Bitwise CIO Predicts Wall Street's Move Onchain Will Fuel Next Crypto Bull Market

Matt Hougan, Chief Investment Officer at Bitwise, contends that the impending bull market in cryptocurrency will substantially differ from previous phases. He argues it will arise from the convergence of traditional finance and onchain finance, emphasizing stablecoins, tokenization, and institutional decentralized finance (DeFi) as core components, rather than the speculative nature that characterized past rallies.

In his recent memo, Hougan delineates two main avenues for growth in the crypto landscape. The first is termed the "Hyperliquid Lane," focusing on crypto-native protocols that generate significant revenue. A salient example is Hyperliquid, which achieved over $1 billion in cumulative revenue by June and is projected to deliver around $800 million in the current year. Notably, 99% of that revenue is utilized to repurchase HYPE tokens from the market, addressing a prevalent issue in the sector where applications amass fees without creating demand for their tokens.

The second avenue, the "Robinhood Lane," pertains to established traditional finance (TradFi) entities that are now building actual financial services using blockchain technology. The Robinhood Chain, which went live on July 1, has reportedly processed more than $3 billion in volume since its launch. This emerging path contrasts with previous crypto cycles that were driven largely by speculative interest.

Hougan highlights the substantial role of traditional financial institutions entering the crypto market. He points to notable moves like Citadel partnering with Crypto.com and Morgan Stanley's entry into E*TRADE as part of this trend. These developments could lead to a more stable and substantial bull market, as the focus shifts towards sustainable revenue generation and the actual utility of crypto assets.

In this evolving landscape, Hougan intends to challenge the prevailing notion that crypto prices must be driven solely by speculative demand. Instead, he posits that financial activity backed by real revenue will propel the next wave of growth, potentially resulting in a bull market that, while slower and less volatile, may be more resilient and far-reaching.

As financial institutions navigate this transition, watchers of the market should consider how these developments in traditional finance will impact the crypto ecosystem. The preparations by both traditional and crypto entities suggest a significant transformation ahead, as new regulations and technological advancements shape the industry.