Matt Hougan, Chief Investment Officer of Bitwise, named three common mistakes he believes investors make when assessing the cryptocurrency market. He thinks the main issue is the gap between the current perception of the industry and its potential changes.
Crypto Applications Are Not Just About Cryptocurrencies
According to Hougan, investors often evaluate applications like Uniswap, Hyperliquid, and Aave solely through the lens of the size of the cryptocurrency market, which is currently estimated at about $2 trillion.
However, the proliferation of tokenization can significantly expand the market available to such applications. Hougan noted that the aggregate value of stocks is about $150 trillion, and bonds about $350 trillion. If these assets were tokenized, decentralized applications could work not only with cryptocurrencies but also with traditional financial instruments.
"People see them as purely crypto applications—just like they once thought Amazon was just a bookstore," Hougan remarked.
By his estimate, the potential market for such platforms could be about 100 times larger than the cryptocurrency market itself.
Crypto-Native Companies Maintain an Advantage Over Traditional Players
Hougan named underestimation of crypto-native companies in the face of large financial institutions entering the industry as the second mistake. He gave the stablecoin market as an example. After launching its own product in 2023, PayPal failed to capture a significant market share. Currently, according to Hougan, Tether and Circle control about 88% of the market, while PayPal's share is about 1%.
A similar situation has developed in the cryptocurrency custody market. Fidelity launched its service back in 2019, yet the largest crypto custodian in the US remains Coinbase.
Hougan also mentioned CME and Bakkt. According to him, crypto-native companies gain an advantage through faster product releases, focus on the cryptocurrency market, and an already established user base.
However, he noted there are exceptions. For example, BlackRock ranks first among spot Bitcoin ETF providers.
Transaction Volume Could Grow Dozens of Times
According to Hougan, the third mistake relates to assessing future transactional activity on blockchains. Currently, the U.S. stock market operates for 33 hours a week—from Monday to Friday during trading sessions. With the tokenization of stocks, trading could take place around the clock and without days off—168 hours a week.
Hougan says this does not mean an automatic fivefold increase in trading volume. However, the availability of 24/7 trading will create conditions for increased activity.
He named the development of AI agents as an additional factor. They will be able to monitor portfolios and execute trades on behalf of users 24/7.
"I can imagine growth of 50 or 100 times," Hougan stated regarding the potential increase in stock transaction volume.
In his opinion, a similar effect could manifest in payments if a significant portion of operations in the future is performed by AI agents.
Hougan believes all three mistakes are connected to one problem: investors assess the cryptocurrency industry based on its current state, while the infrastructure itself continues to change rapidly.
In particular, he highlights the development of tokenization, the expansion of the application scope of crypto applications, and the growth in the number of transactions. In his view, it is precisely the difference between the current perception of the market and its possible future state that creates investment opportunities.
Earlier, Hougan stated that the crypto market is transitioning to a model where the value of assets will increasingly depend on the revenue generated by the corresponding protocols.
