Bitwise: Optimistic about Bitcoin's second-half performance, AI and regulation will spur a new wave of copycat seasons

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Source: Milk Road Show

Editor: Felix, PANews

Bitwise Chief Investment Officer Matt Hougan and Research Director Ryan Rasmussen believe that a $1 million Bitcoin valuation might be too conservative. Their reasoning is: Bitcoin is not just a store of value; it is actually both digital gold and the future global settlement asset, especially as the world gradually loses trust in traditional currency systems. Below are highlights from the conversation.

Host: What are your current feelings about the market? Especially after experiencing another geopolitical fluctuation last weekend, but things still seem quite strong.

Matt: I remain relatively optimistic about the market. The previous market direction was completely off track, with negative funding rates and serious put options, resulting in the market being trapped, then rebounding. Currently, support is holding very steady here. I think if we can stay around $75k, I’ll be very excited about the second half of the year. So, I’m optimistic. We’ve now passed tax day, which I previously mentioned as a turning point. Things look pretty good right now.

Ryan: Feels great. I’m very optimistic. And this is truly an exciting moment. I just attended Paris Blockchain Week last week. It was full of passion, with many great opportunities. There are well-established crypto-native companies doing exciting things, as well as many institutions and UK regulators present.

Host: You just released the Q1 2026 crypto market review report. What are the main conclusions of this report?

Matt: The main conclusion is that Q1 was terrible. My experience with these reports is that Ryan and his team organize the report, then send it to me for review when it’s almost ready. Usually, when I look at the data, I see some assets rising, some falling, some assets up, some down. But Q1 was almost a complete collapse. Every major crypto asset experienced double-digit declines, most major crypto stocks also fell by double digits. Nearly every on-chain indicator you can see dropped sharply. The only “light at the end of the tunnel” was some good news on stablecoins. We’ve been doing this quarterly report for three or four years, and this is the only one where all data points declined across the board.

On the other hand, there was continuous positive news. When the market was falling, Morgan Stanley launched a Bitcoin ETF. When the market was falling, Goldman Sachs launched a Bitcoin ETF, and the US SEC announced a token framework. What really made me realize is that these data are backward-looking. Reviewing the past is indeed bleak. But the problem is, all the news flow is forward-looking. Will it lift into Q2? I think that’s what people are betting on in Q2, which is also why the market rebounded in recent weeks.

Host: Ryan, from your perspective, what is the main conclusion?

Ryan: I think Matt is right. Usually, when you look at this report, you see broad data. You see prices and fundamentals showing a trend, and the news somewhat echoes that. But here, there’s a huge divergence, something you don’t usually see. Except for stablecoins, tokenized real-world assets, and some data from prediction markets that should be rising, the entire market is indeed declining.

It’s worth noting that the starting point at the beginning of this year was relatively high (compared to the end of Q1), but since the end of Q1, the situation for cryptocurrencies has been very good. If you take the Iran conflict as the midpoint of Q1, since the conflict broke out, our performance has outperformed other major asset classes, which feels quite good. So I think the uniqueness of this quarter lies in its starting point, with many sharp fluctuations and indicator changes. But I believe that in the long run, these indicators we’ve been watching, whether on a quarter-over-quarter or year-over-year basis, have increased significantly compared to the past. But you also encounter such quarterly fluctuations, which can feel especially bleak in a bear market.

Host: Are there any indicators or data points worth paying attention to in the future, especially highlighted here?

Ryan: In this report, RWA is a very impressive chart. A few years ago, it wasn’t even in our report. Even if it was in our 2024 report, tokenized real-world assets were less than $2 billion. Over the past two years, that number has grown to nearly $30 billion, more than tenfold, starting from early 2025 with astonishing growth.

Additionally, the range of tokenized asset types is expanding. For a long time, it was basically only government bonds, maybe some tokenized gold. Now you’re starting to see asset-backed loans, asset-backed securities, especially niche financial categories, and more commodities being brought on-chain. I think the diversification among different assets is particularly interesting. I believe we will continue to see this chart move upward and the categories broaden.

Host: What is the “dual bet” on Bitcoin?

Matt: At Bitwise, we’ve always described Bitcoin as a store of value, coupled with a deep out-of-the-money call option to become a universal currency or international settlement tool. In other words, when you invest in Bitcoin, you’re betting on it becoming digital gold. We believe that as long as Bitcoin makes moderate progress toward becoming digital gold, it can easily reach $1 million per coin.

At the same time, you also gain an out-of-the-money call option for Bitcoin to become an international currency settlement tool. We’ve never discussed this with institutions before because the idea was too distant; it’s a theoretical concept. So, we focused people’s attention on digital gold, but you still hold this international settlement option.

The Iran conflict makes this international settlement call option more in-the-money because Iran mentioned using Bitcoin to pay tolls. But equally important is that the global monetary order has become more unstable. If the underlying market becomes more volatile, the option becomes more valuable. So, we believe geopolitical crises can drive Bitcoin to outperform the market because: the global monetary order is becoming more unstable, making this “out-of-the-money call option” more valuable. So, you’re no longer just talking about digital gold; you’re also talking about Bitcoin as a currency. That’s the dual bet. This makes me think that our target price of $1.3 million by 2035 is too low. Maybe it should be $2.3 million. I believe the idea of de-politicized money is becoming a reality, and as the world becomes more chaotic and volatility increases, I think that’s beneficial for Bitcoin.

Host: But does this rely on more geopolitical conflicts?

Matt: Well, it depends on the global reliance on a single political currency decreasing. I think once these systems break down, they can’t really be fully restored. For example, the US froze Russia’s sovereign debt assets. I don’t think you can just slap a band-aid on it and then other countries suddenly think, “Okay, I’m willing to put my wealth on your balance sheet.” I believe there’s no turning back once the bow is drawn. So, does it need more geopolitical conflicts? I’m not sure; it might require more growth in non-dollar economies, and I think that takes time, but geopolitical conflicts will definitely accelerate this process. I see it as a hedge against such geopolitical conflicts.

Host: How much does this reason contribute to institutional adoption? Do all these company analysts think: decades-old treaties and alliances are breaking, and the future of individual fiat currencies is uncertain, which becomes a reason to enter crypto?

Matt: I think it should boost institutional interest. Besides us, I rarely hear others discussing this at the institutional level. It’s a theory that’s been circulating among retail investors for a long time, but I rarely hear it at the institutional level. I think as I travel around, I’ll start talking about it more. I believe it’s still a narrative that needs to penetrate institutional awareness.

Ryan: I want to add that when Matt and I discuss this, what I find interesting is: if Bitcoin is expected to become a settlement currency in the future. Even if Bitcoin isn’t used for international trade settlement tomorrow, the probability of it happening is being pushed higher, and clearly, this is already happening (paying tolls). Any options trader would be eager to buy such a call option because it can generate huge premiums and value increases.

So, this is where we realize: oh, this is no longer something with only a 2% chance of happening in the future. Now, the probability has increased to 15% or 20%. That’s a multiple growth in likelihood. That’s why we see this as a significant moment, surpassing traditional value storage and more likely to be used for international trade settlement.

Host: Has Iran really accepted Bitcoin payments? Or is it just a threat?

Matt: I think Ryan’s point is very good: it’s not a black-and-white result. You don’t have to wait until “China settles transactions with Russia using Bitcoin” before the market recognizes that the probability has increased from, say, 1% to 10%. I believe that has already happened. Iran, facing a difficult geopolitical environment caught between China and the US, has proposed this idea. Naturally, they turn to non-political assets. I think that’s also why Bitcoin’s value is rising again. It doesn’t need to be fully realized; just an increase in probability is enough. And I think this is objectively happening.

Host: I saw you say on the show, “AI plus new token frameworks will lead to a DeFi summer in 2026.” Please explain this statement.

Matt: That was mainly designed to boost clicks; I’m quite proud of it. The token framework stuff is really interesting. If you look back at crypto history, entrepreneurs have tried to build token projects that capture some form of value to incentivize community development. But our attempts have always been thwarted by the SEC of the previous era. If you successfully create a valuable token, they’ll put you in jail. So, we could only do some quirky governance tokens, and everyone gave up on using tokens to incentivize.

Current SEC Chair Paul Atkins has a lobbying background focused on tokens. I believe he believes that tokens capable of capturing real value can incentivize the building of new networks vital to the economy. So, he’s created a safe harbor for this. When you apply this new capability, I think it will surprise people because they still remember how it used to be impossible. Combine that with AI, which allows fewer people to do more, and you get a perfect storm. I can already see a hundred truly valuable token projects emerging like mushrooms after rain. We’re starting to see evidence of value capture, like Hyperliquid, and now you have a framework that allows you to do this legally and compliantly. I believe we’ll see a new wave of innovation, a new ICO boom. All of this will come back, but this time, some projects will truly succeed.

Host: The ICO boom—those words sound intimidating.

Matt: They used to be scary because they were run by scammers conducting illegal securities offerings. But using valuable tokens to incentivize community activity, build new networks, and solve “cold start” problems is a very interesting entrepreneurial idea. And now we can do it in a compliant way. Past failures were due to bad timing. But I absolutely don’t think it means they can’t work now, in an environment with high-performance blockchains, strong regulation, and AI empowerment. I genuinely believe a new boom will emerge within the next 18 months.

Host: I like your point: with a clear token framework, we’re no longer in the phase of unknown teams launching projects. Now, you might see more mature, professional projects being pushed to the table. People may choose tokens to help realize their ideas.

Matt: To clarify, this involves three elements: compliant regulation, high-performance blockchain systems, and greatly enhanced AI capabilities. When these three come together, I think it will be very exciting, and we already have these three conditions.

Host: Is this the ultimate vision of cryptocurrency you’ve always foreseen? The major conditions necessary to achieve great projects?

Matt: I’ve always thought that the ideas we experimented with in 2018, 2020, and 2021 were good ideas, just at the wrong time. For example, solving cold start problems through crypto incentives, or DeFi projects limited by lack of high-performance blockchains. Having experienced the internet bubble era, you know that regulation, technology, and the right market conditions are needed to make these things happen. So, I do believe it’s an inevitable trend, and I think it will catch many people off guard.

Host: You announced an Avalanche (AVAX) ETF, which is believed to be launched soon. What is the reason for launching Avalanche products?

Matt: Our view on L1 space is that it’s still very early. I mentioned before that the scale of L1 is growing from $20 billion to $600 trillion. So, we want to see differentiated architectures in L1 networks that show real-world appeal. Ethereum has a certain architecture and has obviously been hugely successful. Solana has another architecture and has also been very successful. We also have large ETFs invested in both Ethereum and Solana. Avalanche is a third unique architecture; they use a customizable Avalanche L1 that allows projects to build their own permissioned, fee-based networks. Avalanche has made real progress on RWA, with RWA on Avalanche growing nearly 1000% YoY. They are one of the few L1 projects that have truly succeeded. I don’t know how the L1 environment will develop over the next five to ten years, but I know it will grow stronger. I want all the projects with real potential and leading architecture. Everyone is watching Ethereum, Solana, and Avalanche. So, we launched VAVA BAVA.

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