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Today's guest is Matt Hogan, Chief Investment Officer at Bitwise Asset Management,
one of the 11-spot Bitcoin ETF issuers with over $10 billion under management.
He's the institutional explainer that family offices, RIAs, and pension consultants
actually read when they're sizing their Bitcoin allocation.
And now, let's enter the Bitcoin matrix for episode 276 with Matt Hogan.
Matt Hogan is the Chief Investment Officer at Bitwise Asset Management, one of the 11-spot
Bitcoin ETF issuers, $10 billion in assets under management. He's the co-author of Crypto Assets,
and he's the person family offices, RIAs, and pension consultants actually read when they're
sizing their Bitcoin allocation. Matt, welcome to the Bitcoin Matrix, where critical thinkers meet.
How are you? I am doing well, and I'm so excited to be on the show.
Thanks for inviting me.
Yeah, I'm super excited to get into it.
There's a lot of angles here I want to cover from the ETFs and the adoption and where we
are, but I really want to start with the macro picture in 2026.
Debt, deficits, the dollar, treasury market stress that just keeps showing up and plumbing
nobody's talking about, and geopolitical environment that just won't stabilize.
When you and the team look at the world this year, what sort of the dominant signal you're
you're looking to or trading off of? How is geopolitical chaos affecting Bitcoin adoption?
Yeah, well, let's break that into two things. So there's sort of kinetic geopolitical chaos,
like we're seeing in Iran. And then there is the slow building monetary chaos of debt debasement
and sort of the trap that the Fed is in. And they're both really important lenses. We think
about them both. I'll do the kinetic side first. So, you know, I've always described Bitcoin. When
you invest in Bitcoin, you're making two investments at once. You're buying something
that is an established store of value. And then you get what I've described as an out-of-the-money
call option on it becoming a currency that's used in international commerce. So to break those down,
the store value thesis, digital gold is well-established. That's a huge market, right?
Gold is $30 trillion. Bitcoin could get to well north of a million dollars, maybe a couple million
dollars just by being digital gold. And I think it's well on that way. So that's the core way we
underwrite Bitcoin. But then it was originally designed as peer-to-peer cash. And I think there's
a good argument to be made that the world, which is increasingly fractured and conveniently divided
between US and yuan-based dollar rails, and those rails are being weaponized, may at some point want
an apolitical currency for transactions. So why do I bring that up? If you think of that aspect of
Bitcoin as an out-of-the-money call option, then things like kinetic war in places like Iran
increase the volatility of the global monetary order. So in a normal environment, Bitcoin wouldn't
get a seat at the table because things are sort of in stasis and they're working. But when the
world gets scrambled, that opens up space for an apolitical currency to find a role in the world.
And you even saw that in Iran, where they threatened to toll ships using Bitcoin, right?
That wouldn't happen in normal times. But just like they're more overtakes in F1 when it's raining,
when the world is in chaos, it opens up a little bit of space. The volatility increases the value
of that option. So from my view, sort of as we move into a more fractured world, less of a
unipolar world. And as we see geopolitical chaos, it's actually been a catalyst to Bitcoin. And you
could see that it rallied when the Iran conflict started and all other risk assets traded off.
So that's one piece of it. We think about that. We think that's a meaningful catalyst. And we
think if there's more geopolitical conflict, we think it will benefit Bitcoin. The other half is
what you're talking about, which is this slow simmering destruction of traditional fiat
currencies, right? We recently passed this grim milestone of US GDP and US debt crossing in the
wrong way. You know, debt payments are now almost a trillion dollars for the US every year. I think
the world is waking up to the fact that maybe this fiat era that we've been in since we went off the
gold standard maybe is starting to break down and decay in a meaningful fraction. And the way you see
this appearing in sort of flows as you look at sophisticated investors like Harvard, their two
largest liquid positions in the most written 13F were Bitcoin and gold. What does that tell you?
It tells you they're worried about debasement. And if Harvard is worried about debasement,
then an increasing number of people are worried about debasement. So when I look at these two
trends, rising geopolitical tension, rising concern about the levels of debt, their long-term
secular bull pushes for Bitcoin. That doesn't mean we go straight up. It just means the bias
is up. And I think that's the market that we're in right now.
Wow. To me, it's so interesting to hear you lean into the kinetic angle. I think about sort of
maybe an institutional adoption. And I think about just sort of maybe that topic, maybe scaring them
just about new things. And I think it's very brave, but it's very logical to lean into it
and see and show how Bitcoin could benefit there and not run away from it or sort of say,
oh, well, this year's out. We're going to have to sell this next year. But Lynn Alden recently
joined Bitwise's advisory board. For listeners who've heard her on the show before, her thesis
is that fiscal dominance and treasury market dynamics are the underlining story of the decade.
What does her presence at Bitwise change about how the firm thinks?
Lynn is a friend of the firm like many. I don't know the formal relationship, but she's a close friend of the firm. I think the thing that's fascinating about Lynn is the view that's been expressed has been consistent for so many years, right? Nothing stops this train. I'm not sure when Lynn first said that, but it was many years ago.
And I think at that point it was outside of the mainstream.
And the thing that happened is that every time a new page in global news flips over that statement is still true And so we gotten to the point where I think the rest of the world is recognizing that sort of worked its way into the
mainstream. And these are because it's right. And these are the way that ideas sort of penetrate
mainstream thinking and influence people. So look, there are a lot of people that are making the case
for Bitcoin from different angles. I just made a case from a kinetic view. Lynn has led the case
from a macro view. I think the more and more of these voices that we bring into the ecosystem,
it just cumulatively convinces more people that maybe they need some exposure to this important
asset. Yeah. So before maybe we go more into the framework, what kind of made you a Bitcoiner?
What was maybe the conversation or thinker or piece you came across?
Yeah.
You know, the funny thing about Bitcoin, I think it's less true now, but it was certainly
true, you know, eight or nine or 10 or 15 years ago, is that what you really needed
was someone that you trusted and knew to tell you to take a look at it seriously.
I think the reason many people rejected it in 2012 or 2013 is they only thought about
it for a second.
They're like, oh, this new thing, it's probably a joke.
So actually, I mean, the real answer is not, I wish it were like Wences or someone.
It's not.
It's a woman named Kathleen Moriarty.
She was the lawyer on the first ETF, and I came from the ETF industry.
I was the CEO of ETF.com, had a whole career there.
And I had huge respect for Kathleen because she literally created ETFs.
She was the lawyer on SPY, which stayed the largest fund in the world.
And in 2013, the Winklevoss twins filed for a Bitcoin ETF, and we invited them to our conference because I ran the largest conference in the world.
And we sort of invited them because they were celebrities and we thought it would be interesting to have them there.
But at the conference, I can remember this clear as day.
She took me aside and said, Matt, this Bitcoin thing is much more interesting than you think.
You should think about it seriously.
And it was really just this one person that I had massive respect for, that I didn't expect to have that serious of you, who really had me look at it very closely.
I had the benefit before that of having Spencer Bogart on my team at ETF.com.
He became the first Wall Street analyst covering Bitcoin.
He's now a partner at Blockchain Capital.
He's an incredible thinker in the space.
So I had been thinking about Bitcoin for a few years, but it was really Kathleen, that one person who said, just pause, take a breath, spend a few days actually studying this.
That was enough because once you once you peel below that reflexive rejection, you see sort of the inevitability of the space Bitcoin has in the world.
and that's really what brought me in.
Obviously, it aligned with a lot of the ways I think,
but it was really this one person
who made me stop, pause, and dig in
and I owe her a great credit.
Yeah, that's super interesting.
I mean, it's one of the reasons I brought up
sort of how you're so brave
to lean into the real issues of the day
is because I think you are that person
for a lot of people
that conveys a lot of sort of credibility,
not because of the institutional label,
because of how you speak about things
and how articulate you are from a certain angle.
I love the ETF thing too.
I did a conversation with Eric Balchunas about John Bogle.
I think ETF investors or people that allocate ETFs are very interesting.
I'm not talking about people who sign into the 2067 plan
and just give, you know,
but people that are really interested in ETFs and follow that market,
there seems to be some sort of synergy or marriage
or deep correlation with Bitcoin?
And I wanted to hear your thoughts.
Yeah, that's the other thing that I think really prepared me for it
is, look, I had been involved in ETFs since the early 2000s.
And at the time, ETFs were this renegade technology.
I know today they're the apple pie of investing.
You mentioned the 2067 Target Date Fund.
They're how everyone invests.
But in 2002, 2003, they were the disruptive force
that were distrusted by the market.
So people called them EFTs. People called them weapons of mass destruction. There were actually congressional hearings about ETFs destroying the American dream and calls for people to shut them down. They were really disliked by the traditional market. And those of us who loved ETFs looked at them and they were like, look, it's a faster, cheaper, more tax efficient, more fair technology. It's going to win.
And so the reason you see this huge overlap between the ETF industry and the Bitcoin community is because the ETF industry in the early 2000s, right, pre-Bitcoin, saw disruptive technology that was hated by the mainstream but had fundamental advantages, despite all the odds that all the smart people stacked against it, just come to dominate and become a $20, $30 trillion market.
So we've seen this disruption before. So when we looked at Bitcoin, this is part of why I felt comfortable leaving ETFs and moving to Bitwise eight years ago to focus full time on crypto.
I had seen something that people disliked, that there were congressional hearings about, that folks like Jamie Dimon were saying would never happen, become not just successful, but dominant.
And I think once you've seen that, you can pattern match. So I do think there are a lot of historical analogs.
I know that's hard for people to sort of accept today because ETFs are so mainstream.
But look, I think if you fast forward 20 years from now, crypto will be completely mainstream.
Most people will own Bitcoin.
It will be a huge part of the global economy.
And everyone will sort of look back and chuckle that we had, you know, Charlie Munger comparing it to whatever he compared it to.
I think we've seen this journey before.
So I was ready to accept Bitcoin's path, I think, maybe because of the lessons I learned in ETFs.
Yeah. The Winklevoss twins are interesting because they struck kind of, you know, not many people have billion dollar ideas twice and the conviction to sort of stick with it.
I mean, they took stock in Facebook with their settlement rather than just all cash.
And they put a lot of that into Bitcoin and held for quite a while and built a vertical on top of it.
ETFs interesting I it's fascinating like Vanguard was against ETFs in the beginning and
think Charles Boba himself now they're the largest sort of manager and yeah and so it's
and you started I guess bitwise eight years ago so it must have been frustrating and the amount
of patience you must have had to live in the future for that long because even GBTC I don't
know if that was around when you started bitwise but it kind of laid the blueprint you could kind
of see that it would be inevitable and probably made sense. So two, a couple of questions here.
One, maybe you could frame up why does an ETF make sense for large institutional allocators?
Yeah, absolutely. And yeah, it was frustrating to always be waiting for the world to catch up to
the future you see. But that's just the case of being in an innovative area. Why do ETFs make
sense for large institutional people? There are a bunch of reasons. One is that they're really cheap.
So, you know, RETF is 20 basis points, 0.2% per year, and that includes custody, tax, audit,
trading, reporting. You have to be a very large institution managing a very lot of money to get
that kind of deal with a custodian, right? So just on a pure cost basis, at this point, at these
prices, the ETF is often the cheapest way for people to get full institutional quality exposure
to Bitcoin. That's a big piece of it. The second big piece of it is that when you buy Bitcoin,
whether it through an ETF or if you did direct institutional custody you don just buy it you own it And what does that mean That means that you have to continue to due diligence custodians
You have to continue to due diligence audit firms.
You have to continue to protect the Bitcoin and stay up to date with the latest markets.
If there are developments like, God forbid, another major fork, you know, Bitwise has lived through major forks in assets before.
you have to know how to handle that. And so I think having an ETF, particularly with a manager
who's been in the market for eight years or so and has lived through these things, gives you a lot of
comfort on the owning. So both on a cost basis and then on an ongoing management basis, it's easier,
often cheaper. And then it's just the easiest thing for these institutions to do. They own lots
of ETFs. They could just add one more. They don't self-custody a lot of assets. That's not something
that a pension does.
So this is a new muscle
they'd have to underwrite and trust.
And look, ETFs have won in every market,
stocks, bonds, real estate, commodities, etc.
It's a phenomenally effective wrapper
for institutions.
So I'm not surprised
that they've been so successful
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I wonder, especially now with in-kind transactions,
what the sort of multi-generational relationship between Bitcoin and self-custody and Bitcoin in ETFs will be like?
I wonder if you've thought about that.
Yeah, absolutely.
Well, first, I'll tell you a surprising statistic from ETF history, which is, you know, the gold ETF launched in 2004.
And at the time when it launched, everyone was like, oh, this is terrible.
It kills self-custody of gold.
people were worried about it harming the gold bar in coin market. And actually what the data shows
is that the number of people holding physical gold has expanded like 10, 20, 30x since the ETF
launched. Because while many people hold the ETF, it broadened the market of people who are
interacting with gold. And so the number of people who decide to self-custody increased as well.
I think that is happening in Bitcoin ETFs as well. Bitcoin ETFs are broadening the market of people
who interact with Bitcoin and some fraction of those will self-custody. And that is great.
The thing you're pointing to is something that I really am committed to seeing in the ETF space,
which is because you can now in-kind into and increasingly in-kind out of ETFs,
it's possible for you to take Bitcoin that's held in self-custody today. And we've had clients who
do this and bring it into an ETF wrapper. There are various reasons to do that. Maybe you want the
institutional custody. Maybe you want to gift it. That's very hard to do with self-custody Bitcoin,
very easy to do with Bitcoin ETF shares. Maybe you want to pass it down. That may be easier in an ETF
wrapper. But then the other half of that that's really important to me as a Bitcoiner is I would
love it to be the case that you could in kind out of the ETF if you wanted to self-custody.
we're working on that process right now theoretically you can do it at large dollar
amounts that's the way these things work when the in-kinding started you really had to be at like
a hundred million dollars which is just out of reach for most people that's come down into maybe
the five to ten million dollar range I would love to drive that down to a dollar and then the same
thing on the other side being able to in kind out I don't know that we'll be able to get there but I
think we'll be able to get there eventually. That would make ETFs a beautiful part of this ecosystem.
They would make it easy to hold if you wanted to in a regulated format, but they would allow you
self-custody. That's the long-term dream, at least for me. Yeah, that'd be very interesting
over multi-generations as different generations or participants in each generation. You might have
two children. They might each have different desires, this sort of thing. And it's just
fascinating watching sort of the financialization of Bitcoin. So it's been over two years since the
spot Bitcoin ETFs got approved. And you had made a prescient comment, you know, sort of
maybe early on in all this, that sort of years two and three could be bigger than year one,
and year one was huge. So how is this sort of playing out? And maybe what's been the quiet,
you know, story of the past two years, like maybe who actually bought and how does that buyer mix
different from the Bitcoin buyer pre ETFs? Yeah, absolutely. I mean, first of all, record flows.
You know, this is not new news, but the first year of flows, $36 billion was the most successful ETF
launch of all time, not by a little, but by a factor of six, which is to say just to because I
don't think people recognize how extraordinary this is. In the history of all ETFs, the most
successful ETF prior to the Bitcoin ETF raised $6 billion in its first year. And then the ETF
The Bitcoin ETFs did $36 billion.
Amongst 8,000 plus ETF launches from firms like BlackRock and Vanguard covering the S&P 500 and international stocks and all bonds, Bitcoin 6xed.
It's just extraordinary.
So huge, massive inflows.
The second year inflows were strong.
Third-year inflows, I think, are going to be very strong because we've just seen in the past, let's say, six months, the ability for folks like Merrill Lynch and Morgan Stanley and Wells Fargo and other big platforms to buy the ETFs.
So I think those flows are really going to scale up.
The buyers that have come in through ETFs that didn't exist before in scale are really financial advisors and family offices and some parts of the institutional stack, particularly hedge funds.
There are various reasons that those three groups find it easier to do the ETF than they did to buy on like Coinbase or buy direct and self-custody.
ETFs are what they interact with.
But that share of the flow, I think, will grow over time.
It's maybe been about half or maybe 40% or so.
I think it'll eventually be 60% or 70%.
Those are the dominant users of ETFs in most markets and I think will be in crypto.
I guess the $6 billion in the first year was probably gold.
Gold was the second biggest.
It did $3 billion.
The biggest were the Qs, the NASDAQ 100 Qs back in 99.
Yeah, in the heat of the internet bubble.
So one of the sort of the analogies we all play around with is sort of the, you know, Bitcoin adoption might go faster than the Internet because it's built on the Internet.
And I also wonder how much of the greater adoption is really just inflation in dollar terms There probably a little part of it I mean there been It definitely part of it
It's definitely part of it.
But even if you inflation adjust, it's still the most successful ever.
It's not six times.
It's maybe two or two or three times.
Still huge.
Yeah.
And still growing at this phenomenal rate, even through what doesn't seem like a very bullish macro environment.
Or a very bullish Bitcoin environment.
Remember, we haven't seen like a 2017 melt up in Bitcoin.
What we've seen is the market has roughly doubled since the Bitcoin ETF launched or gone up 60 percent.
But that's pretty pedestrian returns.
And, you know, a really interesting thing that we've seen is that not much money flew out from the October high to the February low.
Bitcoin retraced 50 percent.
We only had a few billion dollars of outflows.
That didn't surprise me.
But I think that surprised a lot of people that the buyers were such diamond hands in these ETF markets.
So you mentioned we haven't had a 2017 melt up.
I don't know if you think we definitely will have one.
It definitely is not the right word, but it's something that you kind of see in the future.
And I asked that question with gold.
gold went up like 50 60 percent in a short period of time uh which is a 10 trillion dollars though
in terms of actual the asset class which i think speaks still that that bitcoin could go on a crazy
run but yeah times are different we just grind more you know up uh the way we kind of have the
thing people forget about that gold bull run which took place in the in 2025 right particularly
is the second half, is that actually it was at the end of a grind. So the gold bull market started
in 2022, actually, when the US seized Russia's treasury assets after the start of the Russia-Ukraine
war. That caused central bank buying in gold to rise by 150% on reported terms and probably like
300% or 400% on real terms, because a lot of it doesn't get reported, particularly from China.
And gold went up a little bit in 2022.
But then that central bank buying persisted in 23 and gold went up a little bit more.
And in 24, gold went up a little bit more.
And then in 25, it persisted again.
It didn't increase.
It just sat at about 150% above baseline.
It sort of sat.
But it was only in 2025 that we had that melt up.
And that tells you something.
What it tells you is that the gold market had residual supply that was willing to sell to central banks.
And they sold in 22 and they sold in 23 and they sold in 24.
And then in 25, they ran out of gold to sell.
And there was a supply shock where the central banks were still buying, but the sellers were exhausted.
And that's where you get that parabolic move.
I actually think that that will happen in Bitcoin eventually,
because you have this institutional demand that's come in and is buying tens of billions of dollars
of Bitcoin. And so far, people have been willing to sell. And they're still, to some degree,
willing to sell. But I have a view that this institutional bid is going to persist for
five, 10 years. I think it's going to accelerate, actually, as these platforms
get more comfortable around Bitcoin. And so I actually think it's just a matter of time.
I think gold tells the story, which is it's not like demand spiked in 2025. Demand was persistent.
It's actually that supply ran out of gold to sell. And I think that will eventually happen in Bitcoin.
I do think we'll eventually get to melt up. I don't know when that will happen.
But I think if we see this persistent institutional demand, I think the story we saw in gold will repeat itself in Bitcoin, actually.
Hmm. That's interesting. Well, maybe we'll talk about these other two related forces. The post 2024, 2025 Washington policy reset, it was still kind of coming out of it. Do you think the market kind of understands what's happening in Washington right now?
Look, I think it got excited about the initial policy reset. You certainly saw that around the election where we spiked from the 70s to 100K pretty much immediately. And like anything, I think it probably overestimated the short term impact and underestimates the long term impact. Right. So we're following that traditional sort of trough of disillusionment or whatever.
It's really remarkable the degree of change, right?
I don't think people who weren't in crypto really reflect on how bad it was.
So the new people entering Bitcoin don't recognize how bad it was during the Gensler era.
It was hard for even big companies like Bitwise to get bank accounts.
Like, imagine that world.
Imagine having millions of dollars and going to a bank and then telling you, no, we don't want your money.
That was a real lived experience for many crypto firms.
And virtually every crypto firm faced lawsuits or subpoenas from the SEC.
It was just exquisitely toxic.
And now it's extraordinarily accommodative.
The SEC is pro-crypto.
The OCC is pro-crypto.
The CFTC is pro-crypto.
We're getting crypto bills passed.
So my view is that the market did initially recognize the difference, but it doesn't necessarily
understand that Washington takes a long time to change.
And we're going to feel the impact of this regulatory shift, not over five months, but over five years.
But it's really a different environment.
I can't emphasize how toxic it was and how normal it feels now.
I think it's really important.
The other thing I'll say, which is maybe not obvious to people, is that the improved regulatory environment will make crypto safer.
and there'll be fewer blowups of the life of FTX or the ICO scams that set us back so much
in crypto over the years. We're going to have fewer of those because we have an engaged regulator
who is willing to work with high quality actors instead of just pushing everything to unmonitored
offshore environments where craziness happens. And that means not no blowups in crypto. I don't
think that will be the case, but fewer of those types of low ups in the future than we've had in
the past. Did Bitwise really have banking issues? So when Bitwise was first founded, actually,
back in 2017, it was very hard to get a bank account as a as a crypto company. So literally
imagine having the world's best VCs give you millions of dollars and going to banks and then
saying, we don't want your money. That was a lived experience. And then during the Silicon Valley
bank, Silvergate bank, Signature Bank sort of fiasco where the government almost forced
crypto related banks to shut down.
It was very challenging to find banks that were willing to do business with crypto firms.
Obviously, Bitwise and others negotiated it.
But I do worry about I think there are probably a number of smaller crypto companies that
couldn't negotiate that level of banking distrust. I do think regulators deliberately shut down
Silvergate Bank and made signature very difficult. And if you're another bank and you see that
activity, do you really want to put your bank at risk? So yeah, it was a lot of work by the
ops team to make sure there were not just a functioning bank, but a number of backups
in case those functioning banks faced limits during that period.
Yeah, it was mind-blowing.
You know, I just think of banking like a utility, like water, right?
Like, imagine you can't get water to your house.
What do you do?
It's just like a crazy world that we lived in during that period.
You mentioned one of your orange-pilling moments was Kathleen Moriarty, I think,
and sort of how her background, her resume, her experience was very sort of level-setting.
grounding and gave sort of credibility.
And I imagine most people when they interact with you kind of have that
experience as well to have you had the lived experience. Well,
maybe you're at a family event or friends or barbecue and during silver gate or one of these
unfortunate events where someone's like oh talk to matt he's the crazy bitcoin guy or crazy crypto
guy do you kind of have that at all all the time all the time yes yeah and uh you know the old thing
they say um about being that guy in the family that likes crypto is that when the market is down
it's your fault and when the market is up it's whoever listened to you and bought that it's it's
their uh their smart decision um that's just the reality of it uh most of the time i have enough
energy to walk them through and you have to be rational about about the crypto market there's a
lot of risks it's very volatile but i think um the the funny thing is that the critics are usually
more irrational than even the the high flying uh crypto fans and so yes i've had that experience
quite a bit uh although i will say you know when i left etf.com to move into into bitwise
uh i was worried that the response was going to be more negative than it was
um you know toward your end there's a lot of overlap between the etf and crypto community
and i would say that i thought the response would be 70 30 negative and it turned out to be about 70
30 positive. So there's more support for Bitcoin than maybe the mainstream media lets you know.
Yeah. So maybe what about wealth advisors? What approximate percentage of wealth advisors can even
discuss Bitcoin with their clients yet? It's improved a lot. So at this point,
now that Morgan Stanley and Wells Fargo and Merrill Lynch have all greenlit Bitcoin exposure
for their clients. It's the majority, but it's not everyone. There's probably 20%,
25% of the wealth advisory market that is still strictly closed to Bitcoin. But compared to where
it was even a year ago, I would say that less than half of the market was open. And two years ago,
it was like 10% of the market. So it's expanded dramatically. An important thing to recognize,
though, is that that doesn't mean flows happen immediately. You know, that analogy with Kathleen
Moriarty, it's not like I put 10% of my portfolio in Bitcoin after I met with her, right? You started
studying it. I've said this before, but for a while, our average client did eight meetings with
us before they allocated. If you think about the market just opened, let's say six months ago,
and we meet with people quarterly, they're on meeting too, right? So the flows you'll see from
those people are six quarters away. And that's just the process. And it's easy for Bitcoiners
to say you should get it immediately. But we all forget that very few of us, some people did,
but very few of us read our first media report on Bitcoin and then smashed the buy button.
We all wanted to do our work and they're doing their work. They're just busy. So it takes them
a while. Yeah. Like you mentioned, we have the supply side and the distribution side with the
wealth advisors. But just because they're allowed to discuss Bitcoin with their clients doesn't
mean they know how to or what to say. And it doesn't mean their clients are asking. But the
pipes are open. What about how do you guys feel about competing with BlackRock? Is that, you know,
what's sort of your take there? I love it. Yeah, absolutely love it. So is it frustrating that
Bitwise was in the market for six years, and then BlackRock came in and swooped up huge amounts of
assets. Of course it is. But my firm's assets are up, I think, 10 to 15x since BlackRock came into
the market because they widen the pie dramatically, right? So they bring so much credibility to the
space and they have conversations and we have conversations that we get a piece of that and
they get a large piece of that. And they're such a high quality firm that I love competing with
them. I know that they win a lot of time because they have brand, but they really are growing the
high significantly. The other thing that I think about, you know, one risk to Bitcoin is that we see
the pro-crypto regulatory environment in Washington shift to an anti-crypto regulatory environment
in a future administration. I think the fact that BlackRock is in the market and their most
profitable ETF is their Bitcoin ETF reduces the probability of that shift, right? So you want
high quality firms that believe in Bitcoin on your side with weight to sort of make sure that
we don't swing too far in the event of a future election to an anti-crypto moment. And so for that
reason, I also really welcome them. So I love competing with them. I get frustrated sometimes,
but we're growing the pie. And so they're our friends and I'm glad they're in the market.
Well, you guys did put out the best commercial with the most interesting man in the world. That
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It was an amazing experience to watch him.
You know, he's a relatively elderly gentleman
at this point.
And when you meet with them in normal times,
that's what it feels like.
But when the cameras change
and he shoots his cufflinks out,
he becomes the most interesting man in the world He has this magnetic personality It was just an incredible event That was really fun Yeah and what was it like to have the reception to that commercial You know that was great As a startup you have to do something to make your name
and build your brand in the space.
And I think that was an effective way of bringing Bitwise out.
It was also important to us that that wasn't a Bitwise commercial.
First and foremost, it was about Bitcoin, right?
We're part of this community.
So we didn't say what's interesting Bitwise.
It was what's interesting is Bitcoin.
And yeah, it was just great to be able to do that.
But you get to do some fun things in your career.
That was one of the fun things.
And yeah, really, really special moment.
Yeah, that's awesome.
When you're sitting across from, say, an advisor who has institutional clients or a family
office and they have zero Bitcoin in it, what's the conversation and what's the right
starting point you recommend?
end? Yeah, well, there are three ways to get them interested in Bitcoin. And you sort of have to
figure out who you're talking to, because they'll have different views. And maybe I'll walk you
through those three ways. There's one group where you can make just a sort of Jack Bogle argument,
which is to say, look, Bitcoin's a $2 trillion asset. Equities are $110 trillion. That means you
should be about 1.8%, 1.9% Bitcoin if you're neutral. If you're at zero, you're off market.
Look, Schwab is talking about 7% Bitcoin. Fidelity is saying 10%. My personal portfolio is like a third. You don't have to do that. Let's just get to neutral. If you want to be underweight, maybe you're at 1%. And so there's an audience that really believes in diversification. And if you know that that's the type of advisor, that's an angle you can go.
There's another audience that really loves portfolio construction, and they're into sharp ratios and drawdowns and how to improve the risk adjusted returns of your portfolio.
And the amazing thing about Bitcoin is you can walk through studies that show that over any three year period in history, every single three year period in history, every whatever that is, a thousand X days, Bitcoin has improved your risk adjusted returns.
And even a small allocation has done so without increasing your volatility.
And that you can you can have a great sort of science based conversation that says if you strip Bitcoin of all the emotional baggage and just look at it as an asset, you want it in your portfolio.
Not 30 percent. That's for Yahoo's like me. But at handfuls of percent, you can really have a risk.
And then there's the third group where they're very interested in asymmetric returns.
And they're looking for things that can really provide upside to the rest of a portfolio that's relatively conservative.
And there you can walk them through, like, I love to walk them through why I think Bitcoin will get to $1.4 million by 2035.
And there's some very facts-based reasons with some very modest assumptions that get you to those kinds of numbers.
And so if they're an asymmetric return kind of group, then you have to target them.
Sometimes you pick the wrong lane and you think they're an asymmetric group and they're actually this Jack Bogle style investor.
But we sort of have different approaches for each kind of institution.
And usually one of those three things at least opens the aperture to get them to start to consider it.
Oh, wow. It's really interesting to hear the kind of the approach and just sort of helps us on to still our own messages.
What about quantum computing then? I want to hear your take because one, I'm sure maybe people throw it at you in these meetings, but it keeps showing up as the existential threat to Bitcoin headline. Every six months, a new paper or a new IBM milestone. So from the Bitcoin, from the Bitwise lens, is quantum a real risk to Bitcoin, a manageable upgrade problem or just a distraction?
Yeah, it's a manageable upgrade problem. I think of it like any other problem, which is if you focus on it, you can resolve it. If you take the challenging steps, you can resolve it. I don't think Bitcoin should bury its head in the sand. I think quantum is real and will eventually get here. And while it doesn't threaten the core of Bitcoin, it does put things like Satoshi's wallets and other old wallets at risk that could disrupt the market.
We should address those. We should give people a pathway that they can see in the future that will let them escape that quantum risk or at least mitigate its impact.
So, you know, it's like having high cholesterol. If you ignore it, it'll kill you. But if you treat it, you'll probably be fine.
I think this is the same thing with quantum. It definitely comes up in conversations.
And we like to walk people through a few things.
So one, we like to walk through why it doesn't threaten the core of Bitcoin, the consensus mechanism.
It threatens a portion of Bitcoin, because I think the popular conception is that quantum will just destroy Bitcoin writ large.
And that's not the case. It will expose a large number of old wallets and a lot of Bitcoin to theft.
And then we like to show them high quality reports by leading voices in Bitcoin that show that there is a pathway to deal with this.
So SF Presidio, to call it one example, has a great report on this.
And I think people come to understand that once you view the problem, understand the problem, and if the core devs address the problem, then we will get past it.
But it does slow down institutional allocations.
I do want to emphasize that.
There are institutions that would allocate but for quantum risk, and they want to see more action from the community to have a clear roadmap for dealing with it.
I think we've made a lot of progress in the last six months to getting to that roadmap, but we still have some way to go.
And I do think it's weighing on the market.
I always wonder, because you deal with this, like you're almost a professional messenger.
You are a professional messenger.
And so, you know, you kind of have like sort of the tried and true questions and you kind of, you know, about store value and the economy and you can even talk about war.
And I could see how this could be unsettling for any investor of any asset.
That's why I bring it up.
It's not Bitcoin specific.
But I even wonder, like, do maybe people throw you curveballs?
Like, I heard these guys are mean online or crypto people are into Lambos.
You know, these, you know, do you get kind of things like that?
You definitely get things like that.
You get, yeah, you definitely get things like that.
You get concerns about valuation.
You get questions about money laundering.
You get questions about criminal use.
The good things about money laundering and criminal use you can point to statistics and data and points to show how that strongly diminished Those are solvable problems The reputational things Look that just a piece
I mean, that's just a piece of it. I often tell people there'll be a point where Bitcoin is boring.
Like for my kids or grandkids, Bitcoin would be boring. The returns will be very small.
It'll be very volatile. It'll be owned by sovereign wealth funds and it'll be dull.
you can wait to buy it then that's fine but you'll be paying millions of dollars a coin
there's no you know there's no upside without risk and so there are elements of the bitcoin world
that i don't there's elements of the crypto world you go to a crypto conference like 40 percent of
the booths make you uncomfortable right you're like is this really what we're aligned with
But underneath all that, there's this fundamental thing, which is that this is a massively disruptive technology that brings a hugely valuable new service to the world.
The ability to store wealth without relying on any government or a bank and then move it around the world at the speed of light.
And ultimately, that is what wins out.
So, you know, people can make their choice on where they want to be.
I think you just have to be frank about it.
but it's been winning out for the last 15 years.
You think crypto is crazy now, like go back 15 years ago,
10 years ago, it was a lot crazier.
That's part of the upside, I think, on any asset.
Yeah.
Ever sort of pontificate on maybe what the next event
could sort of set things off?
You know, I don't think it's going to necessarily be something
like a sovereign adoption of the United States
coming out and buying a bunch of Bitcoin.
Corporate treasuries and the ETF rails
are buying more than newly minted Bitcoin per day.
Maybe that's steady,
but maybe that's not sort of the Kindle.
I'm talking about future Kindle.
That's sort of maybe unpredictable,
but you would think there's going to be some event
we look back to like with Iran
trying to charge tolls in Bitcoin.
I don't think America is going to let that happen right now,
but I don't know.
Do you think,
what do you think could be a future event
that might just set things off
if we're just having fun and riffing on that kind of thing.
Yeah, I love that.
Yeah, so you have these steady forces,
this rising tide of institutional adoption,
passage of time, demographics,
which I think is a big rising tide
that people overlook, right?
Think about Robbie Michnick at BlackRock.
10 years ago, he was a young guy working in crypto.
Now he's a major force in BlackRock.
I've seen this in the ETF industry, right?
Many of my friends who were early in ETFs in 2002 are now running major asset managers, right?
And so, of course, those asset managers are ETF focused.
The same thing is going to happen in crypto.
So you have these general rising tides.
In terms of spark catalysts, look, I do think on a small term basis, things like the Clarity Act are a spark catalyst that people probably don't estimate sort of cementing the regulatory infrastructure.
I do think international commerce in Bitcoin is something that's not understood by the market.
I think the market is focused on Bitcoin as a store of value.
And there is this real probability in my mind that we'll want an apolitical currency in the near future just because the world is getting so crazy.
And people are going to force that into Bitcoin.
Bitcoin is the only thing that can do that.
And it now kind of has the liquidity to sustain that.
Right.
It maybe didn't a few years ago.
Now it has the regulated liquidities to really fit that role.
So I think that could be a surprise.
I think Iran was a surprise.
But once you open the door, maybe it won't happen next month.
But could it happen in the next two years that you start to see like some oil settle in Bitcoin or some other international payments in Bitcoin?
I think that's a possibility.
And I do think sovereign is something that people have discounted to zero, which is not zero.
I'll make a specific case there.
The Czech Central Bank just came out.
They did a nice study of Bitcoin.
They found that it really would boost their overall portfolio, but they're not yet allocating.
They're doing a test portfolio with a million dollars, and they're going to monitor it for two years.
And the reason is they're not sure that the characteristics of Bitcoin will persist into the future. They've been volatile over the years. Will it have the same correlation and volatility in the future? But they're not close to it. Right. They studied it. They decided to do a test program. They move much slower than anyone else in crypto. They're going to study this test program for two years, but they're going to study the test program for two years.
And in two years time, they very well may add Bitcoin to their sovereign mix.
And so I think it's maybe a slower timeline than people expect.
But I think we could get like a couple more sovereigns in the next two years and then 10 sovereigns in the next four years and then wake up.
And it's basically everyone in six to 10 years.
And I think that that could be a surprise catalyst for people, too.
Yeah, you bring up demographics.
And I think it's such a like you said, such an underestimated part of the equation.
you know, growing up, you maybe, you don't like what's on TV. You don't like the commercials,
the shows. We'll wait till we grow up and look at this. You're making commercials and I got a
channel on YouTube. You know, you could just do things. And as people grow up, one, the boomers
are probably going to hand down a lot of wealth. That's going to get, maybe they'll dwindle some of
it, but whatever gets handed down will be converted probably into Bitcoin and things of, you know,
a different nature than they currently reside in. And then the decision makers grow up and they can
change things too. It's such a big thing that I really think people don't anticipate. If you even
think about a lot of people got into Bitcoin for the first time in 2017, 2018, if those people were
26 and they were working at Citigroup, they were a junior associate and now they're 36 and they're
managing director. And in five more years, there'll be 41 and there'll be a senior executive.
And they've just, they're just Bitcoin native. They've been in this space all the time. It's not
unusual to them. It's just part of the firmament. And I, I really think this is like a giant long
term catalyst that people don as Jamie Dimon not going to be running JP Morgan forever In 15 years that bank will be run by someone who grown up with Bitcoin knows it and loves it it like this is just inevitable right i think it just going to happen and even jamie diamond an
authorized participant that's right he's come around he's coming around money on the picks and
shovels so you know everyone's getting in the game everyone bends the need of bitcoin this has been
so dope if i who there's anyone in the world you could orange pill who would it be oh man i would
have said Jamie Dimon, I think he'd be really valuable. I don't know. That's a great question.
You probably talked about this with Eric Balchunas, but to go back in time,
both Eric and I think that there's actually overlaps between the crypto Bitcoin ethos and
what Vanguard did. And I'm not saying we could convince Jack Bogle, the founder of Vanguard,
to be a Bitcoiner, but I sure would have loved to have that conversation with him.
He seemed open-minded enough over long periods of time to see it.
That's exactly right.
Also, Vanguard is like a DAO, basically.
It's owned by its shareholders.
It's not a traditional company.
It's a really interesting experiment.
Yeah.
So maybe that's going backwards.
Look, I love...
Yeah.
He fell down like a really weird personal rabbit hole that became a worldwide
phenomenon in a lot of ways. Yeah. Yeah. And to go back to the thing we talked about,
people hated index funds. They were like Wall Street Journal op-eds saying they're anti-American.
And yet now they're half the market. This just happens over and over again. But look,
one of my, I get to talk to increasingly interesting people. Who do I want to orange
pill? I want to keep moving up the stack. So I want to talk to a lot of sovereign wealth
funds. I want to talk to a lot of central bankers. I think the world is better on Bitcoin. So the
more people I can I can bring into this space. That's what I want to do. Yeah, Jack Bogle is
really interesting because he's he seems like someone you want to be around. He seemed like he
had high moral qualities or tried to exhibit them in his professional life. Maybe he had his own
battles. But you know, he and I'm not saying he did, but you never know what someone's like,
but he seemed really of high moral character, way he did business with what he wanted for his
customers and as stakeholders. And there are these,
these kinds of people that you just, you want them to get it.
You want to be around them when they get it.
You enjoy them and you think that the kind of person who would get it,
if you could just get through to them.
That that's exactly right. Yeah. I had the good fortune to know,
know Jack a little bit and spend some time with him.
And he really was a high integrity,
high character person and loved engaging in sort of intellectual debates.
So were he still alive, it would, it would be,
it would sure be fun to talk to him again.
I don't know if I'd be able to bring him around,
but I would love to have the conversation.
What's the one question no one's asked you that you think we should?
What's the one question no one's asked me?
You know, I get asked a lot of questions.
People always, I mean, the people ask me, you know, what could go wrong?
I don't know.
That's a good question.
I'll think about that.
Maybe I'll come back and share it.
Look, I think in the end, Bitcoin is this funny thing, which is when you enter it, it
gets really complex and you dig into mining and you study all these things.
And then at some point it gets relatively simple and seems inevitable.
That's sort of the phase I'm at with Bitcoin.
You know, I do wish people thought, asked more.
a question I don't get from people is sort of why Bitcoin will make the world a better place.
I don't get those questions enough. I think people don't think about that enough, but I do think it
would make the world better. So maybe that's the thing I wish people asked. How has it made your
life better maybe or changed you? Well, you know, look, it's given me a lot of confidence and a lot
of hope in part. You know, I do worry a lot about fiat debasement and sort of the long-term trajectory
of that market. And whether it's the radical solution of moving to Bitcoin or whether Bitcoin
acts as a governor on that, that keeps the Fed in check and slows that process down, that makes the
world better from my point of view. The other way it's really improved my life, I just met a lot of
people who really care about this thing for the right reasons. And it's a phenomenal community.
So just from a personal perspective, it's opened the doors to meeting some people I wouldn't
otherwise have done that I've really, really enjoyed. Well, I look forward to meeting in
person. I'll leave it to you for any parting words and let people know where they could follow Bitwise.
Read the investment pieces you guys are putting out. Yeah, absolutely. So Bitwise Investments,
I'll call out, I write a weekly memo called the CIO memo. What I like about the memo is that it's
short. It's only like a thousand words, usually 800 if I can. And if you sign up for the memo,
we won't send you other sales material we'll just send you that so that's a that's a fun thing the
other thing you can follow me on x matt underscore hogan h-o-u-g-a-n what i try to do on x is share
some of the things that i get to do that other people don't get to do so as an example i recently
posted about a webinar we did where we surveyed advisors on their attitudes toward crypto and if
they're going to buy uh no one else can see the results but me but i try to share that to people
So maybe it's worth looking for me on X.
Sounds great.
This has been so dope.
Thank you so much, Matt.
I really appreciate it.
I've really had fun.
Thank you.
Hey, hey, and that's a wrap on this one.
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