E156: Matt Hougan, CIO of Bitwise: How To Get Rich in Crypto (without Gambling)

26:37And Ethereum, you said, is kind of like the gold for Bitcoin, right? So fair enough. But the other ones that I've probably some merit to, why specifically Solana for you? Yeah, so for what it's worth, I'm bullish on the set of them. And the way that I personally invest is to own all of them. What do I specifically like about the Solana setup? I think ease of use is a killer app that's underrated by investors. Investors like to talk about throughput and they like to talk, I mean - TPS. TPS. This is the kind of word that I actually hate on this podcast. Of course. Every time I'm here, what is this?

27:13Explain to your mom, transaction per second. Who cares about this? No one cares. And even something like centralization, which is really important, that is an important philosophical difference. It has long-term meaning in the world, but for an end user who's trading, who's on-ramping, ease of use is the killer app And Solana is just easy to use, just dead easy to use. The more centralized element versus the diversified L2 infrastructure or even subchains makes it just very easy to use. And I think the market overlooks that. So one of the reasons I'm so bullish on it is I think the market isn't looking at one of its killer features, which I think will cause it to win an increasing share of the market.

27:52And I also think it's been sort of labeled with this mean coin only overhang because it was the center of that activity. and the history of technology suggests that even if like sort of jokes and fun things happen first on a network platform, that doesn't mean it doesn't develop into something very serious as well. So I think there may be a behavioral dismissal of Solana by some in the sort of traditional community that causes them to overlook it. And anytime you have those behavioral mistakes and I'm seeing two in Sol, the meme coin thing and then ignoring ease of use, that's sort of alpha in the market in my view.

28:30Absolutely. Institutional investors love ETFs and they love revenue. Solana has the most revenue of any blockchain. Therefore, institutional investors love Solana ETFs. 100%. They love the Solana story, right? You go to an institutional investor and you talk about Bitcoin and they're like, I can't touch it. I can't feel it. I don't know what digital gold is. What is this thing? You go to them and you talk to them about stable coins and tokenization and that's in their wheelhouse. And then you say you have this relatively small blockchain that generates the most revenue in the crypto market that plans to be, you know, internet capital markets where all stocks, bonds, etc.

29:10trade. And that is actually the leading place for stock tokenization right now. It's a really easy story, right? That's something they can get their heads around. It doesn't cross over into the crypto native divide. It sticks in the traditional realm. revenues, dollars, stocks, bonds, Solana. That's an easy message. And then we get back to the size of the asset. You know, you put a little bit of inflows into an ETF package and they're chasing a relatively small supply of Solana. It just makes it, it's one of the best setups for an asset that I've ever seen because you have this small constrained size, you have significant institutional demand.

29:51You have stablecoins and tokenization, which are these really exciting stories. You put all that together and it seems like a winner. You're saying Solana or Sol has one of the best setup you've ever seen. In my experience in crypto, the combination of narratives that all point to Solana is extraordinarily strong. And I think that's why our Solana ETF has pulled in a lot of assets despite the market being down. I think it's the most successful ETF launch this year. I just think institutions are going to want to get exposure to this. We talked about Bitcoin kind of prices for the future. So let's try with Sol.

30:34Obviously, it's very difficult. What's the potential upside for an asset like Sol in 2026 and in the next five years? Or even 10 years? I would say five years because 10 years is probably too long to talk for an asset like that. Yeah. I mean, look, in 10 years, I think it could be a trillion dollar asset. But in five years, I think it could be a trillion dollar asset. I think that's relatively easy to imagine with potential upside above there. It's hard to give a precise target because it depends on the pace of growth on stable coins and tokenization. It depends on whether Congress passes the Clarity Act.

31:07It depends on sort of crypto market cycles. But I think if you're looking after a few years, I think it could be a trillion dollar asset. That's a 10x from here. thank you to our friends at paradex for supporting this show paradex is the leading perpetual decentralized exchange with zero fees deep liquidity and privacy season two runs through the end of january so you do not want to miss this one trade on paradex and start earning points by using the link in the description down below at when shift happens we're huge believers in freedom and privacy is at the core of it. That is why we partnered with Zashi Wallet, the easiest self-custody wallet for private transactions.

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32:32How do you express your bullishness on Bitcoin and Solana as a percentage of your portfolio? Yeah, so the vast majority of my portfolio is indexed, actually based on market cap. So I own more ETH than Solana. But to get back to the idea of how I run my personal portfolio, it's this core that is indexed. And then there's a satellite that's overweight. Right now, that satellite is overweight Bitcoin and it's overweight Solana. So net-net, I have more Solana than you would in a market cap weighted portfolio. but I still own a lot of ETH, and I'm still bullish on ETH. Boring, to use your words. No, no, but...

33:18It's like... How do you apply that to your gold versus Bitcoin holdings? Yeah. Does it follow the same logic or not, because it's an asset kind of outside, and you really believe more in Bitcoin? Yeah, I really believe more in Bitcoin. Yeah, yeah. Gold is... I mean, gold is too boring even for me.

33:37I also think it looks good on the table. It does look good on the table. I should add this thing. Maybe the one difference there, which I do think is a fundamental difference, is I think Bitcoin is fundamentally better than gold. I think it's actually just a better, unequivocally better asset than gold. And so I ultimately think it will eat the majority of that market. That's my actual long-term opinion. But you don't believe the same for Solana or Sol and ETH, right? Fundamentally better. It's like less. It's better probably now with the setup, but you don't know you're not sure enough it's better sized for its size right now but in terms of who will win the market i think it's just too early for anyone to know you talk to an eth maxi it's guaranteed to be eth you talk to a solana maxi it's guaranteed to be solana um i think it's probably there'll be multiple uh l1s that are significant and i'm i'm not smart enough to figure out who the long-term winner is but looking at the market solana is too small for how great a position it's in.

34:33Multiple L1s might be winners you mentioned. So let's put our magical hat and guess the future if we can do so. Sure. What blockchain asset has a chance to be the next Bitcoin or Solana in your mind? Assets that with some of the best risk adjusted return. Yeah. I actually think, So if I'm thinking of my Mount Rushmore of crypto assets, like what, it's Bitcoin, ETH, Solana, and I think Chainlink may be the fourth asset on that mix. If you're bullish on stablecoin and tokenization, then you're bullish on the intersection of crypto and real world assets, and maybe just crypto and the real world. And if you're bullish on that intersection, the connecting lever there are oracles of which Chainlink is the leader.

35:24So if you're thinking of like, what are the four most important crypto assets in the world? I think you could make a case that they're Bitcoin, Ethereum, Solana and Chainlink. I had the Sergey Nazarov a couple of months ago. He's great. On the podcast. Yeah, he's a machine. He's a legend. He is a legend. And they're continuing to win and press their market cap advantage, uh, market share advantage. I think they're doing a great job. They have this amazing long-term view and they're basically at the forefront of bringing all these institutions in crypto because he's very down to earth and he realizes because you might think some people call him satoshi right some people think he's satoshi so if some people think he's satoshi might think oh he has this very kind of a traditional cypherpunk views on crypto right but absolutely not he's saying hey

36:20if you ask a true bitcoiner what they prefer the most bitcoin to stay kind of cypherpunk and decentralized and all that stuff or bitcoin price to go up they'll tell you that they prefer bitcoin price to go up how do we get bitcoin price to go up we need more money and flows where is where where is the flow coming from institution that's why we're retaining is pushing like crazy on institutional adoption, basically. It's very simple and very practical and down to earth. Very right. Yeah, he's right about that. Yeah, you can't imagine Bitcoin succeeding to its full extent with none of the institutional money owning it.

36:58There's just, that's an impossibility. The best marketing is price go up. There you go. Absolutely. Absolutely. But yeah, I can't wait for there to be a Chainlink ETF and to be able to talk to institutions about that. I think it's really going to resonate with them. Last time you came on this podcast, asked you what crypto you'd be comfortable to hold for next five years. You said Bitcoin, Bitcoin, and Bitcoin. Has this evolved? Well, if I only get to hold one, if that's the box you're putting me in, then Bitcoin, Bitcoin, Bitcoin. The reason for that is that I have every confidence that Bitcoin will win the digital gold store of value monetary asset space.

37:37I think that game is over and Bitcoin has won it and will just extend its lead. if you get into these other areas like eth versus soul uh versus versus avalanche versus whoever else you might want to name i just have left confidence on who will be the winner so if i had to pick one i might pick the wrong one if you let me pick multiple of those i might be happy to do it but since i since the question is just one asset bitcoin's the one where it's not going to face competition for the market it's going after these other markets even chain link in the oracle space. Those markets are newer and more competitive.

38:12There's more competitive threat. And so the way to invest in markets where there's more competition is, in my view, not to try to pick the winner, but to buy the whole bunch. So that's what I would do in that space. So if it's only one asset, it's Bitcoin, Bitcoin, Bitcoin. We still care about Ethereum. I love Ethereum. What's the deal with Ethereum? Look, Ethereum is the leading play on stable coins and tokenization, which are huge markets. the community had gone somewhat astray and was in like depths of despair earlier this year with a super long technical roadmap and like accusations of being ivory tower and now they're much more tasked on the market i think they're shipping better i think the community is focused on investors i think it's their market to lose on stable coins and tokenization so i'm very bullish on eth and own a lot of it it's the second largest position obviously our largest uh our crypto index fund.

39:08Very, very bullish. So I can be very bullish on Ethereum and still be bullish on Solana. I think that's allowed. There are a few things that you think that the market is underestimating for 2026. Let's take them one by one. The market is underestimating the likelihood that sovereigns buy Bitcoin in size in the next few years. Why does this matter? Well, because they have a lot of money um look the the the market price should reflect all the information that the market understands so the point of these things is what does the market miss and i think it's assigning a zero percent chance for instance that the u.s buys bitcoin not that it seizes bitcoin but that it buys bitcoin and i just think the chance is higher than zero maybe it's 10 maybe it's 20 maybe it's 25 um but it's higher than zero and if that happens i think the price goes to half a million or more almost instantly.

40:04So I'd add Bitwise does consultations with central banks. Those markets are happening. They just happen very slowly. And because they happen slowly, I think crypto overlooks them and assumes that they're not happening. It's happening just at the pace that central banks move, which is a turtle-like pace. But I do think they will get there. I don't think it's reflected in the market. And I think when those announcements come, I think the impact on price is going to be big. Mm-hmm. What do you mean by sovereigns exactly? I mean, central banks. Central banks. So sovereign wealth funds are already buying, right?

40:39Abu Dhabi, Luxembourg is buying. There are others who are looking at it. So I actually mean, I mean, Bitcoin held as a strategic asset by a country, maybe even on a central bank verse. Which is what they do with gold today, right? They do it with gold. Yeah. The market is underestimating the speed at which tokenization and stable coins will grow. Yeah. Where does this matter? Well, it matters for the same reason. The market is particularly on tokenization. I think skeptical of the degree to which Wall Street is turning towards tokenization as the future. I mean, you do have the chair of the SEC saying the entire market will move on blockchain-based rails.

41:24And you have the CEO of the largest asset manager saying every asset will be tokenized. and yet people still talk more about stable coins than they do about tokenization. Tokenization is a bigger market. There's$100 trillion of equities. There's more of that of bonds. There's even more of that in real estate. Those are enormous markets. And the New York Stock Exchange, NASDAQ, CBOE, BlackRock, Goldman Sachs, JP Morgan, they're all focused on this space. I just think it will happen faster than people think. I, as mentioned, come from the ETF industry, people were hugely skeptical of that as an evolution in financial markets.

42:01And I see the same sort of like grassroots level adoption there that I'm seeing in tokenization. So I think people are underestimating the uptick.

42:13Quick one. I want to thank our partners who help us make this show possible. Thank you, Trezor. My favorite cold wallet to store my crypto and make sure I sleep well at night. If you want to order a treasure wallet and sleep well at night too, you can use my promo code WSH10 to get a 10 % discount. Thank you to our friends at SWE for supporting this show. SWE is a scalable layer one blockchain that's fast, secure, and affordable, built by previous Facebook developers, and that delivers the benefits of Web3 with the ease of Web2. Big thank you to Bitwise Asset Management for backing today's conversation.

42:46Bitwise is a crypto specialist asset manager with more than$15 billion in client assets across 30 plus crypto solutions, including ETFs, index funds, alpha strategies, staking, and more. However you like to invest in crypto, Bitwise has something for you. The basement is like the dark matter of finance. You can't quite touch it, but it affects everything. Once you see it, all the strange stuff we struggle to explain, like sky-high price-to-earning ratios. Soaring real estate prices, the struggling middle class, the massive gap between GDP growth and the growth of household wealth instantly make sense.

43:28Yeah. In Spain. Well, we do see all these things in the world. We see an economy where stocks are at all-time highs and real estate prices are through the roof. And middle class people who don't own assets or anyone who doesn't own assets is really suffering. uh we see your matcha latte costing ten dollars and probably be 20 tomorrow um and you struggle to explain how all these things like how do they all knit together like why is it that uh you could buy a home for uh two hundred thousand dollars and now it costs two million dollars like that just doesn't the thing that connects all those things is just we've dramatically increased the monetary supply.

44:13And when you dramatically increase the monetary supply, the price of everything goes up. It goes up more for assets, which harms the middle and lower classes. And I think it's the root of all of those evils. There are reasons we did it, and some of those reasons are good. And there are even cases to be made for some flexibility in fiat currencies to cope with economic downturns. But what we've seen is just an abuse of that. And you know that because right now we're in a growing economy and running a two and a half trillion dollar deficit that's absurd uh and so i do think once you recognize debasement all that why do we have sky high real estate prices because we've destroyed money uh why is it so hard for middle-class people to build a life because we've destroyed the value of money and we don't notice it because it's been relatively slow but uh if you stand back and you buy a ten dollar latte suddenly you start to think about it it's slow but it's been fast enough at least a couple of couple of years for people to realize there's a problem here.

45:14It's pretty crazy. The dollar's lost something like 75 % of its value in my lifetime, maybe more. 80%. It's a lot, right? I mean, that's a lot. I'm not that old, you know? And it's just going to continue to do that. That pace is accelerating. And I think when people recognize that, the natural response is to deal with it for themselves because the government it's not going to deal with that. And that means owning some Bitcoin. Do you have a number of dollar devaluation for the last five years? It's like 30%. 30%. Yeah, it is, you know, exponential change. You don't notice it at first. Ticks along very slowly and then you get that.

45:57We're in that phase and it's going to get worse, right? Interest is now, what is it? The second or the third largest item in our federal budget in the US. At some point, you just can't get out of it. and I do think it knits everything together and once you see it, you can't unsee it. So now we understand what debasement is and this trend, the dark matter of finance. You're saying the market is underestimating the fact that the debasement trade will be significantly more popular, not less in 2026. Yeah, people always assume these new trades pop up and they're like a one-year trade. I remember when ChatGPT came out and there was a big AI bubble and people thought, oh, that was it.

46:45And the scale of that bubble from what was that, 2022, 2023? It looks tiny compared to where we are today. That trade ran for years. The debasement trade is going to run for years. It may run for five years. It just got labeled. I think the first Wall Street reports on the quote-unquote debasement trade came out this year. I think you're going to see twice as many reports next year. and then four times as many reports. And then it's going to be the dominant trade maybe in 2027, 2028. Like that's the peak cycle. Which means gold, Bitcoin. Which means flows. And all these, yeah, and all these derived assets, right?

47:24Flows and more money in there. Flows and more money. The problem is we can't think in, we think linearly, right? We can't think in experiential terms. You can't. Human beings. That's exactly right. And in this case, you can't imagine where it's every portfolio's central focus is something like the debasement trade. Just like you couldn't have imagined that every investor would be talking about AI five years ago. It was like an impossibility. Maybe it was a small theme. The debasement trade is going to be front and center, I think, in everyone's mind in two or three years. We're just getting started.

47:59So tell me, how do I get rich with crypto in 2026? Oh, you can't. I mean, slowly. Slowly is the answer. What are all, look, the best quote unquote traders in crypto bought it when it was$100 and still own it today on Bitcoin. And the best way to get wealthy in crypto is to buy and hold. Just buy and hold and wait. Ask yourself, like, what do you have the most conviction in, in crypto? For me, the most conviction I have is that 10 years from now, it's going to be a bigger deal than it is today. And if that's true, you just want to invest for the next 10 years. I always find it funny, people who want a short-term trade, but they're always surprised when the market moves away they didn't expect.

48:48I'm surprised whether the market moves up or down or sideways tomorrow. I have no way to predict that. But I think I feel pretty good about predicting that, let's say, Bitcoin will be a bigger deal in 2035 than it is in 2025, or stable coins and tokenization will be a bigger deal in 2030 than they are today i feel really good about those bets so if that's the bet you want to make just buy hold and wait i think last time you said there's not much alpha anymore in short-term trading but the real alpha can still be found in like long-term trends yeah i think for normal people like us that are not ai robots Yeah, I always try when I'm tempted to short-term trade, I try to imagine a hedge fund manager with a team of smart assets who makes$25 million a year and has infinite access to technology and knows everyone in the space.

49:40And then I ask myself, am I better positioned to out-trade that person or are they better positioned to out-trade me? and the answer is always I'm not going up against that person but for 10 years look I think all of the alpha that I see in the market is people underestimating the long-term impact of technology that's been like the story of the last 30 years and I think that's true here I think there's many of them in this market that's the most surprising the other day I was at an event with some guys that I'm not going to mention that work for a pretty big project in the space and they're literally saying it's all a rug Bitcoin is going to get rug blah blah blah maybe you're going to pump it to one million dollars but then it's going to get rug and I'm like okay there's always a possibility right let's be humble but I'm like why are you in this space yeah it doesn't matter you can make your money short term and I'm like and it reminds me in 2019 when I started to invest in Bitcoin and crypto I was actually in Geneva for a year to build a data business.

50:46And I was like, okay, Geneva was supposed to be at that time, this kind of city that was like embracing blockchain and crypto, but it was just a marketing for all these cities, like all doing that, right? Countries and cities back then. You couldn't even open a bank account if you were a crypto business, but they were saying yes. Anyway, I was going to talk to the three or four guys in Geneva who were building blockchain-based businesses, right? And there was these guys building this tokenization platform. Right. So you could tokenize anything. Okay, cool. So I talked to the guy, brilliant guy, ex-McKinsey, or I think it was ex-McKinsey.

51:20And the logical question I asked him, I was a mega believer in crypto and the assets, right? I'm like, you're building this tokenization platform. Do you own Bitcoin? Do you own ETH? How much invest? I mean, you should be crazily invested in these things if you build a business on that. Zero. Zero. I was like, what the fuck? 2019, maybe you need more conviction, but still, I was like, this makes no sense to me. And I was starting to think, oh, another dude who was like big on LinkedIn, Swiss dude was the Asia Pacific leader of a big crypto business. And he was doing all this, you know, this LinkedIn thing, which is like, you show off, you do all these events, you have the best job description, all that stuff.

52:08And people think you're a crypto expert. Again, 2019, 2020.

52:15And I just had a call once with him. I was like, let's have a call. I'm like, how much are you invested in all this stuff? Well, not much. I'm like, this Bitcoin got to 100K. It was 2019, 2020. I was like, bro, are you crazy? And I'm like, what? Like, so basically you have like all these kind of key figures. It's kind of like this blockchain expert from PWC, right? Yeah. Or it's all bullshit. Then you start to realize, even in the industry, okay, this is BWC, whatever, fine. They might not really believe in, they might just optimize for drop title and next position, whatever. But even in our industry now, with some pretty important projects that we all love, the guys who run that, they're like, Bitcoin is going to work.

53:02And I'm like, actually, when I hear that, you should buy real estate and gold. Bitcoin is going to work. And when I hear that, I'm like, either I'm really stupid, either the opportunity is so big because people who are in this industry don't even believe in it. It's insane. It's insane. It's insane. I agree. So that's the long-term alpha you talked about, right? It's like, hey, when I hear that, I'm like, actually, this is still early. Yeah, yeah. That's what you want. You want that. You want that. Yeah, that is your opportunity in a nutshell. I think it's right. Well, also, I'd say, you know, think back to the, think about the people in 2019 who were doing that versus the people who were buying and holding crypto because they believed in it and who is who's wealthier today right well well long term well that and that uh latest dude i'm talking about i know the first one i'm talking about actually was saying yeah i bought my first bitcoin 2011 or whatever but i sold it after 2x whatever but yeah but i'm not a multi-millionaire he said something like that and i'm like Wait, wait, wait, wait, wait, wait.

54:02So you've been in crypto supposedly since 2011, but you still haven't made crazy money. But you're telling me Bitcoin is gonna rug and you work in crypto today. Like something makes no sense here. I'm like, ah, okay, I think it's probably not safe, but probably more safe to hold Bitcoin and believe it in the long term than listening to these dudes who don't believe in it. And he's in supposedly since 14 years in this industry and haven't made crazy money because the returns were crazy, right? They were crazy. Yeah, you didn't need to put anything in to be. Yeah. I mean, a funny thing that's happened to Bitcoin over the years is if you go back to like 2011, it was the Bitcoiners who were saying, this is different.

54:42This is new. Like this time it's different. We've created this new form of money. Now, to be long Bitcoin, all you have to say is like, look, what's been happening for the next 15 years will continue to happen. Yeah. It's actually the people who are skeptical of Bitcoin at this point who are saying, you know, this time it's different. This time, unlike FTX or unlike Mt. Gox or unlike every other hurdle that Bitcoin jumped over, this time it's actually going to rug. And it's beautiful that Bitcoiners, right, go back to that$6 million thesis. All you have to do to believe that in Bitcoin is that what's been happening for the last 15 years will continue to happen.

55:18If that just happens, that's where Bitcoin ends up. What's the one thing that people should remember on today's conversation? Yeah, they should, you know, be boring. Be boring and wealthy, maybe. Be boring and? And wealthy. Sounds easier said than done. Yeah, well, but - Be boring and therefore you're more likely to become wealthy. I think that's it. Again, I'd focus on that. What is the thing you really have conviction in? Is it where Bitcoin is going to be next week? I have very low conviction on where Bitcoin is going to be next week. Or is it where Bitcoin will be in 10 years? If your highest conviction is where it will be in 10 years, not in 10 days, then invest like that.

56:00Don't get sucked into these up and downs. If the same is true on something like Ethereum or Solana, if your conviction is stable coins and tokenization will be a big deal in 10 years, will they be a big deal next week? 10 days from now? I don't know. Invest in what you have the highest conviction is. For me, it's the very long term of this asset class and this technology is up and to the right. Bumps along the road, but up and to the right. And so that's how I would invest. Thank you so much, Matt, for doing this. Yeah. Hopefully people liked it as much, if not more than last time. I think this one was better than last time.

56:35I agree. Let's see if YouTube and people like it more too. We'll do a nice packaging to make sure we get the views. And thank you for being an early supporter of When Shift Happens. You do amazing stuff here. We love it. In our mission to make crypto look more credible and more boring. Thank you. Thanks for having me. As you probably know by now, I host some of the biggest names in Bitcoin and crypto on my podcast. But a lot of the best stuff never makes it on air. The Shift newsletter is where I share that raw behind the scene alpha. The insights, stories, and lessons straight from my guests that you won't hear anywhere else.

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