# Crypto Market Strategy: Institutional Adoption and Tokenomics

**Podcast:** The Milk Road Show
**Published:** 2026-11-13

## Transcript

I continue to think most of the people who wanted to sell Bitcoin have left the market and there's going to be like a slow rising tide after we get through this period of uncertainty.
Bitcoin is fighting to hold on to $71,000, breaking down below $75k for the first time since August.
Bitcoin ETFs just had one of their worst weeks since June.
But at the same time, the New York Stock Exchange is going 24-7 on Avalanche.
And Vitalik says that Ethereum is a store of value.
What does all this mean for crypto?
What does this all mean for Bitcoin?
And what do investors need to know about all of this?
Hello and welcome to Milk Road Crypto, the show that is feeling very grateful that Bitcoin doesn't have a CEO who wears leather jackets.
I'm your host, John Gillan.
Today is Thursday, November 12th.
And today we are joined by the Bitwise boys once again, Matt Hogan, Chief Investment Officer at Bitwise and Ryan Rasmussen, Head of Research at Bitwise.
These are two of the smartest guys in crypto.
I always learn a lot from talking to them.
They're going to break down everything that's going on in the markets and give us an update on what they are seeing.
If that sounds good to you, make sure you like and subscribe.
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But for now, welcome back to the program, Milk or Crypto, to my friends, Matt, Ryan, gentlemen, how are we today?
Doing better than Jensen.
I'm feeling pretty good today.
I don't know.
How are you, Ryan?
Yeah, I'm doing well.
I'm happy to be here.
Well, I wish Bitcoin could join us today as well, but it's unfortunately falling out of bed right now.
And I think a lot of people are scared about this.
We've been ranging for around three months in a pretty bullish pattern.
And now Bitcoin seems to be losing some strength here.
A lot of people are scared.
What are your initial reactions to this?
Matt, let's start with you.
Yeah, it is suffering a little bit.
I think there is some risk on the downside.
We've been saying at Bitwise that we expected a few weeks of volatility after the election and then a resumption of the bull market following that.
That's been our sort of consistent message in our CIO memo and other reports.
The reason for that essentially is that the markets dislike uncertainty.
And boy, is there a lot of uncertainty in the market today, whether that's coming from what will the Democrats do?
vis-a-vis investigations when they come into Congress, whether that's coming from what will the Fed do vis-a-vis the increasingly sticky evidence of high inflation, or whether it has to do with this AI bubble unwind.
So look, I continue to think there will be potential for softness.
We don't think it revisits all the way down to the June lows.
We do think it's a good opportunity to build positions because we remain very optimistic for next year.
What we're hearing in the field is large wealth managers continue to come into the space.
So short term, volatile, long term, still pretty sanguine is my view today.
Gotcha.
Okay.
And yeah, Matt, you told Laura Shin on an interview this week, I think we bottomed in June, but we're pessimistic on the next few weeks.
That echoes that sentiment there.
Ryan, I'd like to hear your take on this.
And is there a catalyst sometime in the near future here that you think might start to clear some of this pessimistic weight on the crypto markets?
Yeah, I think, oh, I mean, I align with Matt, right?
We sat back for a long time ahead of the midterms and saw where Bitcoin had had a pretty massive rally into the end of summer and thought about what would happen in each scenarios across the midterms.
And look, I'm bullish on the outlook for Bitcoin over the next six to 12 months.
There's so much noise right now happening.
But I think the important thing is that it's not happening.
to crypto markets alone.
There's so much happening in capital markets around the world, geopolitics and the macro environment.
And Bitcoin, yes, is trading down.
But I think Bitcoin absorbed a lot of the selling over the past 12 months that we're now seeing equities experience.
And there was a period this year where you saw crypto assets selling off aggressively while equities were rallying.
pretty momentously.
And I think now we're kind of seeing a levelization of that, which is, I think, positive for Bitcoin and crypto assets going into 2027.
If there's a specific catalyst in mind that I have, it's probably the Anthropic IPO.
I think there's massive, massive fear around AI right now, not to mention what's happening with NVIDIA, what's happening in geopolitics around that.
Are the neoclouds going to crash?
Are they not?
Et cetera.
I think once we churn through this anthropic moment, we'll get clarity on how the market feels about AI.
And that will be the moment that the market turns upwards.
Matt, I want to go back to a comment that you made about there being no more sellers left in the market.
It seems like we keep finding new sellers and crypto ETFs had a lot of outflows this past week.
Do you agree with Ryan that like capital going other places like, you know, chasing the Anthropic IPO or repositioning in other ways is pulling some capital out of the crypto markets right now?
Or what is your updated outlook on that?
Yeah, I mean, I think a lot of the outflows we're seeing from ETFs right now are people coming out of the basis trade.
Basis has completely collapsed.
So I think you have to isolate the hedge fund based basis flows versus the retail and long term demand flows.
I actually think vis-a-vis where we were six months ago, we have less competition for capital.
I think six months ago, AI was sucking up all the capital in the world.
I think now investors are like, oh, where do I invest broadly?
I think what crypto is doing is just reflecting general uncertainty in the market.
I actually suspect it's more like a canary in the coal mine for equities.
I wouldn't be surprised to see equities experience some volatility as people take a step back and say, like having a Chinese spy, having an affair with the leading CEO is probably not good for AI long term.
So I think it's more that.
But those outflows from the ETFs, they were sellers, yes, to counter my point.
But I think that was mostly basis trade getting squeezed out of the market.
I continue to think most of the people who wanted to sell Bitcoin have left the market and there's going to be like a slow rising tide after we get through this period of uncertainty.
Ryan, I want to ask you about something that Matt alluded to around some of these uncertainties.
We talked a little bit about the situation with AI, but there's also rising inflation.
There's fears of the Fed hiking rates again in December.
This seems to be causing a lot of hand-wringing.
How many questions are you getting around monetary policy and Federal Reserve moves from clients that you're having conversations with, or are they more focused on understanding the asset?
Just help me understand how much this matters from your perspective.
Well, the clients that we're talking with are much more focused on understanding what's happening in the crypto market than asking us about the macro environment.
The questions that we get center broadly around tokenization, stable coins, perpetual futures, and quantum risks.
That's the four categories we've been asked the most about over the past few months.
There's still interest in ETFs.
One of the conversations we're having increasingly frequently is about in-kind transfers into and out of.
the Bitcoin ETFs.
I think what all that points to is that they're getting their news like everyone else from CNBC, Bloomberg, Wall Street Journal.
And when they come to us, they really want to learn about what's happening in the crypto market, where we're at today, what the midterms mean, what risk does quantum pose?
And really, what's the opportunity here if tokenization goes to the several trillions, if stablecoins go to the several trillions, if perpetual futures take over the world, and if crypto assets really start to rally?
how do they want to be positioned to capture that growth 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.
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Okay, you brought up midterms here.
Ryan, I'd heard you say before the election happened that this would be a quote, non-event six months from now.
And Matt, you recently wrote a CIO memo for Bitwise going even further than that, saying the election doesn't matter for crypto, but the demographic shift does.
Could you explain a little bit about what your thesis was in this memo and what your takeaway is from what we saw coming out of these midterms?
Yeah, I love it where I love situations where like the gut reflex is.
proven wrong by the data.
And that's the situation with this election.
The gut reflex is nine Senate seats flipping from Republicans to Democrats, which is what most people expect, once Alaska is called, would be harshly negative for crypto.
But if you look at Stand With Crypto, which is the leading crypto sort of lobbying arm, they rate all congressmen as pro or anti-crypto.
The previous Congress had 52 senators who were pro-crypto, had an A or B rating from Stan with Crypto.
The new Congress has 51 senators that have an A or B rating from Stan with Crypto.
52 to 51 is not a tsunami.
It's like barely a drip.
And the reason for that is that Congress didn't just turn blue.
It also turned less gray.
as I wrote in my memo, the average age of the incoming senators is 14 years younger than the departing senators.
And crypto is always skewed younger.
It has more adoption amongst millennials than amongst Gen Z, more adoption amongst Gen Z than amongst boomers.
It's not that surprising.
So as we get younger congressmen and women into the Senate.
we get more pro-crypto tilts.
So look, I think long-term that's just going to keep happening.
We'll see this happen again at the next election.
And the partisanness will matter less and the demographics will matter more.
I don't think we'll get much out of Congress on crypto except for investigations into Trump coin and World Liberty Financial.
And that'll be just fine for the industry.
But it is the case that like on a data-driven basis, not much changed.
We're still moderately pro-crypto in Congress, and I think that's probably just fine.
Ryan, one of the things that Matt mentioned in this memo was that millennials are about four times more likely to own crypto than boomers.
And I'm curious, when you're having dialogues with clients, are you starting to see this demographic shift of more, let's say, younger generations rising up into these decision-making roles at institutions?
And just like, what does that nature of that demographic shift look like, not just in Congress, but...
at clients you're speaking with?
Yeah, well, two things are clear when it comes to demographics and the conversations that we have with wealth managers.
The first is that the younger wealth managers typically are more pro-crypto than the older wealth managers.
They're adopting it in their portfolios.
They're having more conversations with their clients about crypto, and they're more aware of what's happening in the crypto market more broadly.
The second thing that's true about demographics is that more and more advisors are telling us that they're getting questions about crypto from their clients that are younger.
It could be the kids of the older generations that are set to inherit a lot of these assets and a lot of the wealth during this big generational wealth transfer.
Or it could just be.
younger clients who are in their 30s or 40s who now have capital to allocate and they're asking about crypto.
But two things are true when it comes to the demographics that I think support Matt's point that a younger skewed Congress is better for crypto than the previous Congress, which was older skewed.
And I think that is that clients are asking about it who are younger and younger wealth managers are more pro crypto.
Yeah.
I would just add one more thought on demographics.
And this actually speaks to the broader crypto situation is the nature of crypto in the future, I think, is different than it was in the past.
You mentioned catalysts, John, at the beginning.
In the past, we would always look to specific catalysts.
Oh, just imagine when we get an ETF.
Oh, just imagine when Gary Gensler gets out of the SEC or, oh, you know, just imagine where we get institutional custody or stable coin bill.
Or we had these like.
shining dots in the future that we all were waiting on.
And instead, I think what crypto is for the next few years is like a slowly rising tide.
Like it's hard to get fired up about people getting older.
But demographics is like one of the most powerful trends in the world.
It just takes a long time.
It's hard to get that fired up about institutions getting more comfortable with crypto after eight meetings.
But like that temperature is slowly rising over time.
I think we're going to be into a market where most of the catalysts are negative, but there is a slow rising tide that pushes upward.
So it's like a staircase up, an elevator down.
I think it's going to be the kind of bull market that we get into in crypto because the catalysts are just sort of very slow moving going forward.
That's to my view, positive, but it is different than what we've had in the past.
Well, I understand why Elizabeth Warren chairing the Senate Banking Committee scares a lot of people, but I, for one, am really looking forward not to have to think about or talk about Congress in crypto anymore.
So let's talk about the future because there have been some major announcements recently.
I'd like to get your guys' thoughts on this.
The New York Stock Exchange picked Avalanche to settle trades on its new 24-7 tokenized stock trading platform.
And I think that this kind of surprised a lot of people.
I'm curious what your guys' reaction to this.
Ryan, let's start with you.
What's your reaction?
to this news.
Why Avalanche?
And just what's your take on this situation?
Yeah, well, one thing that we've said for a long time that was about Avalanche is that we won't be surprised to see governments and institutions choosing Avalanche as they move assets and businesses on chain.
The customizability of Avalanche is actually such a key benefit to using the Avalanche blockchain when you think about things like tokenization or whether it's government records or science or something like that, where you need to have certain restrictions in place and certain tweaks to the different levers that you can pull while still using public blockchain rail.
So I'm not surprised that we're starting to see major institutions choose Avalanche as its operating base for types of businesses that need to have things like compliance controls and surveillance and the ability to customize the blockchain.
for their specific business purpose while still getting that benefit of using this global settlement layer.
Yeah, I would just add on top of that, that's a very good technical definition.
There's also this cultural angle on Avalanche, which I think is really true.
When you go and meet with many crypto foundations, it's like wandering into a renaissance fair.
There's like a guy juggling and someone talking in couplets and like, it's kind of crazy.
When you meet with Avalanche, it's like walking into a McKinsey office.
They're like KPIs.
and structured timelines and everyone's wearing suits and that's been consistent for the last five years it really does have this business orientation and that's i think one of the reasons it's been one of the all l1s that just keeps sticking around and keeps getting wins even as some of its other competitors fall off because if your view of crypto in the future is like b2b crypto is going to be a big part of this business and it's increasingly institutional that fits Avalanche sort of culturally like a glove.
And I wasn't that surprised to see them win this deal.
This pullback on Bitcoin is scaring a lot of people and I am not one of them.
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Matt, when you at Bitwise launched your Avalanche product back in spring, I read some commentary from you arguing that the design of Avalanche was fundamentally different from every other chain.
And you also commented on that culture piece.
So I think that's an important reminder at this point in the markets.
Ryan, I'd like to get your thoughts on the AVAX token here because a lot of people and like I'm going to.
I get a lot of questions from a lot of people about crypto.
Let's just put it that way.
I'm sure you guys do too.
But one of the things I hear from a lot of people in my community about Link, about AVAX, and a lot of these other projects is that we see a lot of institutions partnering with them, using them as infrastructure and doing business there.
But there's not a lot of clarity around how that drives value to the token and if the token captures any value from that.
I'm curious your thoughts on how bullish this actually is for AVAX, the token, versus just Avalanche, the network.
And just any thoughts you have on that you would like to share?
Yeah, well, one thing that we've learned for certain over the past 12 months is that protocols, foundations can upgrade their tokenomics.
And there's an appetite by investors for that to happen.
And the reason that I say that is because while the tokenomics may not be as attractive as other blockchains are today for certain protocols, perhaps for Avalanche and the AVAX token.
they can make those changes in the future.
And the regulatory environment is actually much more receptive to those changes now than it was two or four years ago.
And so I think the fact that an institution of this size is choosing Avalanche, which will move a bunch of activity onto the Avalanche blockchain, which will result in a bunch more transactions and revenue, you can start to see where there's opportunity to revamp and tweak the tokenomics of the AVAX token to benefit from there.
So maybe today it's not benefiting a whole lot.
But what we've seen time and time again is not only projects changing their tokenomics to make them more beneficial for investors, but for investors rewarding the tokens that do that.
And I think that's probably where we're headed for Avalanche.
Interesting.
Matt, anything you want to add on that?
I think it would behoove the Avalanche community to demonstrate that they want to move strongly in this direction.
I mean, I think what Ryan said is right.
When we look at the data, it's just as important as the quality of the tokenomics are, like the amount of revenue being returned.
It's the trajectory of those tokenomics that actually drives a lot of value in the market.
You need to have clear alignment that improving the value of the token is the fundamental focus.
And you need to be showing like we're taking steps in that direction.
You actually don't need to get to hyperliquid immediately, burning 99%.
You just need to be moving in the correct direction.
And part of the bet on something like Avalanche is that that is.
That is the orientation in which it will move over time.
But certainly the more that can be done to demonstrate that, I think the more directly you'll see the token benefit.
Okay, I appreciate the thoughts on this.
I'd like to ask some questions around tokens versus crypto equities, because on this news, I think Securitize pumped something like 20% in a day.
How are you going about having conversations with clients who are asking about token exposure as a way to get exposure to crypto versus, you know, some of these equities like a Robinhood, a Coinbase, a Securitize, etc.
How do you guys think about that?
How do you communicate on that?
Matt, let's start with you here.
Yeah, own them both.
I mean, I'm a boring crypto investor.
Own them both, man.
Look, Ryan and I were talking about this earlier.
There's 30, what is it, Ryan?
$30 billion in tokenized trading volume right now or something like that on the stock side.
And stocks trade $300 trillion.
That's a 10,000x.
There's so much room to grow in this space.
We're so early that trying to pick the winners is really challenging, even for people like me who have people like Ryan that do actual work on this.
So I would just own them both.
I mean, I do think in the current market climate, If you imagine that the, to go back to our congressional discussion, if you imagine like the future of crypto regulation is more institutional oriented and maybe less sort of freewheeling crypto, a company like Securitize is enormously well positioned for that environment, right?
Tokenized stocks are going to happen.
If they happen in a very well regulated, very clean, normal, TradFi manner, Securitize is like, point center of that.
I think one of the reasons it rallied was the timing closest to the election and people realizing, oh, this is the way to play tokenization in the future, right?
In a more freewheeling way, maybe it was on-dem, right?
And look, I think both will win.
That's why I started with saying, let's win them all.
But I do think if you think the future of crypto now because of the changes in Washington is a little bit more buttoned up, something like a securitize looks really, really good.
in that environment.
Okay.
I appreciate the thoughts on that.
Ryan, you can build on that.
But a question I want to ask you about this is...
how this reads for other blockchain ecosystems that didn't win this because being financial infrastructure for the New York Stock Exchange is sort of like a big banner to win for your ecosystem.
And a lot of people from Ethereum, Solana, many others are kind of asking the question, why not Solana?
Why not Ethereum?
Can you talk about just like your thoughts on that and how big of a win is this for Avalanche versus a loss for some of these other crypto ecosystems?
Yeah, I think the New York Stock Exchange choosing Avalanche is more of a win for Avalanche than it is specifically a major loss for other blockchain ecosystems.
The reason I think that is because these markets are just simply massive and just not winning one segment of the market doesn't mean that you're doomed to fail over the long term.
I actually think this is probably positive for other blockchains because it shows the direction that we're headed in and maybe other financial infrastructure companies will want to choose a competitor.
rather than going and following the New York Stock Exchange.
Or maybe there's just so much activity happening.
And in a future point, we're going to see a lot of this activity crossing across different EVM chains that it's actually not that big of a deal.
We'll start to see assets tokenized on Avalanche, then brought into the DeFi ecosystem on Solana or Ethereum, and perhaps some other elements of this cross-chain kind of world that we think we'll live in in the future.
And so I think it's a massive win for Avalanche.
I don't think it's a massive loss for the other ecosystems.
I think those will, do just fine.
They'll strike deals of their own and they'll be well positioned for this in the future.
Yeah.
Can I just jump on that?
I think that is absolutely right.
But I do think that ecosystems need to show that they're winning.
I think investors are sort of looking for the set of assets that are going to matter in this next bull market cycle.
You need to get on one side of the line.
A beautiful thing about this deal is I think it moves avalanche onto that side.
What's on that side of line?
Hyperlux is on that side of line.
Zcash is on that side of the line.
There are a number of things that are clearly on that side of the line, but we're in the sorting phase.
If you don't move to that side of the line, you're going to be, I don't want to pick on any particular assets, I'm going to hold back, but you're going to be one of those assets that falls off.
Right.
There was a time in previous crypto cycles where we talked about Ethereum Classic.
We talked about Bitcoin Cash and we talked about EOS.
You know, there are a number of these protocols that just didn't make it into the next cycle.
And I do think we're in that sort of moment.
This is a huge win for Avalanche because I think it probably puts it into this line of things we have to pay attention to for the next four years.
And so I agree it doesn't matter.
It doesn't hurt Solana, but it raises the stakes for anyone who hasn't clearly moved into that.
side of the spectrum.
Okay, well, let's talk about projects that are trying to move into that side of the spectrum, because I think, you know, lighter is one that comes to mind immediately, as a project that spent a lot of time building relationships with regulators in DC hyperliquid, same thing, there's been a focus on bringing perpetuals in a more regulatory compliant way into the United States.
What is your outlook on on that?
Is that like a we have to wait years quarters?
Is that like a month's thing away?
And how much does that matter for the markets?
Once we have, you know, spot markets and perps markets coexisting with together in the United States in a much more regulatory compliant way.
Either one of you want to start with this one?
Who wants to jump for it?
Go ahead.
You're right, Jen.
Yeah.
I mean, I do love perps.
There's no there's no hiding from from that.
Look, I think that we'll have regulated perpetual futures from platforms like Hyperliquid and lighter in the next two years in the US.
I think it actually will be sooner.
But I think.
Two years is a pretty safe bet.
And just like in the traditional market, you have derivatives and then you have spot equities.
I think we're on the same exact thing happening for crypto assets, tokenized assets, et cetera.
I think there's a lot of room for projects like hyperliquid and lighter to grow and to.
grab market share because their technology is just so advanced relative to the existing systems.
And perps are new crypto native products.
It's like one of the only segments of the crypto industry where incumbents don't have this natural moat or natural leadership that the crypto industry is trying to cannibalize.
This is something that started in crypto is crypto native and is forging its way into the traditional financial system.
And I think the incumbents are actually going to have to try to catch up here.
and that the hyperliquids and lighters of the worlds are very well positioned for that environment.
Matt, anything to add to the DeGen view on this?
No, I absolutely agree.
I mean, look, perps play into so many super nice trends, right?
For one, they're a more readable version of futures, so it plays into the retail interest in derivatives volume.
They encourage some degree of speculative activity that plays into trends that we see in society broadly.
I think they're going to sweep the market.
I'm optimistic on both.
Very few markets have 100% share.
You often get this oligopoly of distribution with like a 60, 30, 10 share.
That would be my base case here.
So I keep saying the same thing.
So maybe I'm becoming boring, but yeah, own them all.
I think there's room.
These are really big trends.
This is a safe place.
It's okay to be bullish here, Matt.
Okay, I want to ask about Ethereum.
There's been an ongoing conversation for a long time about the value driver for Ethereum.
Is it fee generation?
Is it store value?
Vitalik got a lot of attention for tweeting that Ethereum should be valued as a store value.
And he said this is a much stronger value.
proposition than just fee burning tokens and rent extraction, revenue collection from fees.
A lot of people have had mixed reactions to this.
Some people are saying it's too late.
Some people are saying it's a hard pivot that's not going to work.
I'm really curious your guys' reaction to this and does this help or hurt the clarity of the thesis on Ethereum?
Ryan, what do you think here?
Yeah, I think that the thesis on Ethereum unfortunately remains unclear.
Now I say that being bullish on Ethereum, owning Ethereum personally, I have for a very long time, but I do think that other blockchains are doing a much better job at focusing on making sure investors understand what the thesis is behind the asset.
And I just think this kind of constant shifting of positions, and we've seen it happen time and time again.
across the Ethereum ecosystem.
Part of that's because it's the second oldest blockchain behind Bitcoin.
But part of it is because we've just seen kind of this ever evolving door around what they're focused on and around what's happening with the token.
So I think, you know, clarity is good.
I don't know if this gave us the clarity as an Ethereum investor that I in particular was looking for, but I'm curious what Matt thinks.
Yeah, I can take both a bullish and a bearish case on this.
So I guess where I am is like setting, letting this settle in my mind.
My bullish case on this is if you think digital stores of value are going to be a very large market, right?
We think Bitcoin will be $30 trillion at some point.
It's unlikely that it's the only digital store value, right?
That's not the way it works in the traditional world.
There's gold and there's silver.
There'll probably be Bitcoin and there'll be a few others that have significant market share.
Could ETH get a tenth of that and be $3 trillion, which is 10X from here?
That sounds completely reasonable.
From that perspective of a normal market perspective, I think this is a reasonable thesis that can get you to a higher valuation.
The bearish view is that by casting your lot on store of value, you're walking through a one-way door.
The one-way door is like when you do that, you're de-emphasizing revenue deliberately in a way that you can't come back from.
It's been in this Schroediger's cat position where it could be either depending on which investor we're looking at it, and now it's walked through the door.
That makes it a riskier bet in a sense because if it doesn't land that, it doesn't have this other approach to fall back on.
So I'm sort of letting like it's stewing in my head.
I'm uncertain how I feel about it.
Sometimes I'm like, oh yeah, great.
It'd be multi-trillion dollar store of value.
And sometimes I'm like, oof, it's stepped through a door it can't come back from.
It's competing in a market with other tokens that are revenue driven, that we're bullish on from a pure revenue basis.
Is that the right decision?
Because it's not, in my view, really reversible.
I guess uncertain.
And for that reason, I think it'll probably scuffle for a while compared to other assets as people sort of let it settle in their mind.
This is one of the reasons why I love ETH so much is that there are so many different kinds of value drivers to it that it could pivot to or lean on more or less at different times.
I think it's just something that nobody is used to as an asset.
It's everything is like it has to be one thing or the other.
And ETH is like...
three at once and it breaks everybody's brain and I kind of love it a little bit.
I do want to come back to this store of value conversation though, because one of the ways to read this and I think how a lot of people are reading it is that it's very validating of Bitcoin's core thesis of just being, you know, digital scarcity and a digital store of value.
But it seems like there are a lot of players coming after that, not just Ethereum, but Zcash and many others are trying to chip away at that.
How do you guys see this for Bitcoin?
Do you think that this like strengthens Bitcoin's thesis and like validates it?
Or do you think that some of these other competitors are going to start to chip away at that over time?
Matt, what's your thought on that?
Yeah, both.
I think it's both.
It strengthens the thesis.
It shows that this is a large addressable market.
You don't get to go after a $30 trillion market and not have people come at you.
You don't get to go after a $30 trillion market and have 100% market share.
Like it's sort of inevitable as we go from a few hundred billion to a trillion to many trillion that this market is going to get slightly more complex.
You know, if I wanted to make a bet on this door of value market, I would probably own Bitcoin, I would own Zcash and I would own ETH, you know, and I would want to own all of those things because I think this whole market is going to 10 or 30X.
So I both think it will lose market share and grow market value over time.
And I'm glad that these other competitors exist.
Like I do think Zcash existing and becoming important will make Bitcoin better.
And I think Ethereum coming to the market and positioning as a store of value will probably make both better and more understood.
So the answer to your question is both, both validating and competition.
I've got a siren going on out here, so ignore the police outside.
But Ryan, I'd love to hear your take on this as well.
Is there a narrative besides just store of value that you think eventually will get some traction and real market share in digital assets?
Or is everybody just going to be elbowing for that same piece of real estate in the market?
No, I think most crypto assets are not going to be fighting for the store of value market.
I think a few will, you know, the ones that Matt mentioned, but.
The reality is that these are networks that a lot of economic activity happens on.
And the things you need to think about is how much activity is actually going to happen there.
How much do they make from that activity in terms of fees and revenue?
And then how much of that is passed on to the token holder?
Those are like the things that you need to think about when valuing.
crypto assets.
And it's more clear for some like Hyperliquid, perhaps, and less clear for others like Ethereum.
And I think we need to bridge that gap.
What I hope is that the projects that have a less clear tokenomic structure start to see that investors are rewarding those that do and have a clear model, and they move towards that as kind of the operating standard.
That would be the ideal state for me.
But I think that these networks will largely be valued on The amount of transactions that they process, the amount of revenue they generate from that, and the amount of that revenue that flows back to the token holders, and it won't be a store of value market for all of crypto.
Matt, what outside of the store of value narrative are you most bullish on?
Is there a particular segment of the market that stands out to you?
Is it DeFi?
Is it perps?
Is it something else?
What do you think besides store of value has the strongest case in your mind?
Yeah, I think a lot of DeFi apps are grossly undervalued.
I think people make multiple mistakes.
They assume that they're serving the crypto market, which is a $3 trillion market, and they're actually serving global assets, which is a $600 trillion market.
So they're off by a factor of 2,000.
They assume that the token economics that they have today or the token economics that they have tomorrow, they're probably off by a factor of 10 in terms of value capture.
They assume that things like revenue and priority fees and ordering will decrease over time when they'll likely increase over time as more valuable assets move on chain.
I just think these are some of the most innovative, exciting financial projects I've ever seen and they're trading for a few billion dollars.
Just strikes me as ridiculous.
It's really easy to get to much larger numbers for some of those.
DeFi applications.
And it's really easy to explain why people sort of don't have them right today.
They're coming from the wrong point of view.
So I think, you know, I'm bullish on lots of things, but I'm very bullish there.
I want to try an idea on you guys.
I didn't plan to ask this question, but I've been kind of doing deep dives on a lot of this stuff recently as well.
And a similar strategy that I'm seeing from a lot of these like blue chip crypto projects is, you know, Avalanche used to require people to.
buy a huge amount of Avalanche and hold that in order to spin up what they now call, they used to call a subnet, now they call it an Avalanche L1.
They got rid of that requirement.
Chainlink is bringing all these products to market and...
really adding more value than they're extracting in an attempt to attract more capital.
I think this pivot from Ethereum is sort of a similar idea.
They're not focusing on extracting rent and charging fees.
They're more focused on adding value to the market and trying to bring that capital in.
Is that a strategy that you are seeing as well?
Do you agree with that outlook?
And how effective is that going to be?
How long does that take before that starts to work?
Just kind of give me your read on some of these things, because it seems like a lot of these projects are sort of moving in that same strategic direction here.
And I'm curious if that...
tracks for you guys.
Ryan, what do you think on this?
I think the formula for tech startups historically, trying to grow as fast as possible, taking all of the revenue and pushing it right back into that growth, not operating at a profit in the early years, and then later finding a way to monetize all of that growth that you've realized once you have sustainable market share is a formula that's worked time and time again.
So if that's the path we're headed down, then I think that will work.
It's just if you never figure out a way to monetize it, investors eventually will move on to somewhere that is monetizing.
And I think that's the risk that projects run.
If they are investing in growth early on and just focused on getting as much market share and as much adoption as possible in their early years, that's fine as long as there's some path to monetization once you've realized that.
If there's no path to monetization, what are investors going to invest for?
I don't see that reasoning.
Yeah, I agree with that.
I think as long as there is alignment behind the token being the source of value, that's all investors will care about because the monetization will take care of itself in the future.
I think it's a great thesis, John.
If you think about something like Uniswap, I think we've seen this in real time.
Run Uniswap back to the beginning and have them throw the fee switch and take 90% of the revenue from day one.
There is no one who supplied liquidity to that market.
It didn't gain traction.
It's not today the dominant decks.
It's a nothing.
Hayden has a different job, right?
I mean, you couldn't have turned on aggressive value capture on day one.
They benefited from not having that.
And now they're able to slowly increase value capture as the brand and the positioning gets more cemented in the market.
I think it is the smart thing to do.
at the right stage in a development cycle.
Again, the important thing is that investors know that the long-term value will end up in the token, that that is the pointy end of the sphere, that everything flows to that.
How much is getting there now doesn't matter as much as growing the market share, but you need to know you will get there eventually.
Okay, this is very validating.
I feel like a very smart boy.
All right, we're going to move on to the we got to wrap up here.
But I got to ask one more question about this.
Bitwise raised its 10 year Bitcoin price target to $1.6 million.
And I think at a time when sentiment is struggling so much, hearing you guys raising your long term target on Bitcoin got a lot of attention.
Matt, could you talk through a little bit of what drove this decision and why this target had to be raised for you all?
Yeah, I mean, it's just the math.
The math forced the result.
So basically that target just comes down to two things.
How big is the market that Bitcoin is serving?
Which is to say, how big is the store of value market?
How big is the offshore wealth market?
How big is the institutional market?
Those markets grew over the last year from when we first did this long-term capital markets assumptions report.
They've been growing spectacularly, right?
I know gold has wobbled, but generally speaking, they're up from a year ago.
The market is bigger.
And then what share of the market do you think Bitcoin will take?
And we said it was the same as we thought it would take last year.
Why is it the same?
Actually, I think it'll probably take more.
But why do we think it's an easy argument to say it's the same?
Yes, Bitcoin had a drawdown, but it was significantly reduced from previous drawdowns.
At the same time, Morgan Stanley launched a Bitcoin ETF.
Wells Fargo put Bitcoin into a model.
The first central bank to buy Bitcoin bought their first Bitcoin last year.
You had all these sort of proof points that institutional capital is still on track to flow into the market.
And so when you take the addressable market getting bigger and you keep the market share the same, you end up with a bigger number.
So it just ended up at $1.6 million.
I'll be honest, a funny little story, like going into it, I was very worried we were going to have to take the number down because I was in a bearish market mindset.
And I worried about the media having a field day.
Bitwise lowers its price target.
But actually just like the data, market size, market share means higher value.
That's just what it netted out to.
And I actually am more bullish about Bitcoin today than I have been in the past.
All right.
That was really helpful, Matt.
I appreciate the transparency on that.
It's nice when math helps us a little bit.
Ryan, one of my favorite questions to ask you is always just what are you researching next?
Your head of research at Bitwise.
What's in your crosshairs in terms of research projects that you're looking at?
What are you focused on?
Tell us a little bit about what you're looking at right now.
Yeah, well, we've talked about a lot of it today, to be honest.
I mean, we're spending a lot of time right now thinking about...
how layer one protocols are going to benefit from the rise of stable coins and tokenization.
We're actually publishing a piece next week at Solana Breakpoint on our view on Solana with a price target for Solana over the next five years.
That's something we've been focusing a lot on recently and then understanding how does that model transfer out to other blockchains.
So that's really top of mind.
Of course, our annual predictions will be coming out soon.
So we're excited to share those with everyone.
Look, the reality is, is that the conversations that we're having with financial advisors today are still very, very early in their educational journey.
And so what we're spending a lot of time doing is explaining what is tokenization and not just like a one sentence explainer, but actually how does it work logistically?
What does it mean for them?
What does it mean for their businesses at these major wire houses?
So I think a lot of what we're doing today is just helping.
those kinds of investors understand what's happening and where the opportunities are.
And then us as a research team are spending a lot of time diving into the fundamentals and tokenomics and trying to evaluate where we see opportunities for growth in the market and who we think will be the winners over the long term.
This is a really great conversation, gentlemen.
I appreciate this a lot.
I've kept you guys longer than I intended to, so I'm going to end the conversation there.
But I will be looking forward to hearing your predictions for 2027.
The next time you have you guys on the show, we're going to go over those.
But for now, where can we send people to find more of you and your work online?
Matt, you want to lead us off here?
Sure.
I'm on X at Matt underscore Hogan.
It's got that U in it, H-O-U-G-A-N.
So find me there or come to Bitwise Investments and sign up for my weekly CIO memo.
And Ryan, what about you?
Yes, definitely sign up for Matt's weekly CIO memo.
I'm obviously biased, but I do think it's one of the best weekly newsletters in crypto and it reads to everybody and it sifts through the noise.
So definitely sign up for that.
It's a five minute read or less.
You can also hear Matt read it aloud if you want to, if you follow him or Bitwise on Twitter.
You can find me on Twitter at RasterlyRock, R-A-S-T-E-R-L-Y-R-O-C-K.
It's a Game of Thrones reference that I chose many years ago.
But nonetheless, you can find me there.
You can find all of our research free and available at bitwiseinvestments.com as well.
And be on the lookout for a couple of new reports coming out in the next few months that I think you'll really enjoy.
Ryan, Matt, thank you both so much for being here.
Our audience loves you.
And I always appreciate these conversations a lot.
Thanks so much for being on Milko Crypto.
I hope we can catch up again soon.
Thanks for having us.
Thank you.
And thank you all for joining us.
I hope you enjoyed this episode as much as I did.
So 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.
Everything you hear on Milk Road is for informational purposes only.
These are our personal opinions, not financial advice.
And we may own some of the investments we talk about.
Always do your own research and make the decisions that are right for you.
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