Bitwise Names Three Investor Mistakes When Evaluating the Crypto Market

• Bitwise CIO Matt Hougan believes investors are underestimating the market for crypto applications due to the tokenization of traditional assets.
• He says crypto-native companies can maintain an edge over traditional financial players in the crypto space.
• Hougan also expects a significant increase in transaction volume thanks to 24/7 asset trading and the use of AI agents.

Bitwise CIO Matt Hougan outlined three common mistakes he believes investors make when assessing the crypto market. He argues the core issue is the gap between how the industry is perceived today and how it could evolve.

Crypto Applications Are Not Only About Cryptocurrencies

According to Hougan, investors often evaluate apps like Uniswap, Hyperliquid, and Aave solely through the size of the crypto market. It is currently estimated at around $2 trillion.

However, the spread of tokenization could significantly expand the market available to such apps. Hougan noted that the total value of equities is about $150 trillion, and bonds — about $350 trillion. If these assets are tokenized, decentralized apps will be able to work not only with cryptocurrencies, but also with traditional financial instruments.

“People see them as purely crypto applications — just like they once thought Amazon was simply a bookstore,” Hougan noted.

In his estimate, the potential market for such platforms could be roughly 100 times larger than the crypto market itself.

Crypto Companies Keep an Edge Over Traditional Players

Hougan called the second mistake underestimating crypto-native companies as major financial institutions enter the sector. He cited the stablecoin market as an example. After launching its own product in 2023, PayPal failed to capture a meaningful share of the market. Today, according to Hougan, Tether and Circle control about 88% of the market, while PayPal’s share is around 1%.

A similar situation has played out in crypto custody. Fidelity launched its service back in 2019, but the largest crypto custodian in the US remains Coinbase.

Hougan also mentioned CME and Bakkt. He said crypto-native companies gain an advantage thanks to faster product launches, a tighter focus on the crypto market, and an already established user base.

At the same time, he noted that there are exceptions. For example, BlackRock ranks first among spot bitcoin ETF providers.

Transaction Volume Could Increase by Dozens of Times

The third mistake, in Hougan’s view, is related to assessing future transaction activity on blockchains. Right now, the U.S. stock market operates 33 hours a week — from Monday to Friday during the trading session. With tokenized equities, trading could run around the clock and without weekends — 168 hours a week.

According to Hougan, this does not mean an automatic fivefold increase in trading volumes. However, 24/7 availability will create conditions for higher activity.

He also cited the development of AI agents as an additional factor. They will be able to monitor portfolios around the clock and execute trades on users’ behalf.

“I can imagine growth by 50 or 100 times,” Hougan said, speaking about the potential increase in the number of stock transactions.

In his view, a similar effect could also show up in payments if a significant share of transactions in the future is carried out by AI agents.

Hougan believes all three mistakes stem from one issue: investors are valuing the crypto industry based on its current state, while the underlying infrastructure continues to change rapidly.

In particular, he highlights the development of tokenization, the expanding use cases for crypto apps, and the growing number of transactions. In his view, it is precisely the gap between the market’s current perception and its possible future state that creates investment opportunities.

As a reminder, earlier Hougan said that the crypto market is moving toward a model in which asset values will increasingly depend on the revenues generated by the relevant protocols.

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