Source: Miles Deutscher, YouTube
Compiled by: Felix, PANews
Crypto analyst Miles Deutscher recently hosted a conversation with Bitwise Chief Investment Officer Matt Hougan on his podcast, focusing on recent market volatility, gold versus Bitcoin, RWA, talent drain, and other topics. PANews has compiled the highlights of the discussion. Details are as follows.
Host: Today's guest is Matt Hougan, Chief Investment Officer (CIO) of Bitwise. Bitwise is one of the largest asset management companies in the crypto space. What is your current Assets Under Management (AUM)?
Matt Hougan: Currently, our total AUM across ETPs (Exchange Traded Products) in the US and Europe, staking business, and Alpha business is approximately $15 billion. We are one of the largest players in this field and one of the very few asset management companies offering a full stack of services from traditional finance (TradFi) ETFs to treasury services and staking.
Host: Besides Bitcoin, how involved are you in other crypto markets, such as altcoins?
Matt Hougan: Very deeply involved. We launched the first crypto index fund in 2017, holding the top 10 crypto assets, and we still operate that fund today. Additionally, we have a DeFi index fund, an NFT index fund, and are involved in the small-cap asset space through our active management business.
Multiple Factors Caused This Market Plunge
Host: Let's get straight to the point. What's your take on Bitcoin's recent price action? This might be the most intense sell-off I've ever seen; order flow on Binance and Coinbase showed almost no rebound over the past week. Now that the dust has settled, what's your view on all this?
Matt Hougan: I hope the dust has settled. But anything is possible. If you have a long-term investment horizon, this is indeed a good opportunity, and I think a bottom might be forming. When the media reports on these sharp market swings, they always try to pin the cause on a single specific factor. I believe this plunge wasn't caused by a single factor, but rather the combined effect of 6 to 7 factors.
Simply put, part of the reason is early crypto investors selling due to concerns about the four-year cycle. They might have sold $100 to $150 billion worth of cryptocurrency in 2025. I think this wave of selling is starting to subside, but their prediction that the four-year cycle would repeat was correct, so some chose to exit. Part of the reason is still the lingering effects of the liquidation event on October 10th. There are still rumors that some hedge funds or brokers damaged in that event were forced to sell. I think this is one factor.
Another part is people's concerns that the new Fed Chair, Kevin Watson, is more hawkish than some other candidates for Fed Chair. I also think part of the reason relates to the broader macroeconomic situation. Also, yesterday, investors sold Palantir, Amazon, gold, and silver, and also sold Bitcoin. When all these factors combine, it leads to such a sharp decline. Especially for those of us who are long-term bullish, while we are optimistic about Bitcoin, we don't have a specific narrative, a specific point predicting the price crash, like the approval of a Bitcoin ETF or the rise of DeFi. We are just trying to find such explanations. So I believe it was the result of all these factors working together. Yesterday's price movement was indeed shocking. The Fear and Greed Index hit a historic low. So perhaps this indicates the market is about to bottom out. We'll see.
Host: The Fear and Greed Index dropped to 5, that's indeed crazy.
Matt Hougan: Among all factors, the Fear and Greed Index dropping to 5 actually makes me optimistic. I'm always looking for asymmetric trade opportunities, there's little room for the index to fall further, but plenty of room to rise. Given the current market conditions, fear has hit rock bottom. If we start getting more positive or balanced news, this could indeed create some asymmetry. So, this number makes me quite happy.
Host: You mentioned before that you are very bullish on Bitcoin and the broader crypto space in the long term. As the price falls, many are starting to question Bitcoin, not just at the retail level, but also some veterans and industry leaders are beginning to doubt Bitcoin's status as "digital gold." It's not performing like gold; it's even weaker than risk assets. What's your view?
Why is Gold Rising While Bitcoin Isn't?
Matt Hougan: My core view remains unchanged: Bitcoin is digital gold, and it's superior to gold. Gold faces significant challenges in physical transport and settlement in a multi-currency world, while Bitcoin solves this problem. Over the past 10 years, the US dollar depreciated by 26% while Bitcoin rose by 20,000%; its performance as digital gold has been quite outstanding. If you look from the COVID-19 low, you'll find that even today, Bitcoin's price is up 20 times from the low point when inflation truly hit during the early pandemic. If you study gold over 10 or 20 years, you'll see it goes through long periods where it doesn't perfectly store value. You have to look at this from a long-term perspective. So, I believe the theory for Bitcoin still holds. The technology still works. It remains the only digital asset that can be self-custodied with final settlement. In a world where people are losing faith in institutions, this is very powerful. I still believe this holds true.
Host: Perhaps we should discuss why gold is rising and Bitcoin isn't.
Matt Hougan: Gold's rise in 2022 wasn't due to currency devaluation, but because the US froze Russian government bond assets, causing central bank gold purchases to increase by 150%, from 400 tons annually to 1000 tons, and this continued for several years. This was a one-time surge because central banks realized that if you hold US Treasuries, they can be confiscated at will, and they didn't like that. Central banks don't hold Bitcoin, so this positive factor wasn't directly reflected in Bitcoin. Interestingly, the gold price didn't rise in 2022. Despite the increase in central bank purchases, the gold price only rose a few percentage points. Then, in 2023, gold rose about 11%, and performed somewhat better in 2024. Central banks increased purchases, but it took four years to absorb the excess supply, leading to a parabolic rise in 2025 due to supply depletion.
I think Bitcoin will undergo a similar process in the long run. If you look at the ETFs over a one-year cycle, although there have been outflows in recent months, in 2024, ETFs bought roughly twice the supply of Bitcoin. In 2025, ETFs again bought more than the available supply. This demand will eventually deplete the supply, just like with gold.
Based on my conversations with some institutions, the price will continue to rise. I met with some financial advisors in South Florida this week. They are still very interested in Bitcoin. Many see this as an entry point, a new buying opportunity. Those who bought Bitcoin before will continue to hold. So, ETFs will eventually deplete the supply of Bitcoin, just as gold ETFs eventually depleted the supply of gold, it just takes some time. So, when I look at gold's trajectory, I believe the value storage market is larger than ever, and Bitcoin will eventually capture a significant share of it.
Bitcoin's Next Potential Major Buyers
Host: The positive news about ETFs seems to have been fully priced in. I think the question everyone is asking now is, who are Bitcoin's next potential buyers? As you just mentioned, you see a lot of institutional investors showing interest. How many institutions do you think have not yet allocated to Bitcoin? Is it family offices? Could it be sovereign nations?
Matt Hougan: That's a good question. The challenge the market faces right now is that positive news is emerging very slowly. So the next batch of potential buyers are still financial advisors, large brokerages like Morgan Stanley, family offices, insurance companies, and sovereign nations.
Let me give an example to explain why the current situation is like this. Bitwise's average client requires 8 meetings before allocating assets. We typically meet quarterly, so "8 meetings" means a decision cycle of up to 2 years. Morgan Stanley only approved Bitcoin ETFs in Q4 2025, their "8-meeting clock" has just started, and real fund inflows might not explode until 2027. This is similar to the situation when the gold ETF launched in 2004; inflows increased year by year, taking a full 8 years to reach the first peak. Most professionally managed money is not yet in Bitcoin.
Of course, everyone's situation is different, and the inflow timing varies. This is an average, not every case, but this will trigger a sustained wave of inflows. To support my point, let me add some more data.
I worked in the ETF field before. Before becoming Bitwise's CIO, I was the CEO of ETF.com, creating the first ETF data and analytics business, and the largest ETF conference. I've been in this field for 15 to 20 years. The closest example is the gold ETF launched in 2004. When the gold ETF launched, the inflow in the first year was about $3 billion, it was the second-largest ETF launch ever, and everyone was excited. But the inflow in the second year was $5 billion, the third year $8 billion, then $10 billion, followed by $12 billion, and finally $18 billion. Actually, the gold ETF took eight years to reach its first inflow peak, then dipped slightly, and reached its highest inflow so far in its 18th year. The trading market volatility is exceptionally strong.
I mention this because most of the world's capital is in the hands of professional investors. Most of this money is not yet in Bitcoin. I believe it eventually will be, but it takes a long time, it requires many meetings and a lot of education, but undoubtedly, from my channel checks and internal processes, this is still happening, and I believe it will continue for years to come.
Quantum Threat is Indeed a Concern, Bullish on Privacy
Host: The quantum computing threat has recently become a media focus, even causing some funds to sell Bitcoin. Michael Saylor mentioned at a conference that efforts are underway to form a task force or group to address this issue. Will this really become a big problem, or do you think it's just media hype?
Matt Hougan: It is indeed a problem. Large institutions sometimes use it as an excuse to delay decisions. Even though the quantum threat might be many years away, we need to see substantial progress from Bitcoin core developers. Solving quantum resistance would be a major positive. You can look at the relative performance of assets not yet discussed; since Bitcoin started addressing quantum computing, Bitcoin Cash (BCH) has outperformed Bitcoin relative to it. Although I might not like this outcome, it is an objective fact. The quantum threat has indeed caused some OGs (Original Gangsters, veteran players) to exit the market. Whether it's truly worrisome or imminent is irrelevant. It must be addressed.
Host: I don't follow Bitcoin Cash (BCH) much; I'm surprised it's performing so well.
Matt Hougan: I don't follow it much either, but I looked into it the other day. If you chart from early 2025, comparing Bitcoin, Bitcoin Cash, Zcash, and Monero, it reveals a rather interesting story. Some old-school crypto community members seem worried about Bitcoin and quantum computing, they are concerned that "suit coins" (compliant tokens) will drag Bitcoin into regulatory quagmire, and also worried about the prospects of privacy coins like Zcash. BCH's resistance to quantum computing earlier in the year and mid-year also triggered some capital rotation. This is a very interesting profile. Although my core thesis is still that Bitcoin will ultimately win, the current data does indicate some interesting changes are happening.
Host: Are you bullish on these? Not just these specific examples, but the overall situation regarding privacy.
Matt Hougan: I am very bullish on privacy. As Bitcoin is pulled into the mainstream regulatory sphere, the demand space for actual privacy coins actually becomes larger. While pushing Monero into the institutional market is difficult to get through regulation, the privacy community is still large and active. I feel privacy is very important to many participants.
High-Quality DeFi Projects Poised for 100x Growth with RWA Adoption
Host: What about RWA?
Matt Hougan: The potential of RWA is severely underestimated. The current RWA size is only about $25 billion, while the global stock and bond market is worth several hundred trillion dollars, a penetration rate of less than 0.01%. This is good news for L1s, but I think the most interesting and most overlooked point is that I believe this is huge positive news for DeFi. Actually, the killer app for tokenization isn't faster settlement, but the fact that you can collateralize these assets in DeFi for lending and leverage. So, I think well-organized DeFi projects, especially those with correct token economic models, have the opportunity to achieve 100x growth as tokenization becomes widespread. They are the real 100x beneficiaries. While ETH and Solana might bring 10x growth.
Host: Yes, Maple is an example. In a very bad market, their revenue hit record highs, or at least reached the highest level in the past 12 months. So this shows that the overall market price action is somewhat disconnected, related to other structural risks, while the actual incoming revenue and liquidity are not. I think the same logic applies to stablecoins, which continue to hit new highs despite price declines. Therefore, I think it's important to distinguish between price action and the actual adoption happening behind the scenes.
Host: Several big names have left recently, like Multicoin founder Kyle Samani. What's your take on this so-called venture capital talent drain. Also, developer accounts haven't grown since 2022, many are moving to AI, miners are also shifting to AI. What's your view on this lack of innovation, identity crisis narrative?
Matt Hougan: The talent drain is real, but this happened in 2018 and 2022 as well. The difference now is that AI itself is indeed very powerful; it's absorbing the market's attention.
AI agents are the primary users of the future. I firmly believe that most users of crypto finance in the future will be AI agents. AI cannot open bank accounts, but can have a stablecoin wallet with a click. They don't sleep, don't need rest, and can handle hundreds of millions of micro-payments. If you are bullish on agentic AI, it's hard not to be bullish on wallets, stablecoins, and DeFi.
Related reading: Dialogue with Jeff Park: We are in a bear market, quantitative easing is no longer effective, silver will crash like altcoins
