Compiled & Edited by: Deep Wave TechFlow

Guests: Matt Hougan (Bitwise Chief Investment Officer), Ryan Rasmussen (Bitwise Head of Research)

Host: The Rollup Anchor

Podcast Source: The Rollup

Original Title: Bitwise CIO & Research Head: Why Institutions Are Buying Ethereum Now (Majors vs Apps)

Broadcast Date: August 12, 2026

Note: The guests’ institution, Bitwise, operates multiple crypto ETF products, and their views have a structurally bullish tendency; this article preserves their original words and judgment and does not constitute investment advice.

Summary of Key Points

At the time of this recording, Bitcoin was around $65,000, having retraced over half from last October's peak. However, the two Bitwise executives saw another side: throughout the summer, Saylor (founder of Strategy) was selling coins, over $100 million in cold wallets were stolen, and the Clarity bill stalled in the Senate, yet Bitcoin did not drop. They interpret this phenomenon as a characteristic of a bottom; those who could sell have sold all, leaving only the "ride or die" long-term holders, while the real big buyers, Wall Street's wealth management platforms, are just finishing a two-year education period and are about to start allocation.

The two guests provided a clear bifurcation judgment: the upcoming bull market will be split into two markets. Institutional funds will buy mainstream assets like Bitcoin and Ethereum that can accommodate large sums, while on-chain native capital will bet on DeFi applications with real revenues (such as Hyperliquid, Uniswap, Aave, Morpho, etc.). They emphasized that the biggest catalyst is not in the crypto circle's view but within the model portfolios of Morgan Stanley, Wells Fargo, UBS, and Bank of America Merrill Lynch, which together manage about $20 trillion in assets. As soon as they allocate 1% to 2% in crypto, it equates to continuous inflows in the hundreds of billions. As of the time of compilation (August 13), ETH was about $1,900, with spot ETFs experiencing net inflows for five consecutive weeks, the last week seeing approximately $245 million, the strongest in nearly four months; the SEC is scheduled to review the Reg Crypto proposal on August 14, and the regulatory variables discussed in this episode are coming to fruition.

Highlights of Insights

On Market Bottoms

• “When the market is completely indifferent to bad news, it often indicates a true bottom.” (Matt)
• “This pullback from the peak is 55%, not the usual 70% to 80%. The cycles are compressing, and volatility is decreasing.” (Ryan)
• “Bear markets are always longer than you think, but one day you might wake up to a big bull market.” (Matt)

On Institutional Buying

• “The typical path for our clients is to have eight meetings with us before they start allocating; they might only meet once a year, so it’s a two-year education process.” (Matt)
• “The questions they ask are no longer 'Should we invest in crypto?' but 'When should we invest in crypto?'” (Ryan)
• “They look at 3 to 5 years, 10 years, not just 3 to 5 days. With a new type of investor in the market, volatility naturally goes down.” (Matt)

On the Bifurcated Bull Market

• “Bitcoin will become more and more like gold, while Ethereum and Solana will increasingly resemble software company stocks; they should have different drivers.” (Ryan)
• “A $2.5 billion market cap Uniswap cannot accommodate institutional money; the liquidity size simply doesn’t match.” (Matt)
• “DeFi will become what we thought it would be in the next bull market; regulatory shackles have been loosened.” (Ryan)

On Regulation and Macro

• “The first version of the Reg Crypto rule draft will be released soon, allowing new projects to raise funds without triggering SEC registration, then gradually move towards decentralization. Washington is slower than the crypto world is used to, but this is real.” (Matt)
• “The U.S. government says it needs to borrow $600 billion in the fourth quarter, which is larger than the GFC banking rescue package, and this long-term trend won't stop.” (Ryan)

1. The Market is Indifferent to Bad News; This May Indicate a Bottom

Host: The market is waiting for one last drop this summer, to buy at the bottom in October; what do you think of this script?

Matt mentioned he sent out a Buzz Lightyear meme, with the caption reflecting the crypto circle’s collective voice: "Wash out again this summer, take one last drop, then see a bottom in October, and from there, it's only up, and everyone is ready to enter at the end of October." But he sees a different market.

“My strongest feeling over the past two months is that the market has completely stopped reacting to bad news. Saylor is selling Bitcoin, and Bitcoin doesn’t care; a cold wallet worth over $100 million was stolen, Bitcoin doesn’t care; the Clarity bill has fallen through, and Bitcoin still doesn’t care. When the market is completely immune to bad news, this often indicates a true bottom.”

Ryan added: “In the past few cycles, the largest gains often come within the first few days after emerging from a bear market; those trying to pick the exact bottom often miss the best days. Rather than waiting for Bitcoin to drop below $50,000, it’s better to accept the possibility that this correction has already completed most of its course.”

2. The Four-Year Cycle is Being Compressed into a New Shape

Host: They say the four-year cycle has a year for peaks and a year for bottoms; is this changing now?

Ryan’s observation is that the "amplitude" of cycles is compressing. This round is seeing a 55% pullback, while historically it commonly reaches 70% to 80%; the multiples of the last new peak are also not as high as before. By the nature of the year, 2025 is already projected to be a down year, and the old pattern of “three years up, one year down” no longer fits.

The simple reason behind this is: buyers have changed. Four years ago, retail investors were entering, while now, the entities that Bitwise interacts with daily include institutions, corporations, sovereign wealth funds, and family offices. Their holding periods and decision-making tempos are different, and this market is also significantly larger and has better liquidity than before. The patterns still exist, but their shape will definitely change.

Matt said that bear markets are always a bit longer than one might think, but “it can be easy to return to $100,000 within months under the right conditions.” He repeatedly used a term to describe the next bull market: slow bull. Slower, more fundamental, more institutionalized, gradually building up.

3. Why Institutional Buying is Slow: Eight Meetings, Two-Year Education Process

Host: Are these investors primarily entering through ETFs? How have inflows been recently?

The two guests confirmed that ETFs are indeed the main channel for institutional entry, similar to how they buy stocks and bonds. Before the end of June, crypto ETFs had been experiencing net outflows, but since July 1, they have shifted to relatively strong net inflows, mainly into Bitcoin and Ethereum, with a small amount flowing into Solana and Hyperliquid.

Why now? Matt provided a cold, hard fact: the typical client of Bitwise averages eight meetings before making an allocation decision, and they might only meet once a year, indicating a two-year educational process. The Bitcoin ETF was approved in January 2024, and by this summer, this cohort's educational period has just completed.

“Their investment committees are thinking about how to get the next 10,000 financial advisors to start allocating crypto. The answer starts with Bitcoin, and then adds a bit of Ethereum, based on market cap weighting. You always start with Bitcoin.”

4. Bifurcated Bull Market: Institutions Buy Mainstream Coins, On-Chain Capital Buys Applications

Host: Why is there a bifurcation between institutions and on-chain native capital?

Two reasons. The first is that the liquidity size doesn’t match: the money from institutions like UBS and Morgan Stanley cannot fit into a Uniswap with a $2.5 billion market cap; only a few of the largest assets can truly accommodate institutional-level funding. The second reason is a difference in mindset: institutions lack the "psychological trauma" of crypto natives; those with 0% allocation view a 55% pullback as a gift, a better entry point, while those currently holding see pain.

Conversely, on-chain native capital understands things like Hyperliquid generating nearly $1 billion in revenue in a year, or Uniswap and Morpho returning revenue to token holders. Ryan said this "cash flow" narrative has not yet completely transmitted to the institutional side, but it will eventually, and early crypto players have a chance to get ahead of institutions.

Host: Has the "digital gold" narrative for Bitcoin returned?

Ryan believes Bitcoin is increasingly resembling gold, while Ethereum, Solana, and Hyperliquid are increasingly like tech stocks and software companies. Over the past year, the correlation between Bitcoin and gold has significantly increased, while institutions are pricing these two types of assets using completely different frameworks. He doesn't see one going up while the other goes down; they are simply diverging more and more, as their driving factors are inherently different.

5. The Biggest Catalyst is Not in the Crypto Circle: $20 Trillion is Knocking at the Door

Host: What catalysts are institutions waiting for?

Matt pointed to the places in crypto Twitter that receive the least attention: Morgan Stanley, Wells Fargo, UBS, and Bank of America Merrill Lynch, the four largest wealth management platforms, collectively managing about $20 trillion in assets. Their "model portfolios," standard allocation templates used by thousands of financial advisors, are being redesigned. Crypto has already appeared in small-scale pilots, such as with Wells Fargo. As long as the model portfolio allocates 1% to 2% to crypto, this results in inflows in the hundreds of billions, calculated annually and sustained over multiple years.

Ryan added a larger context: Ray Dalio suggests a 15% allocation to Bitcoin or gold, and one of America’s most successful financial advisors, Ric Edelman, suggests clients allocate 20% to 40% to crypto, and even Charles Schwab is starting to say there can be 6% crypto in portfolios. Five years ago, such statements were unimaginable.

Matt’s conclusion: Don’t only focus on variables that are familiar in the crypto circle, such as the Federal Reserve or the Clarity bill. The most marginal buyers in the coming years will be within the wealth platform model portfolios, and those inconspicuous little news items could trigger sustained inflows in the hundreds of billions over several years.

6. Macro: $600 Billion Borrowing and a Hawkish Federal Reserve

Host: Will AI money rotate back to crypto?

Ryan stated that over the past two years, funds have been flowing out of crypto and gold and into AI-driven U.S. stocks. Now, capital is starting to withdraw from that crowded trade to find new destinations. His discussions with institutional clients give him the sense that no one is asking "should we invest in crypto" anymore; everyone is asking "when should we invest."

The long-term logic hasn't changed: the U.S. fiscal deficit continues to expand, with the government already announcing it needs to borrow $600 billion in the fourth quarter, larger than the package from the global financial crisis that saved the banks, and this trend is accelerating. On the Federal Reserve side, the market's expectations for interest rate hikes have fallen, and the speech at Jackson Hole at the end of the month will provide some direction, but the hawkish tone of the Federal Reserve is being adapted by the crowd, and the pressures on oil prices are also softening. As macro uncertainties decrease, institutions gain confidence to make cross-asset allocations, with crypto being one of the beneficiaries of capital rotation in Q4 and 2027.

7. Quick Questions and Answers: $8,000 Ethereum, $500 HYPE

Host: Are your clients currently buying more Bitcoin or more Ethereum?

Matt: It’s still primarily Bitcoin, though interest in Ethereum is rising; people are excited about stablecoins and tokenization, but the starting point is always Bitcoin.

Host: Bitcoin at $180,000 in 2030?

Both called it over. Ethereum at $8,000? Also over, but Matt said “there are details worth unpacking here.” Zcash at $25,000 to $30,000? Both called under. Ryan explained: it’s not that they are pessimistic about privacy coins, but the notion that all assets should rise is itself flawed; Bitcoin is only at $65,000 today, and the time needed to reach a million dollars by 2030 is longer than people think.

HYPE at $500, about 10 times, corresponding to an estimated $600 billion valuation? Both uncomfortably called under. Ryan pointed out that due to the buyback mechanism, the total market cap at that price may be much lower than expected; historically, there has also been rotation among platform coins, which represents the biggest risk for this long-term forecast for 2030.

When asked who they favored more between Robinhood (HOOD) and Hyperliquid (HYPE), the two disagreed. Ryan favored HYPE more: smaller market cap, earlier cycle, will be a beneficiary of the next bull market. Matt likes both but thinks HOOD is “a family heirloom-level asset you can buy and hold for ten years, an incredibly well-executed company.”

Host: Lighter 30 or 50?

Ryan said many within Bitwise are optimistic about Lighter; the perpetual contracts sector will grow significantly in the coming years, and $30 feels more like a ceiling than a floor. Matt felt predicting for such a new platform is too difficult, so he gave the floor to Ryan.