Why Bitwise's CIO Says the Blue Wave Won't Derail Crypto's Bull Market

Matt Hougan says crypto still moves in cycles and that the market bottomed in June. He points to its resilience despite the reported $6.3 billion Binance hack, a Democratic “blue wave,” high inflation in France, and rising expectations for Federal Reserve rate hikes. In his definition of an early bull market, “bad news stops mattering,” and he thinks crypto is approaching that stage. Hougan expects a multi-year bull market led by Bitcoin, stablecoins, and tokenization, although he warns that uncertainty over the Democrats’ crypto agenda could make the next few weeks difficult.

Asked whether an AI bubble could burst and damage crypto, Hougan says he does not know which AI scenario will unfold, but believes three plausible outcomes all favor Bitcoin. In an AI utopia with abundant wealth, scarce assets such as Bitcoin and coastal real estate would rise. If policymakers shut down AI expansion and a recession followed, he expects Congress to respond with stimulus that would also help Bitcoin. In a muddling-through scenario, institutional adoption remains Bitcoin’s main support. Only a sharp recession with no government response would seriously threaten the June lows.

Hougan sees the intersection of crypto and AI as an experimental phase filled with both promising projects and “overhyped junk,” rather than a mainstream growth market. He identifies Near as Bitwise’s favored public example because its blockchain has an independent business case, while its AI and agentic-finance ambitions function like a potentially valuable free option. He also praises Venice for showing real user demand and product-market fit. Projects such as Pearl and proof-of-useful-work experiments may interest Bitwise researchers, but Hougan says institutions should approach this area cautiously and expect the strongest projects to emerge over several years.

Hougan says the impact of the Democratic takeover of Congress depends on its approach. Investigations into World Liberty Financial, Trump Coin, and broader ethics issues could be welcomed by crypto because many participants view those activities as harmful to the industry. A combative agenda targeting crypto executives, limiting SEC rulemaking, or strengthening enforcement would be marginally negative, especially for DeFi. Still, Hougan believes crypto already has what it needs from the GENIUS Act, a favorable SEC and CFTC posture, and clearer token revenue models. He expects adoption to make crypto too large to put back in the box within two years.

Hougan rejects the idea that Bitcoin’s decline from its high disproves the debasement thesis because debasement should be measured in years rather than weeks. He says gold and Bitcoin have both performed well over the last several years even though each experienced a momentum-driven top and reset. Global sovereign yields and debt burdens are rising, while the United States continues running roughly $2 trillion annual deficits during economic growth. Hougan expects political pressure for more spending and less tax revenue to keep the trade alive, with debasement likely returning to full force around 2027.

Hougan says institutional investors have not generally treated the year’s hacks as an existential threat because they use ETFs or institutional custodians with cold-storage systems, rather than offshore exchanges or older crypto-asset setups. He cites historical price data showing that after Bitcoin’s ten largest hacks, its 30-day performance was positive five times and negative five times. He also describes the changing institutional audience: interest has moved from family offices and independent wealth managers to Wells Fargo, JPMorgan, Morgan Stanley, pensions, consultants, and sovereign wealth funds. Bitwise’s “rule of eight” says clients often allocate only after roughly eight meetings.

Hougan characterizes quantum computing and AI-related cryptographic threats as migration risks rather than immediate network meltdowns, giving the broader crypto market time to adopt stronger security. He sees one exceptional Bitcoin problem: coins from Satoshi and other pre-2015 addresses whose public keys may eventually be vulnerable. He expects a difficult community debate over how to handle those coins and says Bitwise monitors developer forums for signs of it. The issue keeps him awake and could create a future market ripple, but he does not believe it changes Bitcoin’s long-term thesis or represents a current “nine-alarm fire.”

Hougan says public-company committees are opting out of tokenized trading because their job is to identify risks, while pioneers absorb the uncertainty and the early companies see little immediate upside. He does not expect tokenized stocks to replace conventional brokerage accounts first. Instead, adoption should begin with international users who cannot easily access U.S. equities, traders who want 24/7/365 markets, and hedge funds that need weekend trading. He believes stocks will eventually trade continuously and settle on public blockchains, but the change will spread from the edges toward mainstream investors such as his father.

Hougan praises Avalanche after the NYSE selected it as the ledger for a planned 24/7 tokenized-stock venue, saying regulatory clarity is directionally sufficient and the remaining requirement is time for pioneers to prove the model. He expects the deal to support AVAX by keeping it among the assets with visible business momentum. He also views ICE’s three on-chain efforts—with Avalanche, OKX’s X Layer, and Trade.xyz/Hyperliquid—as sensible multiple shots on goal by a technology-forward financial company. ICE’s strategy suggests it expects tokenization, crypto, and stablecoins to be part of finance’s future.

Hougan compares Hyperliquid with Amazon because both began with a focused product and expanded into a highly efficient platform offering many services. Hyperliquid started with crypto perpetuals and is adding real-world assets, commodities, prediction markets, and an open-source environment for other developers. Hougan says the company is layering multiple growth opportunities onto the same platform and has ambitions to become one of the world’s largest financial entities as it enters the U.S. market. Laura Shin worries that restrictive U.S. rules could create a separate American financial internet, but Hougan expects automated compliance and identity tools eventually to support a global, privacy-conscious system.

Hougan says Bitwise expects Bitcoin to be the best-performing major asset of the next decade and reach $1.6 million by 2036, above JPMorgan’s forecast. His calculation starts with a roughly $30 trillion store-of-value market made up mainly of Bitcoin and gold, which has grown about 13% annually over two decades. If it reaches $90 trillion in ten years and Bitcoin captures 25%, Bitcoin would be worth about $1.6 million; its current share is roughly 5%. He cites wealth-platform adoption, ETF resilience, central-bank interest, regulatory progress, and JPMorgan’s own capital-markets report as reasons its share should rise.

Hougan says digital-asset treasury companies may recover if another momentum-driven Bitcoin boom returns, but his base case is that many must evolve beyond merely holding crypto. For an investor seeking debasement protection, he would own both Bitcoin and Zcash: Bitcoin should attract institutional capital first and offer steadier, lower-risk-adjusted exposure, while Zcash is smaller, more volatile, and could benefit as Bitcoin’s institutionalization creates demand for privacy. He calls privacy an important cycle theme and says buybacks clearly improve token alignment, whereas historical data suggests inflation cuts have generally been negative for performance.