# Institutional Crypto Strategy: Bitcoin, AI, and Perps

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

## Transcript

could near 40x of course it could 40x it could 50x if 50x to be about what ethereum is today That doesn't strike me as absurd if it actually executes on this vision.
Bitcoin has retested support at $81,000.
It is now trading around $82,000.
Everyone is panicking because they think it is over.
Is this the end of the bull market or just a retest before one of the biggest bull runs in history?
Hello and welcome to Milk Road Crypto, the show that would tokenize itself, but Bitwise would probably put us into an ETF.
I'm your host, John Gillen.
Today is Friday, October 9th, and the Bitwise boys are back.
Matt Hogan, the chief investment officer at Bitwise, and Ryan Resnusen.
head of research at Bitwise.
These are two of our favorite guests here.
So if that sounds good to you, make sure you 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 partners at Nexo, the digital asset platform that lets you trade, earn and borrow all in one place, all from one account.
So stay tuned for more information about them later in the episode.
But for now, welcome back to two of our favorite guests, Matt and Ryan.
Gentlemen, how are you?
Doing great.
Awesome to be here.
Thanks for having us.
Likewise.
I always do that wrong.
I should do one at a time.
Matt, how are you?
Ryan, how are you?
But you guys always handle it anyway.
Let's start the conversation.
Matt, it's been a week since I've spoken to you.
So welcome back.
You look much different than the last time we spoke.
Bitcoin is now scaring everybody with this pullback here.
What's your reaction to this?
Is this normal?
Is it expected?
Is it concerning to you?
How are you reading this in the markets here?
Yeah, it's a wrap.
We're going straight to zero.
It's all over.
It's my last podcast.
No, I mean, it's been remarkable how quickly people soured on it.
And if you look at the chart, we've just sort of pulled back to a normal, important technological technical level.
I think it's a completely normal part of the market.
I actually think Bitcoin is performing extraordinarily well.
If you look back at the history of early bull markets in crypto, if you look at, let's say, 2023, or you look at 2019, or you even go way back and look at 2015.
What you see is that a lot of the time Bitcoin bounces around and does nothing.
And then the reason it's a bull market is every once in a while you have a big leg up.
So there's like a fat right tail.
in the distribution of returns for Bitcoin in the early phases of a bull market.
In the middle of a bull market, there's a fat middle where it tends to appreciate day after day after day.
But when we're just getting started, mostly it hems and haws and bounces around.
And then every once in a while, it takes a leg up.
That's the historical pattern.
And that's what we've seen since June 30th.
We went from 57, jumped into the 70s, kind of treaded water.
People rolled out the Bitcoin is dead narrative, jumped into the 80s.
Now we're treading water.
roll out the Bitcoin is dead narrative.
We're going to jump into the hundreds.
So from my perspective, I think it's pretty clear that this is just a normal consolidation.
It fits the historical pattern of what happens in an early bear market almost precisely.
And I look at Bitcoin at $82,000 and, you know, smile quietly to myself.
Ryan, I want to get some thoughts from you on this because we can make light of people's reaction to this.
But transitioning from a bear market into a bull market is a tumultuous, volatile time in the markets.
How do you communicate about this to clients?
And what is sort of the messaging you're giving people around this transition from bear to early bull?
Yeah, well, I mean, I agree with everything Matt said there.
First and foremost, historically, bull markets are never up until the right.
And so these are healthy pullbacks.
You reset a little bit of the leverage.
We had a big wipeout of leverage earlier this week.
I think that brings things back to a healthier level.
We're so far below where we were at the tops of prior bull markets in terms of leverage and wipeouts.
And so I think it's pretty healthy that this happens.
When we speak with clients about where we see the market today, we really focus on the long-term drivers.
Yes, they're asking about this recent pullback.
But I think the important thing to remember is that many of the clients we're speaking to have maybe allocated 1% or 2% or haven't yet allocated to Bitcoin.
And so they're thinking about this from if I'm going to make an allocation or if I'm going to increase my allocation, how does that look three years from now or five years from now?
And so we talk a lot about the long term.
drivers, which is something they think about a lot when they make investments on behalf of their clients.
And those long-term drivers are very much still intact.
We have all of this positive regulatory momentum in the last three weeks alone.
And the price has...
rallied on that.
We're still above where we were when the Clarity Act failed to pass by about 10%.
And so I think we focus on those things and we talk about where does it fit in the broader context of their entire portfolio.
And Bitcoin's not the only thing that's had a recent pullback in this past week after a strong rally.
We've seen the same thing happen in equities.
And I think there's a lot of factors at play here.
But from where I sit, there's still a lot of interest in...
building those Bitcoin positions for this next multi-year bull market rather than getting shaken out from this, you know, five, $6,000 pullback that we saw this week.
This pullback on Bitcoin is scaring a lot of people and I am not one of them.
So if you want to see what I'm not selling and why, what's on my watch list and when I'm going to be deploying more capital into these markets, you can join Milk Row Pro today.
It's just a dollar.
The link is in the description.
I answer questions day and night in Discord.
I'll see you there.
Okay, Matt, I want to ask you some questions about, you know, Ryan talked about the long-term outlook.
The short-term outlook, I think, is what's scaring some people here, especially with some of these macro headwinds.
The Federal Reserve raised interest rates.
There's fears they might do it again.
The long end of the bond yield curves is going up and up.
And a lot of people are saying that with that kind of a macro backdrop, the risk assets like equities markets like Bitcoin are going to struggle to perform here.
And some people are even calling for new lows on Bitcoin.
What's your take on sort of the macro?
backdrop here and how do you kind of navigate some of these short term headwinds?
Well, I would say one of that is not priced in.
Right.
Do we not know that the Fed raised rates?
Do we not look at the Fed Funds futures market and see that they're expected to rates?
Do we not raise rates again?
Do we not hear what Waller is saying?
I would say that all of that is already priced into the market.
When you're thinking about the direction Bitcoin goes from a short term perspective, you have to think about things that aren't priced into the market.
So I'm not really.
particularly worried about those macro headwinds.
I think people are also worried about AI rolling over.
I think that is sort of a foolish mistake.
If you think about the three things that can happen with the AI bubble, either we enter this age of abundance, in which case scarce assets do well and Bitcoin does well, or we sort of muddle along as we have been with reasonable economic growth, in which case Bitcoin has these strong secular trends for increased regulation, increased adoption, or it does well.
or AI bubble bursts and we collapse and have a bailout, in which case Bitcoin does well.
You know, it's like a choose your own adventure book where you turn the page and they all end up on the page with Bitcoin doing well.
So I'm not worried about these things.
They're well understood by the market.
I think almost regardless of which outcome occurs, Bitcoin does well in the long term.
If we get a sharp macro retraction, you could see a short term sell off, of course.
I would see that as a buying opportunity because, again, I think there's a rebound on the other side.
So I feel pretty sanguine about that market.
I interviewed another guest on the show who said Bitcoin is heads I win, tails you lose.
And it kind of gets to what you're saying there, Matt.
So that resonates a lot.
Gentlemen, I want to talk about a recent research report that Bitwise published.
I believe this was the first one of these you had done, but it was called the Institutional Crypto Adoption Report, which I think came out in September.
You guys talked to 15 of the biggest institutions in the world over a period of about three months.
And there's a lot of alpha in this report we could break down.
But just give us the high level takeaway here.
Ryan, let's start with you.
What's sort of the high level themes that emerged from these conversations and that are contained in this report?
Yeah, so we were really excited to publish this report.
We went out.
and spoke to 15 of the largest institutional investors around the world.
So not U.S.-based, but focused on large institutions like pensions, endowments, sovereign wealth funds, foundations.
And we spoke to them about why they allocate to crypto, maybe why they don't allocate to crypto, what those allocation sizes are, how they gain the exposure, and their long-term thesis.
So we really sat down and asked them these questions.
These were formatted as 30, 60 minute discussions with senior members of those firms.
So our goal was to pierce through the noise that we see on crypto Twitter that in the sell offs, institutions are the first people to sell or that institutions aren't even allocating to crypto or the 13 Fs represent the entire exposure that they have.
We want to know what's really happening underneath the surface.
And so we sat down and had these conversations actually between really February and April.
earlier this year, which at the time, Bitcoin was down 50% from all time highs that it set last October.
Other crypto assets like Ethereum, Solana, and many others were down more than 50%.
So you can imagine that the backdrop of these conversations was we were in the depths of a bear market and Bitwise is coming to you saying, hey, are you selling?
Are you buying?
What are you thinking?
What's your long term thesis?
It was really relieved.
fascinating what we found in these conversations.
And many of these institutions don't talk about these things publicly, but because we've worked with them now for several years, and in some cases, nearly a decade, they were willing to talk to us on an anonymous basis about how they think about the industry and the asset class.
I would say a couple of the biggest takeaways that I found most interesting were that through that 50% drawdown that we saw from October to let's call it April of last year.
None of these institutions were selling their crypto positions and many of them were adding to their...
crypto positions, right?
They were buying the dip because their long-term focus and their long-term thesis for these crypto assets hasn't changed just because the price has come down.
They're working through investment committee discussions and decisions.
They're systematically making allocations over a multi-year, sometimes multi-decade time horizon.
And that showed through in our discussions with these investors.
Another really interesting finding is that one of the sovereign wealth funds we spoke to was actually selling their gold and FX reserves to fund their Bitcoin allocation.
Right.
So we actually see this Bitcoin and gold pairing playing out in real time in institutional portfolios, which is something we've talked about a lot in the past, but actually saw evidence of through these.
conversations.
And then the last thing that I would add that we found, although we listed 10 key takeaways in this document, is that there's many different views on how Bitcoin or crypto assets fit into portfolio.
But all of them pretty much center around the fact that this is innovative breakthrough technology with a multi-decade time horizon.
And their allocation sizes reflect the kind of moonshot potential element of crypto without having such a big allocation that it could blow up the portfolio on a drawdown.
And what that means practically is that most of these institutions target a 1% to 2% to 3% allocation to crypto across their broader portfolio, which in many cases is tens of billions of dollars.
Matt, I'd love to hear your takeaway from these conversations as well.
And just to expand on Ryan's point there, the 50% drawdown is a big, scary bear market to most crypto investors.
It seems like the institutions just absolutely don't care.
Is that the right way to interpret that reaction?
And what are your thoughts on that?
Yes, they do not care.
They are making an allocation to an asset that they recognize has had multiple 70% or 80% drawdowns in the past.
And so during their underwriting process of understanding these assets, that's factored in.
If Bitcoin has fallen 70% three times in the last decade before you buy it, you can't make that investment if you're not comfortable with the fact that it might indeed do that again.
That just sounds ridiculous.
And institutions have the discipline to stick with it.
So yeah, this was within there.
frame of potential outcomes and didn't change their allocation at all.
I think that is a really important finding.
It suggests that this is going to be a long term trend.
The other finding, and I think Ryan did a great job summarizing the piece.
One thing that I found interesting is that they all own Bitcoin.
There is this perception that some like super sophisticated crypto investors will skip over Bitcoin and just move into the DeFi space or something like that.
And that's just belied by the data.
I would say that's belied by my personal data as well.
It's hard to find even a deep DeFi degen who doesn't also own some Bitcoin.
And we found that in the institutional space as well.
It's an unavoidable asset.
I do think it's the beta of the space.
And that stood out to me as like a somewhat unique finding that surprised me a little bit.
Gotcha.
Okay.
Interesting.
I wanted to ask a little bit about some details in this report.
I saw that family offices had the biggest allocations and sovereign wealth funds had the smallest.
And I'm curious your guys' thoughts on what the reason for that is.
Is it just like more people have to sign off on it at a sovereign wealth fund and that's more friction, so it's harder to get there?
Or like what's the takeaway from that information?
Ryan, let's start with you here.
Yeah, well, I definitely think that's a big part of it, right, is that when you have a family office, you have one or maybe two people calling the shots here, right?
And so there's a much shorter underwriting process and fewer steps in the decision making process to evaluate, underwrite, gain conviction, allocate to crypto or to Bitcoin.
And then with the sovereign wealth fund, sometimes you have many, many levels of investment committees and decision makers that you have to go through in order to establish conviction, get the approval.
And their allocations tend to be kind of slower over time.
They're just bigger ships.
They take longer to move and change direction.
And so it certainly is a function of that.
The other thing that we saw is that because family offices were often moving faster than the larger institutions with all these different decision makers, is that they were the earlier allocators to crypto.
Many of these family offices that we've worked with have had allocations to crypto.
since 2017, 2018, 2019.
And so by nature of that, those allocations maybe started at 1%, but they've grown up to 5% or 10%.
Maybe they've done some rebalancing over that time period, but in some cases, they haven't really rebalanced their crypto positions because their thesis is playing out over that long-term time horizon.
So I think it's both.
They move a little bit faster than the larger institutions, and they were a little bit earlier than the larger institutions.
And you see that play out in this data.
Matt, what's your take on this?
Yeah, I mean, committees exist to say no.
So anytime you put a committee in place, it slows things down.
I would also add that sovereign wealth funds have an audience and media coverage in a way that a single family does not.
We saw this in crypto earlier, right?
Some of the earliest big firms to move into crypto were Fidelity.
and VanEck.
What connects Fidelity and VanEck?
They're family-owned firms.
It wasn't until crypto matured that we started to get the Blackrocks and the other public institutions because a family-owned firm can sort of, it sort of works like a family office.
You know, Abby Johnson can say, we're doing this and we're doing this.
Johan VanEck can say, we're doing this and we're doing this.
Larry Fink can say, this is interesting.
And then he has a committee of shareholders that makes it more difficult to move along.
So I think that's the other piece of it.
Gotcha.
Okay, Matt, I want to hear your perspective on the allocations and what they're, I'm sorry, just committees exist to say no was hilarious.
That's a great line.
I got to remember that.
I just want to, Matt has often shares quotes with me when we're going back on and forth.
And one of my favorite quotes that he's ever shared with me is on this.
And it says, I've searched all the parks in all the cities and found no statues of committees.
And it's a beautiful quote.
And I think that often.
We got to find some rock to chisel that into.
All right, let's continue this, though.
Matt, I want to get some thoughts on this.
You said that, I believe you said all of these institutions you talked to have Bitcoin in the portfolio.
What's the treatment of the mid-caps and the altcoins look like right now?
Has that expanded?
Has there been more interest, waning interest?
What do those conversations look like?
What do the allocations look like?
Yeah, I would say it's interest that's starting to expand.
So I think many people start with Bitcoin, but once you cross that Rubicon, you open your mind to the other things.
And I think there is rising excitement around stable coins and tokenization.
It's almost working down the market cap spectrum.
So Ethereum, Solana are probably top of mind.
Maybe Hyperliquid is easing its way in there given its recent outperformance.
But I think they're broadening opening up.
It's really not that different from an individual's journey.
I would say that over 50% of the people that own crypto assets from a retail perspective first bought Bitcoin.
And then the next thing they bought was probably Ethereum or Solana.
And now they're speculating on DGEN coins way down the pipeline.
But no one or very few, relatively few people come in and say, you know, I'm going to buy just quant.
or I'm going to buy just, you know, whatever, a lighter, like that's not their first entry point.
And institutions for all the pedestal that we put them up on operate in the same way.
Like, let's put our foot in Bitcoin.
Oh, interesting.
Ethereum, Solana, tokenization, stable coins.
Oh, interesting.
Aerodrome, lighter, et cetera.
Like that's the cascade.
We're not to that last phase, but I do think we'll get there.
Okay, so this is an evolving conversation and it's moving in that direction.
Evolution moving in that direction.
Let's talk about an altcoin that you guys have been writing a lot about.
You guys went viral over NIR protocol recently.
And we'll get into this a little bit, but you just launched the first US spot NIR ETF.
It's pulled in over $35 million on its first day.
Let's just talk with why NIR, why now?
What was the decision-making process on this?
Matt, let's start with you on this one.
Yeah.
You know, what we do when we try to launch single asset crypto ETPs is find a protocol that we think has a real shot of being important and a community that has a portion of the world that really loves it and has some staying power.
We don't want to do something that's ephemeral.
So when you look at something like Near, it has a real shot at being important.
Right.
It both has a significant current business and intense.
and a long-term moonshot goal of being the blockchain for AI, that means it could be measured in a success market at many multiples of where it is today.
It has a community that loves it, right?
Not everyone loves Near.
You don't need everyone to love it, but there are people who have been dedicated to Near for a long time.
It has a lot of smart people behind it.
Some of the VCs and other people I respect the most have been behind it for a long time.
And it has proven staying power, right?
It's been around through a bull and bear market.
That means it's not likely to disappear or fade from view.
So it checks all the boxes.
We're also, at least I am, optimistic about the outlook for NIR token.
And so it fits all of those things.
We are really excited to bring it to market.
And the reaction has been phenomenal.
If you size the inflows versus the market cap of NIR.
it is a huge success right it is like a bitcoin etf style success and i do think it will eventually be a very significant etf for us Ryan, I want to ask you a question about the research process on Near Protocol, because this protocol and the asset have evolved and shifted many times over the course of their existence.
How do you go about re-underwriting a project like Near when it keeps pivoting and keeps trying to find that product market fit?
What's that process like from a research perspective?
Yeah, that's a really good question, John.
And Near is one of those protocols where you're exactly right.
It's gone through many phases of its lifecycle.
One, because it's been around.
for a long time, it really is one of those crypto OG platforms, but also because they've continued to ship new products and kind of move the steering of the ship in the direction of where the market is headed, which I think is really important for the outlook for NIR.
And so what we first do is sit down and say, what are the different...
elements of the near ecosystem and if you if you go and look at all of the papers that have been published on near or documentation on near uh it's highly complex because it is a complex platform and ecosystem and most of our audience isn't going to take the time to digest all of these different nuances about how they implement privacy or how intents work underneath the surface or how the near AI cloud platform works.
They just want the TLDR of what is this thing, why is it interesting, and where is it headed?
And so what we did is sat down and read everything we could.
on Nier's history and where Nier's at today and then where it's headed.
We've, of course, spoke with people that are contributing to building Nier, whether those are developers or folks at the foundation or partners of the Nier ecosystem that really intimately understand the platform and think about the long-term direction of it.
And then we go out and say, what is this all telling us about where we think it's going?
And what are the important pieces of information to really pull out and highlight?
The thing for me that I found both most interesting and most difficult.
was kind of connecting all of those dots.
NIR is not just a layer one blockchain.
It is not just an AI cloud provider.
It is not just a cross-chain swapping interface.
It's all of these things, and they actually have built it in a way where each kind of layer of the technology stack.
feeds on and builds into itself.
And so understanding kind of that funnel and that flow of how these different pieces of Near's platform work together and actually build on top of each other was really core to my understanding and our team's understanding of what Near is, where it's headed in our long-term thesis for it.
And I think until we sat down and did all that, we really couldn't have said, how do we feel about this asset 10 years from now?
How do we feel about adoption of Near?
And if it really does have the capability to become the blockchain for ai and the interface for institutions and retail investors and is the privacy thing around near legit and all of those things and you know we walked away from it feeling like They have a really, really compelling opportunity in front of them, and they're well positioned to capitalize on that opportunity because the team ships, they're very mission focused, and they've shown their ability to execute and build towards that mission time and time again.
Okay, so there's a lot of pieces of this, great tech, great market positioning, and there's a lot that goes into that research.
Matt, I'm curious your strategy for communicating about this particular asset because the things like Bitcoin, digital gold, layer ones, it's a very differentiated product.
and asset.
And I've heard you say that near intense solves the bridging problem for AI agents.
Even that is like, what does that exactly mean?
How do you go about communicating to investors what near protocol is, why that asset is distinct from other digital assets and what role it plays in the portfolio?
Yeah, it's a challenging one.
It doesn't have the two words soundbite of Bitcoin.
That's for sure.
I mean, I think blockchain for AI gets people in that direction.
When I talk about near, I tend to talk about it at sort of three different levels.
So I often talk about Ilya, the founder of Near Protocol, who has a tremendous background in AI, you're sort of investing in a startup like ecosystem.
That's investing in people.
Ilya has been a proven leader and sort of telling his story of writing, co-authoring the paper that created LLMs, Attention is All You Need, I think is a good piece of background.
I then often talk about the revenue that Intense is generating.
Intense, I describe to people as just making crypto simple.
Anyone who has been inside crypto with all the different blockchains know how challenging it is to align those and make them all work together.
And Intense just solves that.
You want to move from this asset to that asset and it happens.
It abstracts away all the complexity.
And if you're talking to anyone who has ever tried to do anything on chain, that will sound sweet.
And it does.
And then I do like this positioning.
I wrote about it yesterday of NIR having optionality.
This is what I talked about earlier.
If all NIR was, was a high throughput blockchain with this intense technology and spiking revenue, I think it would be like worth what it is today.
But then you get its long term goal of being the platform where agentic AI finance will happen.
And you get that almost for free.
It's like a moonshot for free.
I try to describe it that way, but it's not that easy.
I think of it as like, look, if you're interested in the intersection of AI and crypto, there are only a handful of projects that are showing real traction in that space.
Near is the top of that stack.
And it's got a proven founder and proven duration.
And usually that's enough for people to at least be interested.
Ryan, I don't know how he does it, but anytime I ask Matt to explain something to me, I come away thinking I understand it.
And it's amazing.
Okay.
Both of you guys got in a lot of trouble.
Well, not in trouble.
You got a lot of attention on crypto Twitter for a report that went viral about your price predictions for Near Protocol.
And just to level set, it's trading at around $4.75 today at the time of recording.
price prediction for near protocol by 2030 is $155 with a bull case of over $500, unless I've completely misread something here.
But let's just walk through the math on that and how you arrived at those price predictions.
Ryan, let's start with you.
Explain yourself on this one.
Yeah, well, I'm happy that you brought this up, John, and happy to talk through it.
Look, I think, you know, first of all, price predictions are always difficult and they always receive a lot of attention.
And the thing about modeling out price projections for crypto projects is you have to make a lot of assumptions over where the project itself is headed over the next five to 10 years, where the industry is headed, and how they're going to monetize if they succeed their goal.
And with Nier in particular, I think that was a really interesting model to work through.
As we've talked about, they're going after...
this massive potential moonshot project of being the blockchain for AI.
Well, if you take a step back and look at what's happening with AI valuations today, they are in the hundreds of billions to multi-trillions for leading AI projects and many of the AI infrastructure companies that exist today that are publicly traded or privately held.
And so we thought about...
If NIR is able to capitalize on where we believe AI is headed and where we believe crypto is headed and the intersection of those two things, and if it's able to monetize the way that it capitalizes on that, what would that be worth?
And so you come up with these really, you know, astronomic projections around, okay, if you have tens of millions or hundreds of millions of agents out in the world transacting on blockchain 24-7, 365, what does that look like for NIR?
You have to start thinking about, well, what's the average transaction cost across all those different agents, right?
Are they microtransactions?
Are they massive?
Am I going to go buy a car with an agent or am I going to pay for my Chipotle burrito to be delivered?
What's the more likely outcome and how many times a week am I going to do that, etc.?
And then you got to think about the near token itself.
And so you really have to pull it all together.
The way that we think about it is that if it does hit this base case or bull case, it's done a really great job of capitalizing and monetizing the intersection of AI and crypto.
And it's seen massive adoption, not just from individuals, not just from institutions, but also from AI agents.
And that does put a massive amount of economic value on Nier for the future.
It's a high risk, high reward bet.
And so we discount that back with a very high discount factor.
And I think that that's also important is that when we underwrite these price predictions, our, you know, one of our going assumptions, particularly in the base and bull case, is that there's a very high likelihood.
that this doesn't work out.
And we're having to discount these expectations significantly because of that.
But if Matt has anything to add, we'd love to...
Well, I mean, you said it's 160, I think is what you said, John.
I don't remember the exact number we had on there.
It's trading at $5 or $4 now.
So it's like a 40-ish X.
That still makes it less valuable than Ethereum is today.
Is it absurd to think that the fundamental layer on which agentic finance takes place is less valuable?
at maturity than Ethereum is today at the depths of the bear market.
I don't think that seems absurd at all.
So on a relative valuation case, could near 40x?
Of course it could 40x.
It could 50x.
If 50x to be about what Ethereum is today, that doesn't strike me as absurd if it actually executes on this vision.
Like remember, we think all finance.
will move over blockchains and we think agents will be the primary drivers of finance.
If you are the platform on which that takes, we probably should have added another zero to that number.
So I know that it sounds like a very large target, but when you put it on a relative market cap perspective and you think about the size of the addressable market it goes after, it still, remember, just gets up to about where Ethereum is, which just doesn't strike me as an absurd price target.
It may not succeed, right?
It may fail.
But if it succeeds and the market is there, then I think that valuation target definitely comes in frame.
One more question on this before we move on is just the timeline for that.
Because the 2030 target, I think, is, you know, it took Ethereum 10 years to get to where it is.
2030 is pretty quick.
It sounds like you guys are forecasting this migration of global finance to tokenize a Gentic world to happen very, very quickly.
Matt, some comment on that.
Yeah, well, you know, in the last week, we solved all math.
So AI is moving pretty quickly.
And, you know, two weeks ago, the SEC made it legal for U.S.
investors to own tokenized stocks.
So it's very hard to pick a date in the future and say it will happen exactly by then.
You could overshoot by a few years on either side of the spectrum.
But AI is moving at an exponential rate.
Tokenized assets are growing at an exponential rate.
All the regulations are moving in this direction.
Everyone's moving to 24-7, 365 trading.
I remember when we went from like floor based stock trading to digital trading, it was not a slow transition.
It was like once people realized that this was a thing, it became the thing.
I think that's very possible here.
So is it 2030?
Is it 2032?
Is it 2029?
I don't know.
But these things are happening really fast.
Gotcha.
Okay.
But that's just very helpful context around some of these outlooks here.
I want to move on to a conversation around Hyperliquid and LiDAR.
You all launched the first LiDAR ETP in Europe a few weeks ago, and you called LiDAR, quote, a fast-growing challenger to Hyperliquid.
You already have a Hyperliquid product.
What was the impetus to bring a second Perpstex product to market?
And was this like something you guys wanted to do?
Was it demand you were getting from clients?
What was that like?
Let's start with Ryan on this one.
Yeah, well, look, I think perps are going to be a massive part of the financial industry 10 years from now, right?
They're already a massive part of crypto.
We're already seeing some convergence from traditional finance with wanting to launch perps with traditional futures, derivatives, options, platforms.
And so I think perps are going to be extremely important.
And Hyperliquid clearly is the current winner.
from a DEX or decentralized perpetuals platform today, perpetuals platform today, sorry.
And, and, and lighter is a rising challenger to that.
I don't think it's a winner takes all market.
You have.
finance and you have Coinbase and others that already have carved out massive chunks of the centralized perps market.
And so it makes sense to us.
There will be several winners in the decentralized perps market and that this market is going to grow many, many multitudes over the next 10 years.
And so our bullishness on hyperliquid doesn't necessarily impact our bullishness on lighter or vice versa.
We think both will be winners over the long term.
And it's really interesting technology that's taking a little bit different approach.
to how it enters into the financial system.
Lighter is focused on licenses and regulations and being a US-based firm.
Hyperliquid has done a phenomenal job capitalizing on the other side of that spectrum and focusing more globally and obviously not based in the US.
But look, I think five years from now, both will be regulated to a certain extent, used by individuals and institutions, and will be a...
critical piece of financial infrastructure for the future.
And so, yes, this recent drama with Robinhood clearly affected the lighter token price.
I think it drew down 30% or so from there.
But that's kind of a blip on the radar, in my opinion, on where things are headed.
One integration with one massive trading platform isn't going to make or break the outlook for perps or for perps exchanges like lighter and hyperliquid, just like it wouldn't do that for hyperliquid.
So I think that focusing on that, you're missing this bigger picture is that we have this new thing that was created by crypto that's grown into this massive market that will continue to grow into an even more massive market.
And Leiter is one of the emerging leaders in that space.
Fantastic.
Matt, I'd love to hear your thoughts on all of that.
The perps wars, Leiter, the thesis there.
Yeah.
Yeah.
I mean, I agree with everything Ryan said.
The first thing is you can never think you're at the end of financial innovation history.
So making singular bets is risky.
Remember, BitMEX created the perp and it's dead.
So you can never assume that you're all the way there.
The second thing I would say is often these markets follow this sort of oligopoly of distribution, right, where there's a winner with 60 percent of the market and then a second player with 30 and then a bunch of little players with less, right?
There's Uber and there's Lyft and then there are a bunch of little players.
There's Airbnb and there's VRBO and then there are a bunch of little players.
This is like a classic distribution in finance.
So this could well be a market with multiple winners.
When you have a market with multiple winners, you can't just try to pick the winner.
You have to pick the winner versus its market capitalization.
I think if you look at Leiter's market capitalization, it's relatively small, has a lot of room to expand.
So there are lots of reasons to be interested in it.
And then the last piece is, you said, was there demand?
There was demand, right?
We did get questions about it.
We get asked about it.
You look at the Citrini report yesterday, Leiter was like number two on their list.
Obviously, it's penetrated an institutional marketplace attracting attention.
And our job as an asset manager is to help people gain access to that in easy ways.
And so that's why it was interesting to us.
You know, one of the weird things about crypto is that the longer you're in it, the more accounts you seem to end up with.
You buy in one place, trade somewhere else, earn yield somewhere else.
And if you actually need capital, you end up having to sell something that you probably wanted to keep.
That's why we at Milk Road are partnering with Nexo.
These guys keep the whole thing under one account.
You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it.
All in one spot, all in one account, all on Nexo.
So if you need liquidity, but you don't want to give up your position, or you're already holding crypto and you want to be able to do more with it, I think Nexo is worth your time.
We love working with them.
I think you will too.
Tell them Milk Road sent you.
Matt, I don't know if oligopolistically is a word or not, but I admire you for going for it.
That was a big swing on that one.
Oh man, stuck in the throat there.
Okay.
So let's talk about these perp wars because I agree with you both that there's a huge addressable market here and there can be multiple players and winners in the space.
But it seems like Lighter and Hyperliquid don't view each other as competition.
They view the entire rest of the financial system as their competition that they're going after.
Talk to me about the addressable market for perps because I think I still wrestle with getting my own head around how big that market actually is.
Matt, what is your view of that?
Yeah, I think it's the whole market.
I think it's the whole derivatives market.
I think there's an argument to be made that like, I forget what the numbers are we're at now, but calendar versus purpose is like 90, 10 or 95, five.
It's like dominated by calendar based exposure, traditional market exposure.
I don't know that that will be the case in the future.
I think it could all migrate in the purpose direction.
So I think they're right to think that the.
the enemy is not inside, it's outside.
And that is the market that they're going after.
So I think that's right.
I think we're dramatically underpenetrated.
For what it's worth, I run into this challenge with our research team.
They sort of model the output opportunity for things like hyperliquid and lighter.
And they're afraid to take more of the market share of the derivatives market because the numbers get really extreme.
But I don't think...
that that is necessarily right.
Like perps are an easier to use financial tool from my perspective than traditional futures and traditional options even.
So I think they could take a huge chunk of the market.
Okay, so the whole addressable market here for perps could be all of finance or all of derivatives products.
Ryan, I want to ask your thoughts on the CFTC and the SEC rush for like regulatory approval and clarity for a lot of these perps.
products.
The president said hyperliquid in the White House.
Mike Selig at the CFTC seems like dead set on trying to get the door open, regulatorily speaking, for perps in the US.
How does that change the potential addressable market for lighter and hyperliquid?
What's the outlook and the thinking there?
Oh, I think it's incredibly impactful on the outlook and addressable market for lighter, for hyperliquid, for all of DeFi.
I mean, it's really incredible.
And this is exactly what happens when you have a pro-technology.
pro-crypto administration in the White House and leading regulators embrace new technologies and see blockchains and crypto protocols and things like LIDR and Hyperliquid as the future of traditional finance.
It opens up the market significantly because we're no longer just going after Bitcoin perps or Ethereum or Solana perps.
We're going after every asset in the world.
being traded on these platforms and futures being completely overhauled to not only be calendar based, but be perps, et cetera.
So I think it's really, really incredible.
And the amount of time in which we've seen kind of the gun go off in this post-Clarity era, post-Clarity Act failing era and new rules being shipped to the White House and clarity being put out by these regulators is really, really incredible.
It has not even been a month yet.
And we've already had several developments that it's almost hard to track in terms of where things are headed.
And so when you have the CFTC and the SEC heads, two of the most important financial regulators in the world, going out and talking about this is the future of financial markets.
And we're no longer going to treat these things as black market illegal platforms.
In the long term, we're going to bring them onshore.
We're going to regulate them, which is extremely important for mainstream.
and Wall Street adoption, we're going to regulate them and create pathways for traditional players to use and access and integrate with these platforms.
It just opens up this massive market that is actually really hard to quantify.
I agree with Matt.
When you start saying, well, what if it attacks 10% of the CME market or 20% or 40%, you get these incredibly massive markets, but that's how large the market.
that these platforms are going after actually is and it's important to remember that when you think about you know what could happen in 10 15 years and maybe that time frame is accelerated now that we have the sec and the cfdc both championing this transition onto you know crypto rails for the financial future About two weeks ago, I did an interview with Trevor King, who is the head of growth at Leiter.
So if anybody is interested in some more bullish conversation about that, check out that episode.
Gentlemen, we're getting close to time here.
I got to wrap up with a conversation about the outlook for Q4, because as we established at the beginning.
Bitcoin's at 82,000, so the sky is falling, the world is ending.
But what are you expecting for Bitcoin here going into the end of the year?
Do you think we're going to founder until after midterms?
Do you think we're going to see a bullish breakout in 2027?
Or what does the outlook for the rest of the year look like for you guys?
Matt, you seem like you have some thoughts on this.
What do you think?
Yeah, well, my thoughts are uncertain.
I actually don't know if the market's going to panic around the midterms.
It shouldn't.
There's nothing that a split government in the U.S.
can do to slow down the progress of crypto for the next couple of years.
But I do I do have a like a little itch in the back of my mind that people might panic.
They might start forecasting ahead to two years future and imagining a new SEC and CFTC.
So I think there's a wrinkle of risk there.
I think there's a wrinkle of macro risk and AI rollover risk.
We see that the market is very much on edge.
Right.
We had a panicked sell off yesterday because.
Someone misinterpreted an accounting rule as applied to open AI.
That's how on edge the market is.
So I don't think it's cleanly up.
But behind the scenes, I do think there is this persistent bid from institutions starting to move into the market.
So my base case would be that we end substantially higher than we are today by the end of the year.
It's not riskless, though.
I do think there'll be some volatile moments.
But I think the overall trend is bullish.
I think we're in a new bull market.
I think that bull market will continue for a couple of years.
And so I'd be looking at dips as opportunities and not like massive setbacks.
Ryan?
Yeah, I mean, I agree with Matt.
The midterms definitely are this gray cloud that we're seeing off on the horizon that I think will lead to a lot of choppiness over the next.
two months not just in crypto but i think in the entire kind of financial uh markets world and add on top of that the fact that we may or may not get more rate hikes that we have this ongoing conflict with Iran and oil prices are being affected every single day by this.
And that's affecting inflation and the macro picture.
I think there's a lot going on here that investors are thinking about and worrying about when it comes to the broader market trajectory.
And crypto is certainly a piece of that.
But if you look at just the crypto specific factors, which is that the debasement trade is front and center in most conversations we're having.
Today, it's part of the reason why the institutions we were speaking with when we did this report earlier this year, it's why they were allocating to Bitcoin and gold.
If you think about the regulatory momentum that's headed in our direction, all of the positive momentum around stable coins and tokenization, I think those things leave me feeling very optimistic that once we churn through the uncertainty.
of the midterms.
And once that risk kind of materializes, if we do have a major transition in Congress, I think that leaves us with a really strong setup going into the end of the year and into 2027.
Gotcha.
Okay.
I want to end with just a couple of quick questions about what's next for Bitwise here.
If anyone missed my conversation with Matt and AGM, who's the head of growth at BASE last week, definitely go check out that episode.
There's a lot of good alpha in that.
But Matt, you said towards the end of that episode to look for Bitwise to do more on chain.
And I wanted to hear you elaborate on what that could mean and what that looks like because the ATPs, the automated token portfolios, staking, Bitwise is already doing a lot on chain.
What do you think?
What's on the horizon there, I guess?
Yeah, I mean, we've called Volts ETFs 2.0.
I think that we are in the very early phases of the growth of Volts.
I really do think the ability for Volts to tap into unique yield opportunities in particularly real world assets serving this 24-7 market is really significant.
I think ATPs are another area of growth.
I think you're going to see some innovation in that space.
You know, everyone is talking about the migration of trading onto on-chain environments.
But if you move all stocks and bonds onto on-chain environments, then you have to imagine asset management has to move there as well.
The primitives there are ATPs and vaults.
Could those 10x, could they 100x in the next couple of years?
I think that's probably directionally right.
And Bitwise wants to be a leader in that space.
So I would expect more vaults announcements from us.
I would expect more portfolio style announcements for us.
It would be a terrible irony.
if Bitwise missed the movement of asset management on chain, and I will die before we do that.
So I'm going to make sure we're there.
Well, I hope you live a very long life.
Ryan, what's next from Bitwise from a research perspective?
What should people watch for?
What are you looking at?
What are you writing about?
What's happening there?
Well, our goal is to keep Matt alive and championing crypto for many, many decades to come.
So that's where all of our efforts are focused today.
I'm making sure that we...
capitalize on this opportunity, which I do truly believe is kind of a once in an industry moment for asset management and for finance.
So really excited about everything Matt spoke about.
You know, for us at Bitwise on the research team, we spend a lot of time not just thinking about what's happening on chain, but actually going and trying out new platforms, new protocols, messing with the technology and speaking with the teams that build this technology.
And so I think you can expect a lot more of our research to start going layers and layers deeper than what it historically has been.
We spent five years just trying to explain what Bitcoin is to investors ahead of the ETFs.
And I think we've got there.
The questions we get on Bitcoin are a lot more advanced than they used to be.
And now they're asking about Ethereum and Hyperliquid and Solana and LiDAR and Pump.Fun and all of these different protocols.
And so we're starting to be able to dive deeper and meet our audience there, which is really exciting.
We have several reports coming out over the next few months that I'm really excited about.
Just launched this morning, our Q4.
crypto market review report, which includes all of the charts that we find most interesting in the crypto market, including a forward from Matt and some of the key developments and catalysts that we're looking at.
And so I would just tell people to sign up for our CIO memos from Matt, follow us on Twitter, and look out for more to come from the Bitwise research team.
Well, it sounds like I've got some reading to do this weekend.
Ryan, you're getting ahead of me.
That's my last question.
Where can we send people to find more of you and your work online?
Matt, let's start with you.
Sure.
On X, I'm Matt underscore Hogan.
It's got a U in it, H-O-U-G-A-N.
And then you can find my weekly memo if you go to Bitwise Investments and search for the CIO memo.
I promise it's short.
I try to keep it under a thousand words.
And I know you're busy, but would love for you to sign up.
It's the best read in crypto.
Ryan, where can we find you?
Yes, I agree.
It's the one piece I make sure I read no matter what, every time it drops.
You can find me on Twitter.
I'm at Rasterly Rock on Twitter.
You can also find all of our research for free and available at bitwiseinvestments.com or from the Twitter handle at Bitwise.
So looking forward to seeing you all out there and appreciate you having us, John.
I appreciate you guys being on.
Once again, great episode, great conversation, great alpha.
Our community loves you guys.
So thank you so much for being on Milk Road Crypto.
And I'm looking forward to catching up again soon.
Awesome.
Thanks, everybody.
Thank you all for joining us.
I hope you all learned something today.
I know I did.
So until next time, stay safe, stay educated, stay bullish.
And we will see you all in the next episode of Milk Road Crypto.
Thanks for being here, everyone.
Bye.
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