Source: Milk Road Show
Compiled by: Felix, PANews
Bitwise Chief Investment Officer Matt Hougan and Head of Research Ryan Rasmussen believe that a $1 million Bitcoin valuation might be too conservative. Their reasoning: Bitcoin is not just a store of value; it is effectively both digital gold and a potential future global settlement asset, especially as the world gradually loses trust in traditional monetary systems. Below are the highlights of the conversation.
Host: How are you feeling about the market right now? Especially after another round of fluctuations over the weekend due to geopolitics, but things still look quite strong.
Matt: I remain relatively optimistic about the market. Previously, the market's direction was completely off, with negative funding rates and heavy put options, which led to the market getting squeezed and then it rebounded. It's holding support quite steadily here now. I think if we can maintain levels around $75,000, I'd be very excited about the trajectory for the second half of the year. So, I'm optimistic. We're now past the tax deadline, which was the inflection point I mentioned before. I think things look good now.
Ryan: It feels fantastic. I'm very optimistic. And it's truly an exciting time right now. I was just at Paris Blockchain Week last week. There was a lot of passion and many great opportunities. There were crypto-native companies doing very well and working on exciting things, and also many institutions and UK regulators were present.
Host: You just released the Q1 2026 Crypto Market Review report. What were the main takeaways from that report?
Matt: The main takeaway is that Q1 was terrible. My experience with these reports is that Ryan and his team compile them and send them to me for review when they're almost ready. Usually, when I look at the data, I see some metrics up, some down, some assets up, some down. But in Q1, almost everything crashed. Every major crypto asset saw double-digit declines, most major crypto stocks also saw double-digit declines. Almost every on-chain metric you could look at fell significantly. The only 'silver lining' was some good news on the stablecoin front. We've been doing this quarterly report for three or four years now, and this is the only report we've ever produced where the data was 'down across the board'.
On the other hand, the news flow was overwhelmingly positive. The market was falling when Morgan Stanley launched a Bitcoin ETF. The market was falling when Goldman Sachs launched a Bitcoin ETF, and when the U.S. SEC published a token framework. What really struck me was that this data is backward-looking. Looking back, it was indeed awful. But the thing is, all the news flow is forward-looking. Will it pull through into Q2? I think that's what people are betting on in Q2, and that's why the market has rallied in the past few weeks.
Host: Ryan, from your perspective, what were the main conclusions?
Ryan: I think Matt is spot on. Usually, you look at this report and see broad data. You see prices and fundamentals showing a trend, and the news more or less echoes that. But here, there was a huge divergence, one you don't typically see of this magnitude. Except for stablecoins, tokenization, and some Polymarket (prediction market) data that you'd expect to be up, the entire market was indeed down.
It's worth noting that the starting point at the beginning of the year was relatively high (compared to the end of Q1), but since the end of Q1, crypto has performed very well. If you take the Iran conflict as the midpoint of Q1, since the conflict broke out, we have outperformed other major asset classes, which feels pretty good. So I think the uniqueness of this quarter lies in its starting point; it contained many sharp swings and indicator changes with high highs and low lows. But I think from a long-term perspective, the indicators we've been tracking, whether sequentially or year-over-year, are significantly higher than in the past. But you also get these inter-quarter volatilities, which feel particularly bleak in a bear market.
Host: Were there any specific metrics or data points that stood out as particularly noteworthy for the future?
Ryan: In this report, RWA is a pretty incredible chart. A few years ago, it wasn't even in our report. Even if we had it in the 2024 report, the amount of real-world assets tokenized was less than $2 billion. In the past two years, that number has grown to nearly $30 billion, more than a 10x increase, with astonishing growth since the beginning of 2025.
Additionally, the range of asset types being tokenized is broadening. For a long time, it was basically just government bonds, maybe some tokenized gold. Now you're starting to see asset-backed credit, asset-backed securities, especially in the specialty finance category, and more commodities being brought on-chain. I think this proliferation across different assets is particularly interesting. I believe we will continue to see this chart move to the upper right, and the categories will keep widening.
Host: What is this 'Dual Bet' on Bitcoin?
Matt: At Bitwise, we have always described Bitcoin as a store of value, coupled with an out-of-the-money call option on it becoming a universal currency or international settlement tool. In other words, when you invest in Bitcoin, you are betting on it becoming digital gold. We believe that even modest progress on the path to becoming digital gold could easily push Bitcoin to $1 million per coin.
But at the same time, you also get this out-of-the-money call option on Bitcoin becoming an international monetary settlement tool. We never used to talk about this with institutions because the idea was too far-fetched; it was a theoretical concept. So we kept the focus on digital gold, but you still own this international settlement option.
The Iran conflict brought this call option on an international settlement tool closer to being in-the-money, as Iran talked about using Bitcoin for toll fees. But just as importantly, the global monetary order has become more unstable. If the underlying market becomes more volatile, the option becomes more valuable. So the reason we think geopolitical crises can drive Bitcoin to outperform is: the global monetary order is more unstable, therefore this 'out-of-the-money call option' becomes more valuable. So you're no longer just talking about digital gold; you're also talking about Bitcoin as money. This is the two-in-one bet. This makes me think our target price of $1.3 million by 2035 is too low. Maybe it should be $2.3 million. I think this idea of a non-political currency is becoming a reality, and as the world becomes more chaotic and volatility increases, I think this directly benefits Bitcoin.
Host: However, does this rely on more geopolitical conflicts?
Matt: Well, it will depend on a global reduction in reliance on a single political currency. So, I think once these systems break, they can't really be fully put back together. For example, the US froze Russian government bond assets. I don't think you can just put a band-aid on it, and then other countries suddenly think, 'Okay, I'm willing to put my wealth on your balance sheet'. I think the genie is out of the bottle. Does it require more geopolitical conflict? I'm not sure; it might require more growth in non-dollar economies, and I think that takes time, but geopolitical conflicts will certainly accelerate the process. I think it acts somewhat as a hedge against such geopolitical conflicts.
Host: To what extent is this reason driving institutional adoption? Would analysts at all these companies really think: decades of treaties and alliances are breaking down, the future of a single fiat currency is uncertain, and that becomes a reason to get into crypto?
Matt: I think it should drive institutional interest. Apart from us, I rarely hear others talk about this at the institutional level. This is a theory that has been circulating at the retail level for a long time, but I seldom hear it at the institutional level. I guess as I travel around, I'll start talking about it more. I think this is still a narrative that needs to permeate the institutional view.
Ryan: I'd like to add, when Matt and I discuss this, what I find interesting is: if Bitcoin has the potential to become a settlement currency in the future. Even if Bitcoin isn't used tomorrow for settling international trade, the probability of it happening is being pushed higher, and obviously this kind of thing is happening here (paying strait tolls). Any options trader would be happy to buy such a call option because it can see huge increases in both premium and value.
So, this is where it clicked for us: Oh, this is no longer that thing with a 2% chance of happening at some point in the future. Now it becomes a 15% or 20% possibility. That's a multiplicative increase in probability. This is also why we think this is a significant moment; it goes beyond the traditional digital store of value and is more likely to be used as an international trade settlement rail.
Host: Has Iran actually accepted Bitcoin payments, or was it just a threat?
Matt: I think the point Ryan made is very good, which is: this isn't actually a binary outcome. You don't have to wait until 'China settles transactions with Russia using Bitcoin' happens for the market to recognize that the probability has increased from, say, 1% to 10%. I think this has certainly happened. Now Iran, facing a difficult geopolitical situation sandwiched between the US and China, has floated this idea. You naturally turn to this non-political asset. I think this is also why you see Bitcoin's value rising again. It doesn't need to be fully realized; just an increase in probability is enough. And I think that is objectively happening.
Host: I saw you say something on the show, 'AI plus the new token framework will lead to the 2026 altcoin season'. Please explain that.
Matt: That was designed for clicks, and I'm quite proud of it. The thing about the token framework is really interesting. If you look back at crypto history, entrepreneurs tried to build token projects that captured some form of value to incentivize community development. But these attempts were always thwarted by the previous SEC – if you successfully created a valuable token, they'd throw you in jail. So, we ended up with meme governance tokens, and everyone gave up on the idea of using tokens to incentivize people.
The current SEC Chairman, Paul Atkins, has a lobbying background specifically for tokens. I think he believes that tokens capable of capturing real value can incentivize the building of new networks crucial to the economy. Therefore, he has created a safe harbor for people in this regard. When you apply this new capability, I think it will surprise people because everyone is still stuck in the memory of it not working before. Combine that with the characteristic of AI allowing people to do more with fewer people. You combine these two. I can already see a million truly valuable token projects springing up. We are starting to see evidence of value capture, like with Hyperliquid, and now you have a token framework that allows you to do it in a legal, compliant way. I think we will see a new wave of innovation, a new ICO (Initial Coin Offering) boom. I think it will all come back, but this time, some projects will actually be able to succeed.
Host: ICO boom, those words sound scary.
Matt: They were scary in the past because they were illegal securities offerings conducted by scammers. But using valuable tokens to incentivize community activity, build new networks, and solve the 'cold start' problem is a very interesting entrepreneurial idea. And we can now do it in a regulatory-compliant manner. The tokens of the past failed because they were born at the wrong time. But I absolutely do not think that means they wouldn't work in this new environment with high-performance blockchains, a robust regulatory framework, and AI empowerment. I do believe a new boom will occur within the next 18 months.
Host: I like your point: with a clear token framework, it's no longer the stage where unknown teams release projects; now you might see more mature, more professional things being put on the table. People might choose tokens to help bring their ideas to fruition.
Matt: To clarify, this involves three elements. Compliant regulation, high-performance blockchain systems, and significantly enhanced AI capabilities. When these three come together, I think it will be very exciting, and we now have all three conditions.
Host: Is this the crypto endgame you always foresaw? The major conditions necessary for great projects to be achieved?
Matt: I always thought the ideas we experimented with in 2018, 2020, and 2021 were good ideas that just appeared at the wrong time. For example, using crypto incentives to solve the cold start problem, or DeFi projects being limited by the lack of high-performance blockchains. Having lived through the internet bubble era, you know that you need regulations, technology, and the right market conditions to make these things happen. So I do see this as an inevitability, and I think it will catch many people by surprise.
Host: You announced an Avalanche (AVAX) ETF, believing it will launch soon. What was the reason for launching an Avalanche product?
Matt: Our view on the L1 space is that it's still very early stages. As I mentioned before, the scale of L1s is growing from $20 billion to $600 trillion. Therefore, we want to see L1 networks with differentiated architectures that show traction in the real world. Ethereum has one architecture and has obviously been hugely successful. Solana has another architecture and has also been hugely successful. We have large ETFs for Ethereum and Solana respectively. Avalanche is a third unique architecture; they use customizable Avalanche L1s, allowing various projects to build their own permissioning, fee networks, etc. Avalanche has made real progress in RWA; RWA on Avalanche has grown nearly 1000% year-over-year. They are one of the few L1s that have truly found success. I don't know how the L1 landscape will look in five to ten years, but I know it will definitely grow. I want all the projects that have real potential and leading architectures. Everyone is watching Ethereum, Solana, and Avalanche. So, we launched VAVA BAVA.
Related reading: Conversation with Bitwise CIO: Quantum Computing and AI Threats Overstated, Bullish on Crypto 'Big Four'
