# Tokenization and DeFi Drive Crypto Recovery

**Podcast:** The Milk Road Show
**Published:** 2026-09-10

## Transcript

We have a tsunami of capital coming on chain in the form of stable coins, tokenized stocks.
and other assets and that's going to Bitcoin is fighting to hold on to the $78,000 level.
The meme coin trenches on Robin Hood are going wild and somewhere in all of this is the future of finance.
Hello and welcome to Milk Road Crypto, the podcast that knows that some digital assets are a generational investment opportunity and some are an IQ test and some are somehow both at the same time.
I'm your host, John Gillan.
Today is Wednesday, September 9th.
And today we are joined by two guests from Bitwise, Ryan Rasmussen, the head of research at Bitwise.
Back on the show.
again, an old friend and fan favorite.
And joining him for the first time is Ish Asad, a research analyst at Bitwise who, and fun fact, this is true, he literally won his job in a contest that Matt Hogan ran.
I'm going to get him to tell us all about that because I'm really curious to hear more.
So he's got to have some kind of alpha to share with us.
If that sounds good with you, make sure you all like and subscribe.
Share this episode with somebody who's going to enjoy it.
And as a reminder, our podcast today is free and that would not be possible without our wonderful sponsors at Saber.Money, the stable coin payments platform built for Asia.
So keep an ear out for more information on them later in the episode.
But for now, welcome back to the Milk Road Show and welcome for the first time-ish.
Ryan, gentlemen, how are you today?
Great to be here.
Thanks for having us.
Well, I'm excited to get into it.
There's a lot going on in crypto these days.
Ryan, first, welcome back.
But just sit still for a second because I want to introduce the audience to Ish.
Ish, I want to start with this story.
You didn't get your job at Bitwise through a normal interview process.
Matt Hogan was running a contest.
You won the contest.
What was the contest?
How did you win?
Tell me about this.
What happened?
Yeah, it was pretty awesome.
First job that I've ever applied to, let alone got on Twitter or X.
I was just, you know, look at the time, looking to go deeper into the industry, stumbled across the first Bitwise Research Hiring Contest posed by Matt on X.
It was whoever can make the best Bitcoin treasury presentation wins the job.
I had no idea who the competitors would be like.
I also saw it about like five to seven days into the competition window.
So I had like three days left.
But it's one of those scenarios where I feel like you just.
If you tell yourself you're going to win it, then you behave like someone who is going to win it.
And then you win it.
So I went all in, had a couple of late nights and I gave it my all and it worked out.
I guess they liked it.
Now they're stuck with you.
Good job, man.
That's great.
So my research says you came over from Hedgeye's digital assets desk.
So you've been in crypto for a long time and you've been co-writing a lot of the research reports, the Chainlink piece, which Bitwise put out, which was fantastic, as well as some of the quarterly updates.
Do you have a specific assigned segment of the market that you cover for Bitwise?
Are you kind of like an all-purpose utility player?
Tell us about what you focus on in crypto.
Yeah, on the research team at Bitwise, for the most part, a general all-purpose research player here.
But if I had to choose a self-assigned area of focus and interest, it's definitely tokenization.
That's the area that I've been focused on ever since I started in crypto five, six years ago.
So tokenization, getting into the mechanics, the weeds of how it's being done.
Well, there's nothing going on with tokenization, so I'm sure we'll have nothing to talk about.
Ryan, it's nice to meet you.
Ryan, I want to ask you about some comments I saw from Matt and get an update from you on just like the whiplash that we've seen in the markets here.
Matt said that in Q2 of 2026, he saw the worst sentiment I've seen in eight years in crypto.
Bitcoin was below 60K at the time.
Now we're in the neighborhood of 80K.
How is the market reacting to this?
What's the sentiment shift been like?
And just how are your clients or what conversations are you having about this whiplash we've seen in the crypto markets?
Yeah, it's a really great question because so much has happened in such a short period of time.
And there's so much like bias recency in crypto.
I think it's important to zoom out even in a few months and think about where we were and how it's changed.
So if you think about Q2 in the summer.
There was really a few things that were driving investor attention and investor sentiment, both towards crypto and towards other areas of the market.
And we had the SpaceX IPO, which was the largest IPO in history.
And around that time, the experience we had at Bitwise speaking with financial advisors and other traditional investors was that all they were thinking about and all they were spending their time looking at was.
SpaceX IPO or equities related to the AI sector.
And what that meant was that capital and focus had rotated completely out of crypto for the most part for many of these cohorts of investors.
And that was one element of why sentiment was bad towards crypto or completely just neutral towards crypto.
that a lot of these investors thought crypto was going to zero, thought Bitcoin was useless, was going to zero.
It was just that they saw other areas of the market that they were being asked about by clients that they were focusing on and that they were paying more attention to and saw more opportunity.
The thing is, in that time, is that the question we continually got was not, is crypto going to zero?
It says, has it bottomed out?
Right?
And we continued to trade around 60K for several months.
In that period, you also had strategies.
First Bitcoin sales, you had a bunch of our clients and all over Twitter asking about a strategy going to blow up.
What does that mean for Bitcoin?
That created a lot of panic and despair across the crypto community.
Quantum was a big threat that we were being asked about a lot.
That was a negative thing.
There was all this uncertainty around the Clarity Act, which continued to get.
delayed and pushed and delayed and pushed.
And there was a lot of hand waving by politicians around that.
So you had all of these things happening in the crypto space that just made investors feel at a minimum like I shouldn't touch that right now or this thing is a mess and there's bright spots I should pay attention to.
But then something interesting happened in August and we had this massive run up near 30% in Bitcoin, a larger run up in altcoins.
And at the same time, you saw equities kind of trail off and a lot of euphoria around AI start to settle out.
And I think that led to this huge shift in sentiment towards crypto.
Clearly sentiment in the crypto native community picked up.
You saw the fear and greed index spike to highs we hadn't seen in a while.
You saw prices run, but you also saw things like ETF flows really accelerate in August and continue to accelerate a bit into September.
And what that tells us is that you have institutional investors and non-crypto native investors for the most part.
really starting to get excited about crypto again and and what we're seeing now is a lot more optimism in the conversations that we're having with advisors i was just at a large conference last uh last week with one of the largest banks in the world and the advisors there were really excited about what's happening in crypto i mean ish mentioned tokenization that's something that people are paying a lot of attention to stable coins of course something we're getting asked a lot about but we're also getting asked about things like hyper liquid and perpetuals and uh and pre-ipo stocks right things that are are new to this audience but they're engaged with and they're excited about the other thing that that reared its head was a 40 trillion uh dollar debt issue that the us is uh is dealing with concerns about debasement gold rallied and i think that additionally drove investor attention to things like Bitcoin.
So this huge shift absolutely did happen.
We're seeing it with the level of engagement from investors that we work with, with new inquiries from new clients who want exposure to Bitcoin and other crypto assets as we turn into the end of the year.
Hi, everyone.
This is John.
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It's really helpful context, Ryan.
Thank you.
I want to hear from both of you on this question because the question everyone in crypto is asking right now is, are we in a new Bitcoin and crypto bull market or are we going to fail this and retrace here?
The latest research I've seen from Bitwise says that we've reclaimed nearly every level that mattered, the short-term holder cost basis, the 200-day, but there's still this 83K level, this failed breakout from May of this year that is still over our heads.
We haven't gotten through it yet.
what's the view on this do you think that we have confirmed a new bull market do you think that there's so risk that we retrace to the downside i want to hear what both of you guys are on this ish let's start with you sure i don't think we're going lower i will say that i think uh this is the largest confirmation of the beginning of recovery we've seen since the highs of last year could we chop sideways for a few months to come sure maybe i know some of the months we're entering historically have been some of the uh lower performers.
But I think one of the themes we've been highlighting on the research team the past few months is how prices have lagged fundamentals.
All these things we're talking about, on-chain finance, tokenized assets, vaults, they're all up and to the right in terms of growth.
Meanwhile, prices have been floundering.
And at some point, that was going to re-rate.
And we've seen it happen very aggressively so far.
And that's going to lead to more and more chasing and could lead us into the next bull market.
Ryan, same question to you and maybe some more on that September seasonality.
September of a midterm election year is historically one of the worst months to hold Bitcoin.
Does that concern you?
Does that factor into your calculus on whether or not we've bottomed here?
Yeah, it's a good question.
I think what it's just saying also is I just add on to that because it's really important is that if you think about historically the signals that have.
have shown us that we're exiting a bear market entering a bull market it's that exact thing that ish mentioned right you see fundamental developments and catalysts that aren't priced in and prices lagging and we saw a little bit of that kind of correction to that gap happen in august but i think there's a lot more to go if you think about all of the fundamental growth and positive momentum we have across all these different mega trends in crypto stable coins tokenization debasement social trading on chain finance agent again all of these things are individual tailwinds for the industry and they're coming at a time all at once when prices are still down 40 or more from all-time high so i think that's a signal to us that The market has shifted from despair in winter into at least early spring with a lot of runway ahead.
The thing about September is that not only is it historically a bad month for Bitcoin, but it's also a bad month for equities historically.
I was at an investment committee meeting last week with a large RIA, and they were heavily focused on the fact that September historically is a rough month for equities.
The thing there is that you add the midterms, you add the uncertainty around interest rates, you add the intervention from the Treasury, the conflict in Iran, all of those things just add uncertainty and create more choppy waters ahead for the month of September.
But what's also true is that Q4 historically is the best quarter for Bitcoin.
And so what I think we continue to see as investors take a step back.
particularly financial advisors and wealth managers.
They think about the meetings they're going to have with clients towards the end of the year.
They think about how they want to position for 2027.
And I think crypto looks very, very attractive against that backdrop.
And once we've pushed through this uncertainty, next week, we're going to have a few things that clear some of that uncertainty out of the way, regardless of which way they go.
And that's, of course, the next FOMC decision, almost the last one right before the midterms.
And we'll have this clarity vote in the Senate.
And those two things kind of being pushed through will allow investors to settle and say, OK, where are we at?
How do we want to position for the future?
So I think the setup is really, really strong.
September is likely going to be a choppy month.
But I think that clears a lot of the runway and a lot of the obstacles for Q4.
Okay.
That's a really helpful outlook on that.
I want to ask about the ETF flows because a lot of the direction of travel that we saw earlier in 2026 was outflows from the ETFs.
And depending on how you measure it, somewhere between like four and five billion of outflows.
Has that started to turn around?
Is it starting to accelerate?
Is money coming back in?
What are you seeing on the ETF flow side?
Either one of you.
I think...
Coinciding with the recent massive jump in prices, 20%, 30% Bitcoin, Ethereum and beyond, we saw ETF flows inflect higher.
And I think it actually offset all the outflows or almost all the outflows from this year, all within a week for Bitcoin and Ether ETFs.
But interestingly, 2026 year to date, some other crypto asset ETFs maintain positive inflows throughout all of it.
even as prices floundered, namely Solana and Hyperliquid.
But I'll let Ryan add on to that.
Yeah, no, I think that's right.
It's also another thing that we typically have seen historically when exiting crypto winters into bull markets is that you see individual assets and ecosystems start to perform better than the market or particularly well.
And I agree with Ish.
We've seen that happen with Solana.
recently.
You've seen that happen with hyperliquid.
You're seeing other areas of the market where there's a lot of momentum, whether it's Robinhood chain or pawns and social trading.
These are areas that are distinct from one another and showing strong performance and momentum.
And so ETF flows is a great way to gauge investor sentiment because it really has a direct impact on price.
Assets come into the ETFs.
Then we go out and buy the spot asset and put it in the custody.
And the inverse is true when dollars flow out.
And I think the fact that we've seen capital come into the space to largely offset the outflows that we experienced in Q4 last year following the October 10th flash crash and in the first half of this year is that signal that capital actually is really returning to the ecosystem.
And the thing to remember about ETF flows is that we saw $35 billion of inflows into Bitcoin ETFs in the first year.
that they launched.
So if we're talking about 3 billion or 4 billion in a month of August, we are still just at the tip of the iceberg in terms of the type of capital that can come into the space.
Now we have other ETFs, Hyperliquid, Solana, XRP.
uh ethereum etc which also can allow capital to come into the ecosystem create buying pressure and upward momentum and a lot of etf buyers are long-term holders by nature they add them to model portfolios they rebalance on a systematic schedule they they kind of set and forget and i think that's a positive signal as well is that we're rotating out of maybe investors who are just trying to exit their positions because they've been holding you at a loss and they're happy to get a little bit of a of a reclaim of those losses and we're transitioning to investors who are repositioning for the next two three four years and that's sticky capital and clearly has an impact on price Excellent.
Really helpful, like just view of the ETF space there.
And it's nice to hear that the capital that left has come back and then some.
It's great to hear all of that context.
Ish, I want to ask you about something Ryan touched on a little bit, but the frenzy on the Robinhood chain.
I'd like to get your reaction because obviously there's some innovation that's happening around tokenization.
And like Ryan said, it's brought a lot of attention, enthusiasm back to crypto.
It is still right now, though, just mostly a meme coin frenzy.
And some people are kind of dismissive.
As a result, what's your reaction?
What are your thoughts on this?
Yeah, I think crazy things happening on Robinhood chain.
One of the most successful launches of a chain, especially at layer two in history.
I think breaking down what's going on on Robinhood chain, I think what's noise is the meme coins themselves.
Obviously, they're not meant to retain value.
They're just quick trades sentiment.
But I think the signal there is there's real businesses forming on Robinhood chain, even if they are.
just launching meme coin launch pads.
There's real businesses that are generating real fee revenue as real users are coming and transacting on the chain.
And that's been a huge resurgence in crypto activity over the past year.
You know, as the market really quieted down, Robinhood chain has led the market into some more active times.
And I think there are some interesting innovations there beyond just meme coin launch pads.
There's been huge inflows of tokenized stocks and even some interesting protocols that are pairing tokenized stocks with meme coins like they'll reinvest fees from meme coin trading into tokenized stocks and then pay dividends to users that's an interesting use case and i think that's what's happening on robin hood chain Yeah, there's a lot going on with that.
Ryan, the last time you were on, you and I were talking about some tokenized products that Bitwise is collaborating with Coinbase on and other partners as well.
But it's called Automated Token Portfolios, which I'm still getting my arms around that language.
But talk to me a little bit about the updates in the month since this has gone live and just like what's been the initial reaction to those products.
And just catch me up on what's happened since we last spoke.
Yeah, yeah.
Happy to.
I think we spoke, if I'm not mistaken, on the day that Bitwise launched automated token portfolios alongside Glider and Coinbase.
So happy to be back here and chatting with it about you today.
I'm quite proud of that, by the way.
I scooped that story on everybody.
So yeah, I am proud we got you on the same day that happened.
But yes, please continue.
That's right.
That was the first media appearance anyone Bitwise had around automated token portfolios.
So I am as well and proud of that.
Look.
The thing with automated token portfolios is that it's a way for on-chain investors to get exposure to professionally designed strategies and self-custody those holdings in their wallet.
That unlocks so much of what tokenization is all about.
You can lend and borrow against these in DeFi.
You can make adjustments to the strategies yourself.
For instance, if you don't like one of the equities in the strategies, you can sell it.
The rest of the strategy still chugs along as it's designed.
And Glider's underlying technology handles all of the rebalancing for you and ensures that the portfolio of assets that you're self-custodying follows this professionally designed strategy.
And it's a very popular...
model in the traditional finance world.
A lot of institutions use model portfolios that follow a standard rebalance schedule or index funds, which have rules around what assets are in this specific thematic index or other index.
They rebalance their market cap weight, et cetera.
And so we were really excited about taking this traditional model and bringing it on chain.
I think it's an example of where we're headed, which is you're going to see traditional finance rebuilt.
and improved and made more accessible and less expensive than it is in the traditional world.
And I think that's really what all of us in crypto have been so excited about for so many years.
And it's finally happening since the launch of the first automated token portfolios.
We've seen Coinbase tokenize more stocks.
So the universe of assets you can design strategies around has expanded.
I think that's great because you can start to see more and more unique strategies.
built out in the automated token portfolios.
And I think we'll continue to see more and more investor interest in these things.
So it's really exciting that automated token portfolios have seen so much success, but they are literally just getting started.
We think they're going to be a several trillion dollar business in the next five, 10 years.
In the same way that ETFs went from zero to 30 trillion in 30 years, we see the same potential growth for automated token portfolios, which are on-chain strategies.
I'd love to get your thoughts on this product as well.
You know, as Ryan pointed out, ETFs have become a many, many trillion dollar industry.
And it seems like automated token portfolios or tokenized assets could become an alternative, a competitor.
Just how do you see this landscape evolving?
What's your view on all of this?
Yeah, I think automated token portfolios, similar to vaults, are a really interesting way that's going to bring more capital on chain.
It really opens the doors to manage strategies, especially, you know, vaults.
things that are generating yield from various sources like looping strategies and atps as well there's a lot of different things that might be complicated for an individual user to put together themselves but packaging them nicely into you know click of a button solutions i think is going to bring a lot more capital on chain who do you think this who do you think this product is ideally suited for is this meant to be for like the retail investor who doesn't really know a whole lot about finance and just wants a little like one quick one click way to get some some exposure in this way or is this more something you see as being suited for more institutional more professional capital solutions or is it really like everybody's going to come to this in some way or another like talk me through who the user base you see um this to be well suited for either one of you Yeah, I'm happy to take this, then maybe Ish can add on.
Look, today, these are available to non-US investors, and primarily it's targeted at investors who are on-chain and don't have access to these types of strategies in their traditional...
portfolios.
So it's easy for us in the US to gain exposure to the MAG7X in our individual brokerage accounts of portfolios, which is the first automated token portfolio that we launched, which is the MAG7 plus SpaceX.
But if you think about an individual in India or in Africa or South America, it's historically difficult.
or impossible or very expensive to gain exposure to US-based equities.
Yet this is the most important and largest equity market in the world.
So now these investors with a smartphone and a crypto wallet can gain exposure to the biggest companies in the world.
directly in their crypto wallet with a few clicks of a button.
And I think that's really, really important because it's not just the, it's not that it's, you know, you don't know about finance and now you get exposure to these things, but it's actually investors who, you know, are very savvy.
They're savvy enough to use DeFi and be on chain and maybe LP or lend and borrow, allocate to vaults, et cetera.
This just unlocks a massive, the most massive part of the market for them to access.
Now they can hold.
a yield generating vault strategy.
They can hold Bitcoin, they can hold Ethereum, Solana, Hyperliquid, LiDAR, XRP, whatever, alongside the Mag7 and SpaceX, the largest publicly traded companies in the world, when they just couldn't do it in the traditional structure unless they were an ultra high net worth individual or geographically situated in a place where it was easy to access those markets.
So the primary...
audience today is non-US investors and individual investors.
Eventually, I think we'll see financial advisors, hedge funds, all kinds of traditional investment.
firms accessing ATPs on chain once you have the convergence of that infrastructure.
But for instance, an advisor outside the US, since these are not available to US investors, can't custody assets in a wallet on behalf of their clients, right?
Like the infrastructure for them and the platforms they use, the industrial systems they use aren't built or upgraded for that today, but you can envision a world.
in two, three, five years, where the ability to custody assets under their billable umbrella within the platforms they use to custody on-chain assets is as seamless and as easy as custodying traditional assets.
And I think that's where you start to see the adjustable market for these products really expand to include the professional investor community alongside the individual investor community.
Yeah.
And just to add to what Ryan is saying, I think eventually we will see tokenized stocks in the US.
And at that point, you'll probably see investor base expand beyond the international investors who are accessing U.S.
stocks for the first time to individual investors who might just want to invest in a really interesting strategy, like top 10 picks from Ryan Rasmussen or something like that.
I think that's one of the great things about HCPs is the speed of launch, which you can achieve with it because they're just self-custaining, copy trading portfolios that people can follow.
I can't wait to see Ryan's meme coin portfolio come on chain.
That's going to be a great day.
Okay, Ish, I want to ask you about this.
You do a lot of time doing deep dives on chain products and projects and how tokenization is actually coming on chain.
Can you talk to me a little bit about some of the winners and losers here from your perspective?
Because I think a lot of people are, they hear this buzzword of tokenization, but they don't know exactly what this means, how to get exposure to it, or which projects benefit which people are going to.
you know, get displaced.
Talk to me a little bit about your outlook on that and where you see like the real winners from this being.
Sure.
The way I think about who's winning in tokenization, I think I break it down into three layers because there's a whole stack that's happening for tokenization and there's entities who are winning all throughout that stack.
At the top, you have the issuers like Ondo, Xdocs, Denari.
generating revenue from bringing these stocks on chain, creating the SPV wrappers and offering the 24-7 assets themselves.
Then you have the middle layer, which is the DeFi platforms where these tokenized stocks are being used.
So maybe that's Aave, where people can lend and borrow against tokenized stocks, or Uniswap, where they're trading them against stable coins.
And then at the base layer, where those issuers and those protocols are all deployed would be the layer ones.
particularly Ethereum and Solana.
Ethereum has about half of all stablecoins, half of all tokenized assets are on Ethereum.
And that's accruing value to the ETH token, whether it's just from actual demand for ETH, for paying for transaction fees, or just creating ETH as the global settlement layer for this new age of on-chain finance.
that assigns a value to the ETH token.
So I think there's value accruing to those three layers of the tokenization stack.
You know, one thing we've talked about a lot on this show is that crypto is quickly becoming a huge part of the global payments infrastructure, and nowhere is that more obvious than in Asia.
But if you're actually running a remittance company or a payment business, you know that the hard part isn't moving the stablecoins.
It's dealing with local banking partners, compliance, liquidity, and all of the operational headaches that come with sending money into places like India and Southeast Asia.
That's why today's partner is Sabre.
They give payment companies stablecoin.
That is really helpful framing because I think they're...
Yeah, just like you said, there's a lot of different players at a lot of different parts of this, and they're all capturing value in different ways.
So I appreciate the outlook on that.
I want to get some thoughts on this.
You know, you spoke a little bit about some DeFi projects.
Bitwise, a couple of times in these conversations, has called DeFi the sneaky outperformer of this cycle, to quote Matt Hogan.
But there's been this huge recovery in DeFi that we've seen on projects like Aave, had a lot of inflows after some of the scares earlier this year.
Uniswap is doing all-time high on volume.
Do you think this momentum in- in DeFi continues through the end of the year.
In other words, do you expect that strength in DeFi to continue?
Ryan, let's start with you.
Look, I'll let Ish close this out on this topic because he's the DeFi DJ on the team.
But look, I do think the strength continues through the end of the year.
I mean, just look at the amounts of revenue we've seen generated from the recent activity.
on Robinhood chain as it integrates with DeFi protocols.
I think you can extrapolate that out to a world where we move from tens of billions of tokenized assets to trillions of tokenized assets.
And all of those users or investors in those tokenized assets are trading them frequently.
They're using other DeFi protocols like Aave to lend out those tokenized stocks at the rate the market is willing to pay all of that activity generates fees and revenue and what we've seen happen i think ish mentioned this earlier is that there's extreme interest in value and revenue generating crypto assets which is somewhat of a new phenomenon in this space because you couldn't really translate that revenue into value under the prior regulatory regime.
But of course, we're seeing the US regulatory regime really open up the door for this type of value creation and value transfer into the crypto asset.
At the same time, we're seeing revenue really accelerate at an incredible rate.
So I do think it continues, but love to hear Isha's take on it.
Yeah, I agree.
I think it continues.
And I think we're entering a DeFi decade, no longer just DeFi summer.
I think there's two things that are happening here that's going to accelerate that.
We have a tsunami of capital coming on chain in the form of stable coins, tokenized stocks, and other assets.
And that's going to propel capital into these DeFi protocols like Aave, Uniswap, other vault apps like Morpho.
They're going to be generating a lot more fees as a result.
fee revenue.
And the last thing that I think is going to continue the price appreciation for DeFi tokens being the sneaky winner of this cycle is they're all changing their tokenomic models now, probably because of the regulatory landscape changing and becoming more favorable.
They don't have to be afraid of making their tokens look too security-like.
Now they're starting token buybacks, allowing those DeFi tokens to have a direct linkage to the growth of the protocol.
and making them attractive investment opportunities.
I do.
Tsunami of capital is an absolute banger.
So thank you for that answer.
I really like that.
I hope a tsunami of capital lands on chain this decade.
OK, I want to talk a little bit about like the road ahead for the rest of this year, but also some things that might derail this.
There's been this like looming shadow over all of us, this Clarity Act passing or not passing the vote, I believe, is still scheduled for September 15th.
The next time they vote on this in the Senate.
However, there are rumors now this week circulating that Senate Republicans are already kind of admitting that they don't have the votes and they're not going to get them.
Do you guys think that if this doesn't pass, the sentiment shift could reverse on us and this might kind of kill some of the rally?
Or do you think it's already priced in and nobody really cares if they pass it or not at this point?
Let's start with you here.
Sure.
I think it's priced in already.
You look at the odds on Polly Market and Kalshi of Clarity Act passing in 2026.
They're probably down to 15% last time I looked on Polly Market.
So the market is not expecting Clarity to pass at this point.
So that really limits the amount of downside that we're going to see in crypto prices should it fail.
I think eventually it may pass.
Like 2026 is one thing.
There's still 2027.
It could pass then or it never passes.
And the SEC has said they're here to step up and address the same issues that Clarity would have.
Ryan, I know you have thoughts to add.
Yeah, I think that's exactly right and agree.
The market has assumed this wasn't going to pass since we reached the September recess in August and really started pricing in before that.
So I do think there might be some small reaction to the downside if it doesn't pass.
I think the larger potential is if it does pass, there's going to be a lot more upside because the going assumption priced in today is that it's going to fail.
But I think something else that's really important here is that, and Ish mentioned this, the SEC has said that they're ready and willing to step up and provide the clarity from a regulatory perspective through rules and other exemptions by the SEC that the Clarity Act was intended to provide.
And so we're going to get regulatory clarity and continued regulatory momentum from the clarity we've already received from the SEC.
and CFTC with or without this specific bill passing.
I think what a lot of the non crypto market and perhaps even the crypto market misses is that exact fact.
Like, for instance, we get asked about the Clarity Act all the time at conferences or on calls with clients.
But they're those same people asking those questions aren't aware and are surprised when we say, oh, by the way.
the sec commissioner the most finan important financial regulator in the world has stepped up and say that we are immediately ready to provide this regulatory clarity if the act fails and i think that is very very important and not really priced in of course legislation is better than the regulation here by the SEC because it's more bulletproof for the next administrations, can't be reversed by an SEC chair that may come in and be anti-crypto like we had for the prior SEC administration.
But we're going to see a lot of innovation and capital and new product growth.
between now and any potential future date where we may or may not have an sec regime that that is anti or crypto neutral and i think that's really really important i would just add that the clarity act fails this vote next week it doesn't mean that it's off the table forever, right?
It falls into this lame duck period, probably hard to pass then for the end of the year.
But then it's back on the on the stage next year as well, right?
We don't know what's going to happen with the midterms, it probably gets a little bit harder to pass next year, if the way the midterms shake out is what everyone's expecting.
But it already has a lot of bipartisan support is something that's important to remember.
And it's already passed through the House.
And so we've cleared a lot of these hurdles already for Clarity Act to eventually be passed in the next 12 months 18 months or so and i think that's also probably not not fully absorbed by a large amount of the investment community okay so you guys aren't worried about this but i reserve the right to be disappointed nonetheless but i appreciate the outlook on that i want to talk about ish you mentioned prediction markets we're coming up towards midterms here uh historically speaking around elections we've seen an enormous amount of capital on prediction market activity and it seems like there's like a three-way bout shaping up between Calci, Polymarket, Hyperliquid.
Ryan, I've seen you posting about this on Twitter.
I'd love to get your guys' thoughts on who you expect the winners and losers to be here because there's so many different prediction markets coming to market now.
Coinbase, Robinhood, et cetera.
Who's winning in those prediction market wars and what are you expecting to see in terms of volume and capital chasing this around the midterms?
Yeah, happy to.
Look, I was just thinking about it over the weekend in terms of the first NFL.
uh game is is today we have the elite seattle seahawks defending their title against the inferior new england patriots and that kicks off a bunch of other things that also is happening in q4 you have the nba season set to start you have the midterms that we spoke about in september october of course is mlb playoffs we have college football that just started we also have a lot of attention on what the Fed's going to do around the FOMC decisions this month and later this year.
And there's always a lot of prediction market activity around end of year crypto prices as we get into Q4.
I think what that means is that you have this, to use Ish's word, tsunami of volume and attention coming into prediction markets in Q4.
We're going to see volume spike above levels ever seen before across these platforms.
We're going to see a huge amount of open interest in the space.
And what's particularly interesting now is that back in 2024, during the prior election, all of that was concentrated for the most part into Polymarket.
But today you have Polymarket, you of course have Calci, you have Robinhood prediction markets, you have Coinbase prediction markets.
You also have Hyperliquid deploying HIP4, which enables outcome markets or prediction markets that are really starting to take off.
I think right now what we're going to see is not only...
aggregate growth across the prediction market space, but we're going to see really interesting market dynamics playing out.
Like if you turn on CNBC, all you see is Kalshi everywhere.
But I know a lot of crypto natives prefer to use Polymarket.
And then the even deeper crypto natives probably prefer to use Hyperliquid.
But maybe Coinbase's tens of millions of users are going to stay on Coinbase or Robinhood.
It's crazy adoption of the Robinhood chain.
Maybe that leads to growth in there.
prediction markets as well and so i think the market share dynamics are going to be pretty interesting here as we see this explosion of growth and i'm i'm interested to to watch it play out i think hyperliquid's prediction market is actually going to surprise a lot of people to the upside in in ways the market's not expecting and uh and i'm really excited to see that play out ish what about you do you have a take on on these prediction market wars we're seeing Yeah, I don't know if I would assign a winner.
I like Polymarket over CallSheet because they use more crypto rails.
So that's as far as my opinions go there, really.
That's a very diplomatic answer.
All right, gentlemen, last question.
I always end when I ask when I have Bitwise on, I always end with this question.
But I want to know what you guys are researching next.
What can we look forward to from from Bitwise in terms of research reports or just memos coming out or whatever the case may be?
Ryan, let's start with you here.
Yeah, look, we have a lot in the pipeline.
We're really excited for the second half of the year, but it's certainly a lot of work to tackle.
Last year, around this time, we published the first ever long-term capital market assumptions for Bitcoin, which is a long-term oriented piece that focused on Bitcoin relative to other major asset classes.
The world's largest financial institutions produce these every year.
on other major asset classes, but nobody had ever done that in Bitcoin.
So we published that last year.
We're really excited to update that and refresh that and put a new kind of a new spin on it this year in October.
So we're excited to publish that piece.
We've been working on some really interesting papers around on-chain finance and specific ecosystems.
So we're excited to launch those.
Of course, we've been doing a ton of stuff at Bitwise around staking and on-chain vaults.
We have our quarterly reports coming up, both the Crypto Market Quarterly Review, which is your guide to the crypto markets.
And then we have a staking report that also comes out at the end of each quarter.
Our first one came out last quarter.
The second version of that will come out this quarter that dives into the largest staking ecosystem.
So our goal is to provide insights into every corner of the market.
And Ish is instrumental in doing that and works on all of these things.
But I'm really excited about our long term capital market assumptions, our staking report, some of the other on-chain reports that we're working on.
And then, of course, our annual crypto predictions, which is my favorite thing to sit down and discuss with everyone in the research team and write every single year, which will come out towards the end of the year.
I did a full episode doing a deep dive on Bitwise's first staking report, which I was really excited to see a staking report from you guys.
So thanks for that.
Ish, let's hear from you.
What are you researching?
What's next for you on the docket?
Yeah, working on a lot of interesting single asset papers right now in terms of areas we're looking at.
Like I said, tokenization, as always.
Another area that I'm looking at in particular, I think, is capital formation in crypto, projects like MetaDAO.
I think we're going to see more of this happen again with the regulatory environment changing.
Token designs can get better and we're going to see better launches.
Stay tuned from us on Twitter.
That's where a good chunk of our content is going to come out as well in the form of some really interesting threads.
Yeah, well, I follow all of you guys on Twitter and Ish, you leak a lot of alpha just through the pictures you post from the Bitwise Research Room and what's on the whiteboards in there.
So yeah, it's a great place to go for alpha.
One final question.
Is Bitcoin over or under 100k by the end of the year?
I'm really interested to hear what Ish says about this.
But Ryan, I want to hear your take as well.
I get price predictions from Ryan all the time.
But yeah, let's go.
Who wants to start with this one?
Let's go, Ish.
Let's hear you.
By the end of the year?
Over 100.
Bullish.
And I think that's conservative.
Yeah, I agree with Ish.
I think there's a few things to remember.
Historically, Q4 has been a really strong year for Bitcoin.
I think that that's working in our favor from a seasonality perspective.
I also believe...
that we're going to see renewed acceleration of ETF flows.
A lot of this negative things that we talked about earlier in the episode from Q2 in the summer have just been churned through.
No one's worried about strategy anymore.
Quantum is being addressed by all of the different crypto ecosystems at an accelerated pace.
We've seen crypto ETF flows accelerate.
People are worried about debasement.
They turn to hard assets like Bitcoin and gold.
So I think all of those things work in Bitcoin's favor and push it higher.
The other thing to remember is we're only about 10% down from where we started the year, right?
Bitcoin closed last year in the mid to high 80s.
And so I think once we reclaim the year to date losses for Bitcoin, which we're very close to doing, I think we see a massive amount of momentum into the asset and we see it snap up and would not be surprised.
to end the year above 100K in Bitcoin.
Yeah, I very much agree with Ryan.
I think Q4C is now that it's going to be a big push.
All the downside risks have largely been priced in.
I mean, crypto has gotten hammered over the year.
Meanwhile, AI stocks were pumping endlessly.
Multi-trillion dollar companies.
I think a rotation is due.
Well, I really appreciate the bullish encouragement and updated thoughts from both of you.
Thank you so much for being on the Milk Road Show.
Where can we send people to find more of you and your work online?
Ryan, let's start with you.
Ah, you can find us on bitwiseinvestments.com.
Would encourage everyone to sign up for our CIO memo, which is a weekly memo, three to five minute read, also an audio version on what's happening in the market and what we're seeing at Bitwise.
Also can follow us on Twitter, as Ish mentioned.
I'm at rasterlyrock.
And Ish, go ahead and show your Twitter handle.
I'm at Asad Ishmael.
Follow us.
There's other members of our team as well, putting out good content on X.
Everybody at Bitwise is a great follow.
Gentlemen, I want to just take one moment to just remind you both that I could have asked you both about Hunter Biden's laptop meme, but I didn't.
And so you owe me.
But thank you all for being on The Milko Show.
Our audience really appreciates the work you're doing and the insights that you share.
So thank you so much for being here.
Thanks so much, John.
Yeah.
Thanks, John.
Great to be here again.
And thank you all for joining us.
I hope you all learned something today.
There's a lot of fun in this one.
So I hope you take it slow and unpack it all.
But until next time, stay safe, stay educated, stay bullish.
And we will see you all on the next episode of Milk Road Crypto.
Thanks for being here, everyone.
Bye.
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