the episode.
But for now, welcome back to the Milk Road Show.
Matt, how are you, sir?
Glad to be here.
Glad to hear Ryan getting dragged a little bit and excited for the conversation.
Likewise.
Yeah, it's always good to have an opportunity to troll Ryan a little bit.
Matt, I thought a good place to start the conversation today would be with the most recent CIO memo that you'd written.
And in this, you talked all about what to expect from the Clarity Act if it fails.
The line that stuck out to me was, first, it won't really die.
Second, crypto will march ahead anyway.
Could you elaborate a little bit more on this for all of us?
Yeah, absolutely.
I was worried when I was writing the memo that everyone was expecting the final news on the Clarity Act by August 5th or August 7th because Congress was going into recess.
And we had circled those dates on our calendar for months.
We had talked about August.
And what occurred to me is that that's not the way Washington works.
As we sort of started to approach that, you heard this senator or that senator start to talk about maybe we could address it in September or maybe we could do it in the lame duck session.
So what I wanted to prepare people for was that the event we were going to finally have happen, this sort of deciding moment for clarity.
was going to be a fizzle.
And sure enough, that's actually what happened, right?
It didn't get acted on before the August recess, but at the last minute, a senator filed for a potential vote in September.
So we sort of have this dribble off into the distance.
My expectation is that this thing will never die and maybe will never pass.
It will just sort of live in this perpetual almost state.
Now, I could be wrong about that.
I think there's a chance that Congress comes around and agrees to pass it before the election if we put the right kind of political pressure.
But the base case is we're still in this sort of waking undead moment for the Clarity Act until the end of the year.
I do think the other part that I said, which also is coming true, is that crypto will move on without it.
When I talked about that, I mostly focused on the idea that crypto will continue to build without it.
right?
Wall Street will move on tokenization, people will move on stable coins.
There's actually been another piece that has bubbled up over the last week or so, which the SEC is just going to do rules without the Clarity Act.
If the Clarity Act won't pass, then the SEC will establish rules.
And sure enough, that's what we've heard out of the SEC.
We expect major rule ranking next week on tokenized stocks, on how new crypto projects can be born without triggering automatic SEC oversight, how they can decentralize.
The SEC is just going to plow ahead.
So I think it's a win for the crypto market.
I think it was maybe it would have been better if it passed, but it wasn't going to.
And we ended up in a good place.
I did an interview on this channel with Rebecca Reitig, who is the chief legal officer at Gito Labs.
And she said something that resonates with me as somebody who used to work on Capitol Hill, which is that bills in Washington die nine times before they finally pass.
And so I haven't totally given up hope yet.
But you brought up something I wanted to ask about, but just about an hour ago, you were tweeting about this.
You said the switch to 24-7 stock trading is going to happen bigger and faster than most people anticipate.
And that was in reference to this thing you mentioned, the SEC.
seems like they're going to move forward with an innovation exemption to allow tokenized stock trading.
Talk to me more about this.
Why is this so bullish?
What should investors understand about this?
Yeah, well, the reason I wrote that tweet is because financial firms love making money and they will make more money if stocks trade 24-7, 365 than if they trade from 9.30 to 4, five days a week and not on holidays.
They'll make more money if stocks are available globally.
to an audience of 8 billion people, then to the U.S.
and an audience of a couple hundred million people.
So they want to do this.
That's why you see all these tokenization projects.
That's why you see all these firms talking about it on conference calls.
The limiting factor has been regulatory.
But if the SEC is going to establish rulemaking that provides a project to get us from here to tokenize trading, Wall Street is going to rush through those doors.
The thing that always hits me when we talk about tokenization, is that the market right now is so tiny.
It's $300 billion of assets on chain.
Tokenized stocks really are a few billion dollars.
The global equity market's $110 trillion, right?
So I think people miss the scale of what is going to happen.
When you have regulatory progress and the opportunity for Wall Street to make money, you end up with rapid action.
I just think that's what we're going to see.
I think it's almost inevitable.
We get a headline every day.
I think it's going to be a mega trend for the next couple of years.
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So building on this point, I wanted to ask you about this as well.
The same week that the Senate decided to delay the Clarity Act vote by a whole month, BlackRock decided to launch two new tokenized funds on Ethereum and other blockchains.
And I'm curious if this means that Wall Street is just going to accelerate and keep going, barreling ahead with or without Clarity.
And what does that world look like where Wall Street just says, we don't care if we get the law or not, we're just going full speed ahead?
Yeah, I think there's some good analogies that we can point to.
It looks like Uber.
It looks like Airbnb.
It looks like the early days of the internet.
There have been plenty of examples where consumers and companies moved ahead of the current regulatory status quo because there was demand on the other side that was obvious and they felt they could do it in a safe and successful manner.
That's what we saw with Uber and Lyft.
As I said, that's what we saw with Airbnb.
eventually the regulation catches up to it.
Why is BlackRock doing it?
BlackRock's doing it because they feel they can do it in a compliant fashion and they know there's demand on the other side of the spectrum and they know the world is moving to tokenize all assets and they want to be the world's largest asset manager in that world just as they are in the current paper certificate world.
They're plowing ahead.
You're going to see this across the board.
And it also builds on itself because if BlackRock is doing it, then the board of every other asset manager is asking why they're not doing it.
And they will follow in a few months.
I do think this is, it's basically an inevitability.
Assets want to move 24-7, 365 on a global basis.
The way to do that is on chain.
We're going to see all assets move on chain over the next five to 10 years.
And what we're seeing now is just sort of the early steps in that process.
Do you think that there is a risk of some of these firms having to unwind some of these activities?
This whole Clarity Act fight.
has been a strong reminder that the anti-crypto army is not totally dead yet.
And there are some people actually publicly celebrating the Clarity Act not getting passed into law.
Do you think that that regulatory risk or that, you know, the anti-crypto army coming back to power in some way is a risk that the market is still concerned about?
Or are they kind of looking through this at this point?
It's always a risk because you never know if an extreme part of a political party can come back into power.
But I think when it's not just crypto pushing this forward, when it's BlackRock and it's NASDAQ and it's NYSE and it's JP Morgan and it's Standard Chartered and it's other giants in the space when they are behind it, I think it just gets very hard to put back into sort of the original bottle.
Now, there are aspects, there are corners where there could be questions and challenges.
And I think.
Those corners can slow our growth, right?
There are concerns around developer liability.
I think there is uncertainty in that space.
But the broad idea that we're moving assets on chain, I just think there's no way even the anti-crypto army will be able to peel that back.
And I think they would be wrong to do so.
That will be a better, more efficient world for more people.
It'll be safer.
I think we're going to end up there.
So no, let them chatter.
They're a dying breed.
And I think they'll be sort of relegated to the dustbin of history in the next couple of years.
It's nice to hear you say that out loud.
I feel the same way, but we'll see how this all plays out.
So I want to get a sense from you of how big the scope of this tidal wave of Wall Street coming on chain is going to be.
Standard Charter is a name you just mentioned.
They put out a report, I think just this week, calling for, I think, $4 trillion of tokenized assets on chain by 2030.
And they said like a $200 chain link price prediction along with that.
We can leave that aside for the moment.
But how are you thinking about this in terms of, you know, just like your tweet about this is going to happen bigger and faster than people expect?
How much capital?
How fast does this move?
What does that look like in your mind?
What are your expectations on that?
I think there could be upside to that standard charted prediction.
If we get the right regulations in place, these things can move dramatically fast when they start to snowball.
And the world is a big place.
right i mentioned there's 110 trillion dollars of stocks that number is actually probably outdated the bull market move maybe it's 125 trillion dollars of stocks there's 670 trillion dollars of assets globally uh four percent is a down payment on 600 trillion dollars right it's less than a percent so standard charter just saying we're going to start to move in that direction but there could be upside if we get the right regulation in place I find this space, the really surprising thing is how small the tokenized real world asset market is right now.
And it's been held back by reluctant regulators for a long period of time.
As a result, I think there's sort of pent up demand that's going to spring up.
So I don't think the standard chart number is wrong.
I just think it may be.
uh pessimistic in the same way that you know Citigroup is calling for two plus trillion dollars of stable coins by 2030.
uh we could surprise on the upside you know things can change pretty quickly i'm not guaranteeing that we will it might take till 2032 or 2033 but the direction of travel i think is pretty clear to me Okay, Matt, we talked about how Wall Street is going full speed ahead on crypto and digital assets.
I'm curious your thoughts about startups and some of the smaller players in the industry and how not having the Clarity Act might affect them.
Because it seems like some of the protections in this bill were specifically designed to promote disruption, innovation, and smaller startups coming into the U.S.
jurisdiction.
Do you think there's a risk the U.S.
loses some of that market and some of these newer startups?
Or how do you think about that?
Hmm, that's an interesting question.
I think it's a two sided question, right?
On the one hand, they will be slow to relocate to the US and we've seen that, right?
Hyperliquid is not located in the US.
It's located abroad.
That's been true of many crypto innovations in the past.
In the end, the US is still the world's largest capital market.
So I think, I think you'll see some shift.
I would love to see positive regulation so that the next Hyperliquid.
is based in Palo Alto or in Austin or in Dallas or in New York instead of internationally.
So I do think there is an element of that.
The flip side to that is almost paradoxically, I think the lack of regulation has created more space for startups to thrive, right?
It's unusual that the largest stablecoin providers are Circle and Tether.
The reason for that.
is that the traditional asset managers, traditional banks have been slow to move into the space.
And I think what we've seen is that it's hard for them to catch up.
PayPal comes into the stablecoin space, well positioned to compete, struggles to gain real traction.
Every time there's a major new financial services company that tries to attack this market, what they're finding is that the assets are stickier amongst these well-established startups than maybe they expected.
So I do think it's pushed some innovation offshore.
I wish that stopped because I would love for it to be located here in the US.
But it also has allowed these startups to get bigger than they otherwise would and establish real competitive moats that I think people still underestimate how strong those moats are.
I think five years from now, Circle will still probably be the largest stablecoin issuer in the US.
And I think people probably underestimate that probability.
That's an interesting perspective.
There's trade-offs to all these things.
Matt, I want to talk about Bitcoin here because we've talked about this institutional bull run.
We've seen historic volatility in the equities markets.
Meanwhile, Bitcoin has been a $64,000 pancake at historically low levels of volatility.
Does that market behavior concern you or what is your interpretation of this low volatility and just like flat price action from Bitcoin here?
Oh, no, it's so great because it's the opposite of concerning me.
I love it.
Bear markets die in apathy, and you know that they're dead when the market stops reacting to bad news.
And we've had a slew of bad news from the broader equity market volatility, right?
The most significant momentum compression trade in history happened around situational awareness, and Bitcoin just sort of shrubbed.
You had sailors selling significant amounts of Bitcoin.
Bitcoin really doesn't care.
We had the Clarity Act odds.
fall from 40% to 14% over the handful of a few days.
I think Bitcoin rallied.
Bear markets die in apathy, and they're dead when they stop reacting to bad news.
That's what's happening in Bitcoin.
It's happening because anyone who was going to sell, sold.
And it's left in the hands of people who think this is going to be worth a million dollars a coin.
So they don't care if an AI bubble unravels a little bit.
That will probably end up being good.
for Bitcoin.
So I take a lot of comfort in its pancake sidewaysness.
I do think volatility is being sort of stored up and will be released eventually.
My expectation is it will be released on the upside, not the downside.
That's not a guarantee that the bottom is in, but it does have the attributes of a real bottom.
That's what we're seeing in the market today.
And it's making me pretty excited.
Okay.
Well, I want to think about, get your thoughts on how you're...
allocating to this asset class.
And I want to give some context around this.
I interviewed Matthew Siegel, who's the head of crypto research at VanEck.
And I also interviewed Jan VanEck last week on the Milk Road AI channel.
And I asked both of them how they're thinking about positioning into Bitcoin here.
And it seems like there's this tug of war.
Jan was like, don't get cute, just get the position now.
And Matthew is a little bit more on the DCA into your position between now and Q4.
How are you thinking about this?
How is Bitwise approaching this?
And just give me your thoughts on positioning into Bitcoin at this time.
Yeah, so I think they're both right.
I'm a huge fan of VanEck and love both Jan and Matthew.
Matthew's right from a behavioral perspective.
One of the biggest risks in crypto is behavioral risk.
You invest, the market pulls back 15%, you panic and sell it, and you don't come back to it until you're at new all-time highs.
The beauty of DCA-ing is it protects you from behavioral.
sort of failure, right?
If you buy 10% this month, and then it goes down next month, you're excited to buy that next 10%.
So it's like a behavioral hack, right?
And then if it went up 10%, that's okay.
At least you had some.
It's a really nice behavioral mechanism for investors who may not be comfortable with Bitcoin's overall volatility.
But from an absolute return perspective, I think Jan is exactly right.
I think there's a chance that volatility is being built up or sorry, is being suppressed in Bitcoin, as I mentioned, will be released on the upside, meaning we could have a really fast move upwards at some point.
The big question, if you're allocating for the next 10 years, is not whether the bottom is in Bitcoin, it's whether the top is in.
And I think what Jan is saying is the top isn't in, right?
We're printing deficits.
The world is uncertain.
Bitcoin is pretty certain.
It's at this sort of natural cyclical low.
Who cares if it goes down 10% or more?
I think it's going to go up 5x.
That's the argument to just buy it all now.
So it really comes down to whether you're return maximizing or behavior risk minimizing.
That's how I would split their two views.
My view is just own it, come back to it in 10 years.
I think you'll be very happy.
That's a very helpful balance between those two things.
Another thing I want to hear your thoughts on is this consensus I've heard from so many different analysts at this point that Bitcoin's bottom is going to come sometime in or around October.
And it's made me nervous because it feels like as soon as everybody agrees on something, that's not what happens.
Do you have a view on this and the growing consensus around October as a bottom for Bitcoin?
Yeah, I mean...
It is consensus.
I mean, you literally hear it three or four times a day from three or four different people.
And that does make me nervous.
The calendar has been a reliable indicator of Bitcoin returns, much more reliable than I anticipated over the last couple of years.
So who am I to say that it won't continue to be reliable?
Again, I would go back to that point I made about what Jan was saying.
which is, yeah, maybe it goes down a little bit.
The consensus is we could trade into the 50s.
But if you think this is going to a million dollars, do you really want to take that risk?
So I know the honest answer is I don't know.
I think we're higher by the end of the year.
The path between here and there depends on a lot of different factors.
But I think the upside is much more significant than the downside at this point.
To peel back, do you care if you bought it $5,000 in 2018 or $3,500 in 2019?
We're at $63,000 now.
In either case, you did pretty well.
I think that may be the scenario that we're in.
It's been a while since we've caught up.
I'm just curious, in the last month or so, what have the conversations been like with the people you're talking to, the clients you're facing off with?
Are they more concerned about?
like the clarity or no quantum risks like jim kramer selling his bags because he's afraid of quantum are they more like accumulating quietly while while nobody's looking like what what are those conversations been like recently for you yeah the the number one surprise for me over the last month i've been spending a lot of time with the largest wealth management platforms in the world right the whether it's a wells fargo or the ubs's or the stiefels etc the most surprising thing to me about those conversations is just this recognition that those ships have turned slowly towards crypto, and they really don't care about the short-term price.
They are orienting around this as an asset class that will emerge over the next 10 years.
And it's not as if the bear market hasn't happened.
They're aware that price is down.
These people are very smart.
It's that they sort of understand that that's part of the asset class.
And the overwhelming consensus I get from them, is just like this is a slow but significant change and we're moving in that direction.
Maybe an idiosyncratic example of that is Morgan Stanley approved Solana ETFs, not because of FOMO, quite the opposite.
The market is down substantially, but rather because they see the direction of travel, of tokenization and tokenized stocks as a decade-long trend would be my guess.
I don't want to speak for them.
But I think it's interesting that we're getting these sort of platform shifts in favor of adding crypto to portfolios, in favor of approving more crypto ETFs at a time where the market is down 50%.
That really tells you something about the long-term nature of this orientation.
So that's been maybe one of the biggest surprises from the people I've been speaking with is that they're looking years ahead, not months ahead.
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You've been pounding the table for a while now that vaults are going to be the next big thing in crypto and a big way that a lot of these players are going to start bringing their capital into digital assets.
And I'm just curious if there's an update from you on that progress there and those conversations, what you're seeing in that area.
Yeah, I think vaults have been really big.
I think they are growing substantially.
Our business on the vault side has grown quite substantially this year.
We've had really significant inflows despite the uncertainty in the crypto market.
My views have become a little bit more nuanced, which is I think on-chain portfolio management is going to be absolutely massive.
And I think vaults are one of the primitives that allow you to do that.
But I don't think they're the only one.
I suspect we'll see other ways of managing on-chain portfolios emerge in the next like three to six months that I think will be pretty exciting as well.
So vaults are going to be huge.
There's significant demand, particularly from crypto native foundations for yield within a vaults like wrapper.
I think that's been accelerating.
But I think the bigger trend is sort of on chain portfolios.
I think that's going to be really significant.
And that can be done through SMA style exposures.
It could be done with tokenized stocks.
It can be done in other vehicles that may not all directly fall.
exactly on the vaults wrapper.
So maybe broaden out my pound the table from vaults to on-chain portfolios.
I think that's going to be a huge trend in the next year.
Are there any specific projects or assets that you think benefit the most from that migration towards on-chain asset management?
Or how do you think about that trend in terms of where that capital goes as it comes on-chain?
Great question.
I think there are two places where it's going to be really significant.
The first is on income generating strategies.
That's a space where vaults are really scaling quite aggressively.
And I think on-chain assets give you unique opportunities to generate income in ways that off-chain assets do not.
And I think people are going to be looking for those.
And I think that's going to be a really big direction of growth.
funding rate ARB strategies and things like that.
I think that is a huge area that's going to significantly grow.
The other is focused portfolios of tokenized equities, I think are a really interesting thing that you can do on chain and in ways that are maybe better than you can do in traditional wrappers that can be slower to move.
So I think that that will be an interesting area as well.
And then of course, you get the exposures on chain that you can't get in other.
traditional worlds, things like perps, things like pre-IPO stocks, things like commodities, and the ability to blend all those together into a single portfolio.
You can't do that in a mutual fund.
You probably can do that in an on-chain portfolio.
And so that's going to be pretty exciting.
In these conversations with these larger institutions, you talk about on-chain asset management and you talk about the thesis on Bitcoin there.
Are they also entertaining or interested in or asking questions about altcoins as well?
Is there one that they particularly are more or less interested in?
Or are these kind of not touching that rest of the asset class still and just focus on coming on-chain and Bitcoin?
Yeah, mostly it's the former.
I will say that there's interest in two specific areas of the altcoin side.
So the first is anything linked to stablecoins and tokenization.
There's a desire to get exposure to the growth of those themes.
And if I asked you, John, how do you get exposure to stablecoins and tokenization?
You might say Circle and you might say Securitize.
You might say Robinhood, but you also might say Ethereum or Solana or Chainlink or Ondo.
etc.
So there is that focus, right?
They don't know what those assets are.
Most financial advisors and professional investors haven't heard of Ondo, but they're looking for Ondo, right?
They're wondering what that is.
So there's a lot of conversations around that.
The other one that's maybe earlier, but I think growing substantially is revenue.
There's this desire for crypto that's real.
And Hyperliquid is obviously the easiest example of that.
But if you look throughout the crypto stack, you see a lot of projects that are dramatically improving their tokenomics.
I'm thinking about Uniswap throwing the fee switch and the unification proposal.
I'm thinking about Aave and Aavenomics 3.0.
I'm thinking about Aptos 10xing fees and then having their on-chain activity 3x.
I think there's more pricing power.
even in the L1 space than many in crypto give them credit for, and certainly in the DeFi app space.
The other place that's just starting to bubble up is show me the assets with real revenue, and I'll find that to be interesting.
I think that's going to be an emergent theme over the next handful of months.
Well, let's talk about the next handful of months, because the last time we spoke, you know, a lot of the projects you just listed are DeFi projects.
And the last time we spoke, you said that DeFi had been sort of a sneaky outperformer.
Do you think that continues for the rest of the year?
Do you think that sector continues to show strength in the digital asset space?
Yeah, absolutely.
Those assets are too cheap.
Not investment advice.
But if you look at something like Uniswap, which is a global brand that has shown the ability to turn on monetization without losing users.
It's a two, what, two, three billion dollar project.
You look at on-chain lending, whether it's you take Aave and Morpho, the leading protocols, combined, they're a couple billion dollars.
These are tiny amounts.
We sort of almost talk about Uniswap in the same category as Ethereum.
It's a hundredth the size, right?
So could those double and still be relatively undervalued?
considering their growth and their brand and their reach, the fact that they're being integrated into things like Robinhood chain and sort of the institutional crypto community.
I think absolutely.
So look, I think the DeFi trend is probably got years to play out.
I think people have overlooked those assets for reasons that are no longer accurate.
The idea that they don't generate revenue that benefits token holders, I think that's no longer accurate.
The idea that regulation will squish them, I think that's no longer accurate.
So I think there's going to be a while while people re-underwrite them, where people have an opportunity to maybe find some outperformance in that space.
Well, a while, but not too long because this is happening very quickly, like you said.
I want to ask about a price prediction that I heard from you very recently this week.
You said that you think ETH will be over 8K by 2030.
And I wonder if you could just unpack the thinking on that, right?
Because Bitcoin, just like you said, is orders of magnitude bigger than Ethereum, is orders of magnitude than the rest of the things as you go down the stack.
When we get to that 2030 time point and we have all these trends of assets on chain, what is the thesis on Ethereum there and what does that look like to you?
Yeah, actually, there's a lot of questions around Ethereum.
So I'm glad that you asked that because I was asked that in like a one answer, yes or no setting.
I'd love to hear you elaborate.
A lot of time, a lot of time to elaborate.
Look, the bull case for Ethereum is that the total number of assets on chain is going to 10 or 100x.
And Ethereum is the leader on tokenization and stable coins from a market share perspective.
A lot of that is going to move on chain.
And then my thesis is it will figure out why that's valuable.
I think that the questions on Ethereum, I mean, there are two.
There's one, can it compete to continue to gather assets on chain?
I actually think it will.
I think that's a pretty Lindy market where trust and brand and reputation and time in the market matters and where the Ethereum community is starting to execute well to be competitive with the Solanas and other things of the world.
So I think they'll have a reasonable market share.
I think the questions that center around Ethereum is how they think that market share translates into value.
And the community is focused on sort of Ethereum's monetary asset value.
I think that's an interesting idea, but as yet unproven.
And I think the question of whether the price goes up is whether that is realized or whether the view of Ethereum shifts to a revenue-focused view, in which case it needs to make changes to how it operates and its policy in order to justify that higher valuation.
I think it's one of the most complex crypto assets to value in the market today.
because it is a revenue generating chain that is organized around accruing a monetary value.
And that is a transition or a separation that they need to bridge.
I think it's possible to bridge it, but not certain.
And so that's the nuance around it.
But the broad bulk thesis is it's a leader in the market.
It's executing well.
The community is energized.
And the assets in the market it serves are going to 10 or 100x.
is probably a good bet.
That's the level of that analysis that gets us north of that $8,000 figure.
I appreciate you kind of like explaining a little bit more of the thinking around that, because just like you said, there's risks, there's questions, but directionally, that's where things are pointing for you.
Talk to me a little bit about some of these other alts in this space.
You know, like Standard Charter has these huge targets on Uniswap, on Aave, on Chainlink.
And then, you know, things like Solana are, just like you said, orders of magnitude maybe still smaller than Ethereum, but they're shipping, they're building, they're growing.
Do you think that we see a situation where like we keep seeing that?
that distribution of like Bitcoin's the king, then Ethereum and all these long tail of assets after that?
Or do you think that we're going to see some of these all start to really grow in market cap basically?
Yeah.
Yeah.
So the nuanced answer there is that the assets that succeed will grow like Standard Chartered is saying.
That's a core belief that I have because the volume of assets moving on chain is really significant.
We've done like one tenth of 1% of the assets that are going to move on chain.
And so if Chainlink maintains its current position in the market and the assets 100x, well, guess what?
Its revenue is going to 100x at a minimum, probably more.
And so the value of the token will go up substantially.
The flaw in this analysis that the reason like collectively it doesn't make sense is they're not all going to win.
Look, I don't think the L1 space is going to be a monopoly, but they're probably not 100 valuable L1s, right?
If you ask me to make the bull case on L1 number nine, I can make that bull case.
And in that bull case, it will do very well.
And that's how you get these optimistic price targets on all these different assets.
But will they all do well?
They will not all do well.
Will there be turnover in the leadership?
There will be turnover in the leadership.
And what does that mean for an investor?
It means that if you want to maximize your return, you're going to pick the one that you are certain will win.
And then you probably will get those standard chartered 25x returns.
For other investors, you may just want to own the field and be satisfied with a handful of x's, even though some will fail and some will succeed.
That's more the kind of investor I am.
But I don't think the standard chartered estimates are crazy.
I think people underestimate the scale of assets that can move on chain in the next handful of years.
And, you know, again, these DeFi assets.
They're tiny.
Like Uniswap, again, is a couple billion dollars.
If I told you today that Uniswap was $10 billion, you wouldn't be like, that's crazy.
You'd be like, oh, that makes sense.
Coinbase is what, you know, 60 going to 100 or whatever.
It's not reasonable.
It's just anchored at this two and a half-ish valuation.
It could double and still, we could still be having the conversation of it's too cheap.
So I think there is a lot of upside in these assets if they execute well.
Matt, this is just really helpful, I think, especially in a bear market to just kind of level set and kind of get some scope and scale about some of these things.
So thank you for sharing all this with us.
I wanted to ask you a question about this.
Actually, I wanted to ask Ryan, but he's not here.
So you're going to get this instead.
But I heard Ryan say on a podcast recently that Bitwise recommends, as a general recommendation, a 5% allocation to crypto that's held for a minimum of three years, but then also rebalanced along the way as the market shifts and changes.
Could you give me a little bit more?
or like explication on this, on how Bitwise thinks about portfolio construction and allocation to crypto and just talk me through a little bit of that.
Yeah, absolutely.
So that number comes straight out of our historical analysis of what happens when you add Bitcoin to a portfolio or what happens when you add crypto to a portfolio.
And 5% is this magic number.
And when I say it's a magic number, here's the reason.
Below 5%, when you add crypto to a portfolio historically, what you've done is you've increased your return substantially without changing the overall volatility of your portfolio much.
So below 5%, it's still stocks that are driving the overall volatility of your portfolio.
And you're sort of getting what the financial literature would call almost a free lunch.
You get the diversification benefit and the upside.
without substantially increasing your risk.
Historically, that's not a guarantee that it will happen in the future, but historically that's been true.
Above 5%, the table sort of flips.
Because crypto has returned so well, you continue to get higher returns, but the volatility of the portfolio starts ticking up substantially, right?
And by the time you get to 10%, you've gone from a relatively stayed portfolio to one that will turn your hair gray.
And the reason we tell most investors to focus on that 5% and below is that we're worried about behavioral risk.
Again, the biggest risk in crypto is you buy it, it falls, you sell it, and you don't touch it for another few years.
If you buy it and rebalance, historically, over a three-year period, you've always come out ahead.
100% of the time, over crypto's entire history, dating back to...
2011, when Bitcoin first started trading publicly and we have real prices.
There's never been a three-year history if you bought and rebalanced where that didn't happen.
So it's just a realistic check for most people.
Look, the other piece of it is the people who are going to put 10, 20, 30, 40% of their portfolio in crypto, people like me, they don't need our advice.
They're going to do it regardless.
It's the people who wonder, who have diversified assets.
They don't spend all the time thinking about crypto.
What is the right allocation for them?
I don't think it's zero.
I think it could be between, you know, one and 5%.
And above 5%, you run into these behavioral risks.
So I think that's probably why Ryan threw out that number.
I think it's a very wise and astute observation that DGENs are going to DGEN no matter what you say.
But I really do think that framing is very helpful for a lot of people.
And I have heard a lot of other asset managers recommend much higher allocations.
So it's not by any means a stretch there.
It'd be better for my business if you YOLOed in 100%.
So, you know, God bless.
But I think that we're trying to be responsible in that space.
One more thing, John, that I'll say that's counterintuitive.
You know, I said that I think zero is the wrong number.
The way the largest institutions in the world invest is they want to own everything, right?
That's sort of the Jack Bogle thing.
Own all the stocks, own all the bonds, et cetera.
Crypto is now part of that everything.
Stocks are $110 trillion.
Crypto is $2.5 trillion.
If you're at a neutral weight, you're at like 2% crypto, right?
If 5% is a little bit bullish, 0% is extremely bearish.
I do think that's the other piece that people need to realize that if they're at zero, they're actually off the market, right?
2% of your equity exposure is sort of the neutral position if you don't have a view on crypto up or down.
Right.
Yeah.
And I think being at zero on an asset class like this at a time like this is a huge risk.
And people do want to hedge out the risk.
Matt, I'll let you go here.
But I just want to say thank you so much again for coming on The Milk Road Show.
I always enjoy these conversations.
Our audience loves having you here.
So thanks so much for coming on The Milk Road Show.
Where can we send people to find more of you and your work online?
Absolutely.
Come to bitwiseinvestments.com.
You can sign up for my weekly memo.
That's at bitwiseinvestments.com.
Or follow me on Twitter.
It's Matt underscore Hogan.
Hogan has a U in it, H-O-U-G-A-N.
So there's only one of me.
I don't know why it has a U, but at least it makes it unique.
So Matt underscore Hogan, you can find me on X.
I've been following you so long that this is now the normal way to spell it in my mind.
So I don't know what that says about me.
But Matt, thanks for being here.
I'm looking forward to the next conversation.
Awesome.
Thanks for having me.
And thank you all for joining us.
I hope you all learned something today.
So until next time, stay safe, stay educated, stay bullish, and we will see you all in the next episode of The Milkrow Show.
Thanks for being here, everyone.
Bye.
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