Bitwise CIO: The ‘Fascinating Dichotomy’ of Crypto Presents New Opportunities

The contrast between institutional appetite and retail sentiment in crypto presents a massive opportunity, according to Matt Hougan, Chief Investment Officer at Bitwise.

In a note to clients on February 12, Hougan highlighted what he called a “fascinating dichotomy” in crypto markets. This refers to the bullish demand from institutional investors versus the bearish perception among retail investors.

Hougan pointed out that bullish catalysts for digital assets are abundant, largely driven by the growth of exchange-traded funds (ETFs) focused on crypto. He noted that billions of dollars have been allocated to Bitcoin and Ethereum-focused products, with more crypto ETFs likely to be considered by the U.S. Securities and Exchange Commission in the near future.

Additionally, Hougan emphasized the shift in Washington’s stance on crypto with Donald Trump’s return to the White House. Once a significant adversary to blockchain technology, Capitol Hill has increasingly embraced digital assets since the early days of Trump’s administration. Lawmakers have proposed stablecoin bills, and key committees in both the House and Senate have formed joint working groups to refine crypto regulations.

Hougan also believes that sovereign adoption of cryptocurrencies will eventually influence market prices, despite current skepticism from retail investors. While Bitwise’s proprietary on-chain sentiment chart shows a decline in retail expectations, Hougan stated that the outlook for the broader altcoin market is “stronger than at any point in history.”

Retail investors have largely been disillusioned by major drawdowns in the market, while Bitcoin has reached new highs. Hougan observed that the altcoin market lacks the same spark seen in previous cycles, like the 2017 initial coin offering (ICO) boom or the 2021 decentralized finance (DeFi) surge.

While meme coins have temporarily provided momentum for ecosystems like Solana, Hougan predicted that forthcoming U.S. crypto regulations will shift attention back to altcoin fundamentals, drive mass DeFi adoption, and boost institutional demand for blockchain technology.

“I smell opportunity,” Hougan said. “In a year or two, my guess is that you’re not going to have to squint to see the transformation in altcoins. The impact will be self-evident and overwhelming.” He anticipates a significant repricing of digital assets in 2025 or 2026.