Podcast Source: Empire
Broadcast Date: December 8, 2025
Guest: Bitwise Chief Investment Officer (CIO) Matt Hougan
This article is compiled from the latest episode of the crypto podcast Empire titled "Institutional Flows Will Overpower the 4-Year Cycle." The guest is Bitwise Chief Investment Officer (CIO) Matt Hougan.
In the program, Matt engages in an in-depth discussion on key topics such as "Is the influence of Bitcoin's four-year cycle diminishing?", "The acceleration of institutional capital entering the market", and "Is there a real risk of forced selling of Bitcoin by institutions?" He also provides his judgment on the debate between Haseeb and Santi regarding the valuation of L1 public chains, while sharing his views on the growth drivers for the next phase of the crypto market.
(The following is a summary of the interview content)
Q1: The market has been experiencing severe fluctuations recently, especially with significant drops often occurring on weekends. What are your thoughts?
Matt Hougan:
Short-term volatility itself doesn't indicate much, but there has indeed been a "weekend panic mode" developing over the past few months. Since the crypto market trades 24/7 all year round, and humans do not stay awake all year, market liquidity tends to be weaker on weekends. Additionally, significant macro policy announcements often come out on Friday afternoons, forcing the crypto market to digest news in advance, which is often amplified over the weekend.
So, I don't think this reflects a change in fundamentals. In fact, we are discussing a market that is still flat overall this year, but the sentiment has been exaggerated to feel like a crash. Many investors are currently anxious simply because of the memory of "things often going wrong on weekends." This is not a signal of a long-term trend.
Q2: From a more macro perspective, how do you assess the market for 2025-2026? Is the four-year cycle still effective?
Matt:
I have said many times that I believe the so-called "four-year cycle" has essentially lost its effectiveness. It used to hold because certain specific factors overlapped, but those factors no longer have sufficient influence.
The supply shock from the halving is impacting the market at a diminishing rate; the interest rate environment is completely different from the last two "cycle correction years" (2018, 2022), as we are now in a rate-cutting cycle; the "systemic explosion" risks that caused significant corrections in previous cycles have also significantly decreased. In other words, the original forces driving the cycle have now weakened.
On the other hand, there is a force that has become increasingly powerful—the entry of institutional capital. Over the past six months, traditional giants like Bank of America, Morgan Stanley, UBS, and Wells Fargo have opened up crypto asset allocations, with a total scale exceeding $15 trillion. This is a decade-level force that is strong enough to overpower the so-called four-year cycle.
So I can say very clearly: I do not believe 2026 will be a down year; on the contrary, I think it will be very strong.
Q3: You mentioned that much of the "old retail selling pressure" does not come from on-chain addresses. Where does this selling pressure come from?
Matt:
Many OG holders have not directly sold their coins in recent years, so on-chain data does not show "old wallets moving," but they have engaged in another form of equivalent selling pressure: covered calls.
In simple terms, they do not want to sell the Bitcoin they have held for years (due to high tax burdens), but they want to realize profits, so they will collateralize their Bitcoin to write options, earning an annualized return of 10%-20%. This operation essentially "sells" the future upside to the market, creating price pressure equivalent to partial selling, but it will not be marked on-chain as "old addresses transferring assets."
This type of business has grown very rapidly at Bitwise, and we are not the only provider. I speculate that there may already be tens of billions of dollars in hidden selling pressure coming from this structural selling.
Q4: Is there really a risk of forced selling by Strategy? Why does the market repeatedly worry about this?
Matt:
There is absolutely no need for concern. I even think this is a misunderstanding.
MicroStrategy's annual interest expense is about $800 million, and it has $14.4 billion in cash, enough to cover the next 18 months. Its debt is about $8 billion, while the value of its Bitcoin holdings exceeds $60 billion. More importantly, the earliest debt it needs to repay is not due until 2027.
Unless Bitcoin's price drops by 90%, there is no situation of "forced selling." And if it does drop by 90%, the entire industry's situation would be worse than MicroStrategy's.
So the correct concern is not "Will they sell?" but rather "Will they buy as much in the future as they did before?" That is the marginal impact.
Q5: Which companies or institutions are you more concerned about in terms of selling pressure?
Matt:
If we borrow from the "missionaries and mercenaries" model, I think:
Missionary type (like Saylor): Almost impossible to sell.
Mercenary type (small companies mimicking MicroStrategy): They will exit in the future, but their scale is too small; even if they all sell, it won't cause systemic shock.
Q6: In your meetings with large financial institutions, what are their main concerns?
Matt:
I now spend a lot of time communicating with these institutions. Their questions are very basic: Why is Bitcoin valuable? How is it valued? What is its correlation with existing assets? What role does it play in a portfolio?
One key fact that is often overlooked: Institutional decision-making is very slow.
The average institutional client of Bitwise often needs 8 meetings before they actually buy in, and these meetings are sometimes quarterly, so you can understand why Harvard University is only now increasing its Bitcoin allocation—they started researching from the day the ETF was listed, and it took a whole year to get approval.
Giants like Bank of America manage $35 trillion in assets; even allocating just 1% would mean $350 billion, which is more than the current net inflow of all Bitcoin ETFs.
That’s why I say: Institutional adoption is the most important force in the market for the next few years.
Q7: Why are financial advisors (FAs) so slow to accept crypto assets?
Matt:
Because their goal is not to pursue the highest returns for the portfolio, but to:
"Avoid being fired by clients due to losses."
If an FA allocated client funds into Bitcoin in 2021, and the FTX incident in 2022 caused assets to drop by 75%, the client would definitely fire them immediately.
On the other hand, AI stocks like Nvidia might also drop by 50%, but the market narrative is "future trends," while the media narrative around cryptocurrencies remains questioned, so the "risk of being fired" is higher.
As volatility decreases and the narratives around stablecoins and asset tokenization (RWA) strengthen, crypto assets are becoming more "acceptable to professional advisors."
Q8: How do you explain the differences between Ethereum, Solana, and other L1s to institutions?
Matt:
The strategy is simple:
First emphasize the differences (technical paths, speed, cost, design philosophy)
Then suggest "buy a little of all"
The reason is that advisors typically spend an average of only 5 hours per week researching portfolios, and they might only allocate 3 minutes to crypto assets.
Matt says:
"If I only have three minutes a week to study crypto, I cannot possibly determine which chain will ultimately win, so the most reasonable approach is to hold a diversified portfolio."
In terms of understandability:
Uniswap and Aave are the easiest to understand because they are "decentralized Coinbase" and "crypto version of lending banks."
Chainlink is also very popular among institutions because it can be directly described as:
"Chainlink is the Bloomberg data terminal of the blockchain world."
Q9: What are your thoughts on the debate between Haseeb and Santi regarding L1 valuation?
**(Bitpush Note: *Haseeb Qureshi* is a partner at the crypto venture capital firm Dragonfly Capital, representing a long-term perspective, arguing that the market seriously underestimates the future trading volume and network effects of public chains (L1), and that using current data for valuation will underestimate their long-term potential.
Santi Santos is a crypto investor and researcher, representing a more traditional financial rational valuation perspective, emphasizing that public chains must ultimately be priced based on revenue, fees, and real economic value, arguing that the current valuations of some L1s are overly stretched in terms of future expectations.**)
Matt:
I think both of them are actually correct, but their focus is different.
From a long-term structural perspective, I am indeed closer to Haseeb's viewpoint. Our current imagination of on-chain transaction volume, economic activity, and asset settlement frequency is too conservative. A simple example: Why are salaries paid every two weeks? They could be settled hourly or even by the minute, and this shift would mean exponential growth in on-chain transaction volume.
But I also agree with one point from Santi: Ultimately, all L1s must be valued based on real economic indicators. Revenue, fees, and protocol capture value cannot be overlooked. However, the financial data we see now is far from sufficient to reflect the future network scale.
I would summarize it this way—
Valuation will ultimately be based on financial performance (Santi is right), but the future economic scale will far exceed the current models (Haseeb is right).
Q10: If you were the founder of a token project, what do you think should be done now to make the token more attractive to investors?
Matt:
I believe crypto projects are moving from the "pure community narrative era" to the "quasi-public company era." This means that project teams need to learn mature practices from traditional capital markets, such as:
Regularly publishing transparent operational and financial data
Holding quarterly update conference calls
Establishing investor relations (IR) teams
Clearly explaining the protocol's revenue, economic model, and long-term vision
In recent years, many foundations have over-financed and have not used funds efficiently. I believe that in the future, project teams should manage their treasury like Arbitrum, treating it as a real investment portfolio rather than a short-term subsidy mechanism.
These measures are not formalism but rather effective communication methods validated by capital markets over the past century.
Q11: What changes do you think will happen to IC*0 and token issuance models in the future?
Matt:
I have always believed that the IC*0 of 2017 was a "premature but correct" attempt. The concept itself was not wrong; it was just that the economic models were immature and the regulations were unclear at the time, leading to many projects being unable to fulfill their promises.
In the future, I believe IC*0 will make a comeback and its scale will far exceed that of 2017. Compared to traditional IPOs, it is faster, more democratic, and lower in cost. Moreover, the current regulatory environment allows tokens to be directly linked to economic activities of protocols, giving tokens real economic value.
In the long term, I even think that the way companies go public will gradually shift from IPOs to native token issuance, or a combination of both.
Q12: What are your thoughts on the institutional landscape for privacy coins like Zcash?
Matt:
The narrative around Zcash is very clear, but currently, the regulatory side remains quite sensitive, especially in the compliance discussions around "default privacy vs optional privacy."
As a result, ETFs and institutional products find it difficult to engage with Zcash.
However, he emphasizes:
"In the future, the crypto space will expand from one narrative to ten narratives, and privacy will be one of them."
But now is not the time for institutions to position themselves in privacy assets.
Q13: How do you ultimately assess 2026?
Matt Hougan:
I believe 2026 will be very strong. Institutional inflows are building momentum, the regulatory environment is shifting from headwinds to tailwinds, and new narratives such as stablecoins, asset tokenization, and on-chain finance are spreading. The market may feel disappointed with these narratives at certain stages, but that is merely a matter of timing, not direction.
To summarize in one sentence:
We are currently just standing at the entrance of the next massive growth cycle.
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