Source: Milk Road Show
Organizer: Felix, PANews
Bitwise Chief Investment Officer Matt Hougan and Research Director Ryan Rasmussen believe that a $1 million Bitcoin valuation may be too conservative. Their reasoning is that Bitcoin is not just a store of value; it actually serves as both digital gold and a future global settlement asset, especially as the world gradually loses trust in the traditional currency system. Here are the highlights from the conversation.
Host: How do you feel about the market right now? Especially after experiencing another geopolitical fluctuation last weekend, but things still seem quite strong.
Matt: I remain relatively optimistic about the market. The direction of the market was completely off before, with negative funding rates and severe put options, leading to the market getting trapped, but then it rebounded. It has been very stable here. If we can maintain around the $75,000 level, I would be very excited about the momentum in the second half of the year. So, I'm optimistic. We’ve passed Tax Day now, which I mentioned before as a turning point. I think things are looking decent right now.
Ryan: It feels incredible. I’m very optimistic. It’s truly an exciting time. I just went to Paris Blockchain Week last week. It was full of passion and there were tons of great opportunities. There were crypto-native companies doing exceptionally well and exciting things, as well as many institutions and UK regulators present.
Host: You just released the Q1 2026 Cryptocurrency 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 prepare the report, then when it's almost ready, they send it to me for review. Usually, when I look at the data, I see some metrics rising and some falling, some assets increasing and some decreasing. But in Q1, almost everything crashed. Every major crypto asset saw double-digit declines, and most major crypto stocks also experienced double-digit declines. Virtually every on-chain metric you can see has significantly dropped. The only "glimmer of hope" is some good news in stablecoins. We've been putting together this quarterly report for three or four years, and this is the only report where "everything is down."
On the other hand, there has been a constant flow of positive news. When the market was down, Morgan Stanley launched a Bitcoin ETF. When the market was down, Goldman Sachs introduced a Bitcoin ETF, and the US SEC released a token framework. What really struck me is that these data are retrospective. The past was certainly terrible. But the issue is, all the news flow is forward-looking. Will it drive up into Q2? I think that's what people are betting on for Q2, and that’s why the market rebounded in the past few weeks.
Host: Ryan, from your perspective, what is the main conclusion?
Ryan: I think Matt is right. Typically, when you look at this report, you’d see a wide range of data. You’d see prices and fundamentals showing a certain trend, and the news somewhat reflecting that. But here, there’s a huge divergence, which you usually don’t see. Aside from stablecoins, tokenization, and some Polymarket (prediction market) data that should have risen, the entire market is indeed down.
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 has been excellent for cryptocurrencies. If you take the Iran conflict as a midpoint in Q1, since the outbreak of the conflict, we have outperformed other major asset classes, which feels quite good. So I think this quarter's uniqueness lies in its starting point, which includes a lot of volatility and fluctuations in benchmarks. But I believe that the metrics we've been focused on long-term, whether month-over-month or year-over-year, have risen significantly compared to the past. But you’ll also encounter this quarterly volatility, which can feel especially bleak during a bear market.
Host: Are there any indicators or data points worth watching in the future that stand out here?
Ryan: In this report, RWA is a remarkable chart. A few years ago, it wasn't even in our reports. Even if we include it in the 2024 report, tokenized real-world assets were less than $2 billion. Over the past two years, that number has grown to nearly $30 billion, increasing more than tenfold, with astonishing growth beginning in early 2025.
Moreover, the range of tokenized asset types is expanding. For a long time, basically, there were only government bonds and perhaps some tokenized gold. Now you are starting to see asset-backed credit, asset-backed securities, particularly specialized financial categories, and more commodities being brought onto the chain. I find this spreading among different assets particularly interesting. I believe we will continue to see this chart trend upward, and the categories will keep expanding.
Host: What is the "double bet" on Bitcoin?
Matt: At Bitwise, we have always described Bitcoin as a store of value, along with a call option on becoming a universal currency or international settlement tool. In other words, when you invest in Bitcoin, you are betting on its becoming digital gold. We believe that as long as Bitcoin makes moderate progress on the path to becoming digital gold, it can easily reach $1 million each.
At the same time, you also gain a call option on Bitcoin becoming an international monetary settlement tool. We used to never discuss this with institutions because the idea was too far-fetched; it was a theoretical concept. So we let people focus on the digital gold aspect, but you still have this international settlement option.
The Iran conflict made the international settlement tool call option closer to an in-the-money option because Iran talked about using Bitcoin to pay tolls. But equally importantly, the global monetary order has become more unstable. If the underlying market becomes more volatile, the options become more valuable. So we believe the reason geopolitical crises can propel Bitcoin to outperform is: the global monetary order is more unstable, making this "out-of-the-money call option" more valuable. So you're not just talking about digital gold; you are also discussing Bitcoin as currency. That’s the dual bet. It makes me feel that our target price of $1.3 million by 2035 is too low. Perhaps it should be $2.3 million. I think the idea of a non-political currency is becoming a reality, and as the world becomes more chaotic, volatility is increasing, which I think is favorable for Bitcoin.
Host: However, does this rely on more geopolitical conflicts?
Matt: Well, it depends on the reduction of global reliance on a single political currency. So I think that once these systems break down, they can never really return to their former state. For example, the US froze Russian government bond assets. I don't think you can just put a Band-Aid on it and have other countries suddenly think: "Okay, I’d like to put my wealth on your balance sheet." I think once the bow is drawn, there’s no turning back. So does it need more geopolitical conflicts? I'm not sure; it may require more growth from non-dollar economies, and I think that will take time, but geopolitical conflicts will certainly accelerate this process. I see it as a bit like a hedge against such geopolitical conflicts.
Host: How much does this reason contribute to driving institutional adoption? Do all these companies' analysts feel that decades of treaties and alliances are fracturing and the future of single fiat currencies is uncertain, prompting a reason to enter the crypto space?
Matt: I think it should drive institutional interest. Aside from us, I rarely hear others discussing this at the institutional level. This has been a theory circulating in retail for a long time, but I seldom hear it at the institutional level. I think as I travel more, I’ll start discussing it more. I still think it's a narrative that needs to permeate the institutional view.
Ryan: I want to add that when Matt and I discuss this issue, it’s fascinating to think about the possibility of Bitcoin becoming a settlement currency in the future. Even if Bitcoin isn’t used as an international trade settlement currency tomorrow, the odds of that happening will be raised, and clearly, things are happening here (paying the Strait tolls). Any options trader would be eager to buy such a call option because it can yield massive premium and value increases.
So, this is where we had our revelation: Oh, this is no longer something that has only a 2% probability of happening at some future point. Now it has turned into a 15% or 20% chance. This is a multiplication of probabilities. That’s also why we think this is a significant moment; it transcends the traditional store of digital value and has a greater likelihood of being used as an international trade settlement track.
Host: Has Iran really accepted Bitcoin payments, or is it just a threat?
Matt: I think Ryan's point is excellent, which is: this is not a black and white outcome. There’s no need to wait for "China to settle transactions with Russia using Bitcoin" for the market to realize that the probability has increased from say, 1% to 10%. I believe this has certainly happened. Now Iran has proposed this idea while facing this difficult geopolitical environment between the US and China. Naturally, you would turn to this kind of non-political asset. I think this is also why you see Bitcoin's value rising again. It doesn’t need to be fully realized; it just needs the probability to increase. And I believe this is objectively happening.
Host: I saw you say on the show, "AI plus the new token framework will lead to the altcoin season in 2026." Please explain this statement.
Matt: That was designed to drive clicks, and I’m quite proud of it. The thing about the token framework 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. However, our attempts have often been thwarted by the previous SEC. If you successfully built a valuable token, they would put you in jail. So we were left with goofy governance tokens, and everyone gave up the idea of using tokens to incentivize people.
The current SEC Chairman, Paul Atkins, has a lobbying background specifically focused on tokens. I believe he believes in tokens that can capture real value and incentivize the building of new networks that are critical to the economy. So he has created a safe harbor for people in this regard. When you apply this new capability, I think it will be surprising because everyone is still stuck in their past memories of why it didn’t work. Coupled with the characteristic of AI allowing people to do more with less, combining these two, I can already see a million truly valuable token projects emerging. We are beginning to see evidence of value capture like Hyperliquid, and now you have a token framework that allows you to do this in a legal and compliant manner. I think we will see a wave of new innovation, a new ICO (Initial Coin Offering) boom. I believe all of this will come back, but this time, some projects will genuinely succeed.
Host: An ICO boom? Those words sound frightening.
Matt: They were frightening in the past because those were illegal securities offerings conducted by scammers. However, using valuable tokens to incentivize community activities, build new networks, and address the "cold start" problem is a very interesting entrepreneurial idea. And now we can do it in a regulatory-compliant manner. Past token failures were due to timing issues. But I absolutely do not believe this means they won't work in the present environment with high-performance blockchains, a robust regulatory environment, and AI-enabled capabilities. I genuinely believe there will be a wave of new prosperity within the next 18 months.
Host: I like your statement: with a clear token framework, it’s no longer the stage of unknown teams releasing projects; now you may encounter some more mature, professional ideas being brought to the table. People may choose tokens to help realize their ideas.
Matt: To clarify, this includes three elements: regulatory compliance, high-performance blockchain systems, and significantly enhanced AI capabilities. When these three come together, I think it will be very exciting, and we now have all three conditions met.
Host: Is this the endpoint of cryptocurrency that you’ve always envisioned? The major conditions necessary to achieve great projects?
Matt: I have always believed that the ideas we experimented with in 2018, 2020, and 2021 were good ideas; they just appeared at the wrong time. For example, using cryptocurrency incentives to solve cold start problems, or DeFi projects being limited by a lack of high-performance blockchains. If you’ve experienced the internet bubble, you would know that regulatory, technological, and correct market conditions are needed to achieve these two things. So I do believe it is inevitable, and I think it will catch many people off guard.
Host: You announced an Avalanche (AVAX) ETF, which will be launched soon. What is the reason for launching the Avalanche product?
Matt: Our view on L1 is that we are still very early in the stage. I mentioned before that the scale of L1 is growing from $20 billion to $600 trillion. So we want to see L1 networks with differentiated architectures that show appeal in the real world. Ethereum has a certain architecture and has clearly achieved tremendous success. Solana has another architecture and has also achieved great success. We have large ETFs investing in both Ethereum and Solana. Avalanche is the third unique architecture; they use customizable Avalanche L1, allowing various projects to build their own permissioned fee networks, etc. Avalanche has made real progress in RWA, with RWA on Avalanche growing nearly 1000% year-over-year. They are one of the few truly successful L1 projects. I don't know how the L1 environment will develop over the next five to ten years, but I know it will definitely grow. I want all genuinely potential projects with leading architectures. Everyone is focused on Ethereum, Solana, and Avalanche. So, we launched VAVA BAVA.
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