Bitwise Exec: BTC Immune to Bad News, Bear Market May Be Nearing Its End

Compiled & Edited by: Odaily TechFlow

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

Host: The Rollup Anchor

Podcast Source: The Rollup

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

Air Date: August 12, 2026

Note: The guests' firm, Bitwise, operates multiple crypto ETF products, and their views may carry a structural bullish bias. This article preserves their original statements and does not constitute investment advice.

Key Takeaways

At the time of this recording, Bitcoin was approximately $65,000, down more than half from its October high. But the two Bitwise executives saw a different picture: throughout the summer, Saylor (founder of Strategy) was selling coins, a cold wallet theft of over $100 million occurred, and the Clarity Act stalled in the Senate—yet Bitcoin didn't drop at all. They interpret this phenomenon as a bottom signal: those who could sell have already sold, leaving only the "ride or die" long-term holders. Meanwhile, the real big buyers—Wall Street wealth management platforms—have just completed a two-year education period and are about to begin allocating.

The two guests offered a clear bifurcation thesis: the upcoming bull market will be split into two distinct markets. Institutional capital will buy mainstream assets like Bitcoin and Ethereum that can absorb large sums, while on-chain native capital will bet on DeFi applications with real revenue (Hyperliquid, Uniswap, Aave, Morpho, etc.). They specifically emphasized that the biggest catalyst isn't within the crypto community's sightline, but rather in the model portfolios of four wealth platforms—Morgan Stanley, Wells Fargo, UBS, and BofA Merrill Lynch—which collectively manage approximately $20 trillion in assets. If just 1% to 2% is allocated to crypto, that's hundreds of billions in sustained inflows. As of compilation time (August 13), ETH is around $1,900, spot ETFs have seen net inflows for five consecutive weeks, with approximately $245 million flowing in over the most recent week—the strongest in nearly four months. The SEC is scheduled to review the Reg Crypto proposal on August 14, meaning the regulatory variable discussed in this episode is materializing right now.

Key Insights Summary

On Market Bottom

• "When the market becomes completely indifferent to bad news, that's often when a true bottom forms." (Matt)
• "This drawdown from the high is 55%, not the 70% to 80% we've seen in the past. Cycles are compressing, and volatility is declining." (Ryan)
• "Bear markets always last longer than you think, but you could wake up one day in a full-blown bull market." (Matt)

On Institutional Buying

• "The typical path for our clients is eight meetings before they start allocating, and we might only see them once a year—that's a two-year education process." (Matt)
• "The question they're asking is 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 3 to 5 days. With a new type of investor in the market, volatility naturally comes down." (Matt)

On the Bifurcated Bull Market

• "Bitcoin will increasingly resemble gold, while Ethereum and Solana will look more like software company stocks. They should have different drivers." (Ryan)
• "A $2.5 billion market cap Uniswap can't accommodate institutional money—the liquidity scale simply doesn't match." (Matt)
• "DeFi will become in the next bull run what we thought it would be in 2021—the regulatory shackles have been removed." (Ryan)

On Regulation and Macro

• "The first draft rules of Reg Crypto are coming soon, allowing new projects to raise funds without triggering SEC registration, then gradually move toward decentralization. Washington moves slower than crypto is used to, but this is real." (Matt)
• "The US government says it will borrow $600 billion in Q4—bigger than the GFC rescue package for banks. This long-term trend won't stop." (Ryan)

1. The Market Is Indifferent to Bad News—This Could Be the Bottom

Host: The market is waiting for one final summer dip and an October bottom. What do you make of that narrative?

Matt said he posted a Buzz Lightyear meme with the collective sentiment of the crypto community: one more washout in the summer, a final dip, then an October bottom followed by a steady rise—everyone is planning to enter at the end of October. But the market he sees looks different.

"Over the past two months, my strongest impression is that the market has completely stopped reacting to bad news. Saylor is selling Bitcoin—Bitcoin doesn't care. A $100 million cold wallet theft—Bitcoin doesn't care. The Clarity Act falls through—Bitcoin still doesn't care. When the market becomes immune to bad news, that's often when a true bottom forms."

Ryan added: In past cycles, the biggest gains after a bear market often came in the very first few days, and those trying to time the perfect bottom missed the best days. Rather than waiting for Bitcoin at $50,000-something, it's worth accepting the possibility that most of this correction is already behind us.

2. The Four-Year Cycle Is Compressing Into a New Shape

Host: They say every four-year cycle has one year up and one year down. Is that changing?

Ryan's observation is that the cycle's "amplitude" is compressing. This drawdown from the high is 55%, compared to the historical 70% to 80%. The multiple of the last run to new highs was also far less dramatic than in the past. Calendar year 2025 was itself a down year—the old "three years up, one year down" pattern no longer fits.

The reason is simple: the buyers have changed. Four years ago, retail investors were entering. Now, Bitwise deals with institutions, corporations, sovereign wealth funds, and family offices on a daily basis. Their holding periods differ, their decision-making cadence differs, and this market is far larger and more liquid than before. The cycle still exists, but its shape will inevitably change.

Matt said bear markets always last a bit longer than expected, but "it's easy to get back to $100K within months under the right conditions." He repeatedly used one word to describe the upcoming bull market: a slow grind. Slower, more fundamentals-driven, more institutionalized—climbing steadily.

3. Why Institutional Buying Is Slow: Eight Meetings, Two-Year Education Period

Host: Are these investors mainly entering through ETFs? What's the recent inflow picture?

Both guests confirmed that ETFs are the primary channel for institutional entry, just like how they buy stocks and bonds. Crypto ETFs saw net outflows until the end of June, but since July 1, they've turned to relatively strong net inflows, led by Bitcoin and Ethereum, with smaller amounts flowing to Solana and Hyperliquid.

Why now? Matt gave a stark number: Bitwise's typical client requires an average of eight meetings before making an allocation decision, and they might meet only once a year—meaning a two-year education process. Bitcoin ETFs were approved in January 2024, and by this summer, the education cycle for this cohort has just completed.

"Their investment committees are thinking about how to get 10,000 financial advisors to start allocating to crypto. The answer is to start with Bitcoin, then add a bit of Ethereum, weighted by market cap. You always start with Bitcoin."

4. The Bifurcated Bull Market: Institutions Buy Majors, On-Chain Capital Buys Applications

Host: Why is there a divergence between institutional and on-chain native capital?

Two reasons. First, liquidity scale doesn't match: the money from institutions like UBS and Morgan Stanley can't fit into a $2.5 billion market cap Uniswap. Only a handful of the largest assets can truly absorb institutional-grade capital. Second, mindset differs: institutions don't have the "psychological trauma" of crypto natives. Someone with 0% allocation sees a 55% drawdown as a gift—a better entry point—while those holding positions see pain.

Conversely, on-chain native capital better understands things like Hyperliquid's nearly $1 billion in annual revenue, and how Uniswap and Morpho return revenue to token holders. Ryan said this "cash flow" narrative hasn't fully transmitted to the institutional side yet, but it will eventually—and veteran crypto players have a chance to stay ahead of institutions.

Host: Is Bitcoin's "digital gold" narrative back?

Ryan believes Bitcoin increasingly resembles gold, while Ethereum, Solana, and Hyperliquid increasingly resemble tech stocks and software companies. Over the past year, Bitcoin's correlation with gold has clearly risen, and institutions are pricing these two asset classes using completely different frameworks. He doesn't think one rises while the other falls—they'll just diverge further because their drivers are fundamentally different.

5. The Biggest Catalyst Isn't in Crypto: $20 Trillion Is Knocking

Host: What catalysts are institutions waiting for?

Matt pointed to the place crypto Twitter pays the least attention to: Morgan Stanley, Wells Fargo, UBS, and BofA Merrill Lynch—the four largest wealth management platforms, collectively managing approximately $20 trillion in assets. Their "model portfolios"—the standard allocation templates used by thousands of financial advisors—are being redesigned. Crypto is already appearing in small pilot programs, like at Wells Fargo. If model portfolios allocate just 1% to 2% to crypto, that's hundreds of billions in inflows, sustained annually over multiple years.

Ryan added a broader backdrop: Ray Dalio recommends 15% allocation to Bitcoin or gold, one of America's most successful financial advisors, Ric Edelman, recommends clients allocate 20% to 40% to crypto, and even Charles Schwab is starting to say portfolios can hold 6% crypto. Five years ago, these statements were unimaginable.

Matt's conclusion: Don't just watch the Fed or the Clarity Act—the variables crypto is used to monitoring. The most marginal buyers over the next few years are in the model portfolios of wealth platforms. Those unassuming bits of news will trigger inflows of hundreds of billions sustained over years.

6. Macro: $600 Billion in Borrowing and a Hawkish Fed

Host: Will AI money rotate back into crypto?

Ryan said that over the past two years, capital flowed out of crypto and gold into AI-driven US equities. Now capital is beginning to exit that crowded trade in search of new destinations. From his conversations with institutional clients, the feeling is that no one is asking "should we invest in crypto" anymore—they're all asking "when."

The long-term logic hasn't changed: the US fiscal deficit continues to widen, the government has announced $600 billion in borrowing for Q4—larger than the GFC rescue package for banks—and this trend is accelerating. On the Fed side, market expectations for rate hikes have already pulled back. The Jackson Hole speech at the end of the month will provide some direction, but the market is adapting to the hawkish Fed stance, and oil price pressure is also dulling. As macro uncertainty declines, institutions gain confidence for cross-asset allocation, and crypto will be one of the beneficiaries of capital rotation in Q4 and 2027.

7. Lightning Round: $8,000 Ethereum, $500 HYPE

Host: Are your clients buying more Bitcoin or Ethereum right now?

Matt: It's still primarily Bitcoin, with Ethereum interest rising. People are excited about stablecoins and tokenization, but the starting point is always Bitcoin.

Host: Bitcoin at $180,000 by 2030?

Both called over. Ethereum at $8,000? Also over, but Matt said "there are details worth unpacking there." Zcash at $25,000 to $30,000? Both called under. Ryan's explanation: It's not that they're bearish on privacy coins—it's that the premise of everything rising doesn't hold. Bitcoin is only $65,000 today; reaching the million-dollar level by 2030 would take longer than people think.

HYPE at $500, roughly 10x and corresponding to approximately a $600 billion valuation? Both somewhat uncomfortably called under. Ryan cautioned that due to the buyback mechanism, the total market cap at that price could be much lower than imagined. Also, historically there's rotation among exchange tokens—that's the biggest risk to a long-term 2030 call.

When asked which they'd rather own between Robinhood (HOOD) and Hyperliquid (HYPE), the two diverged. Ryan prefers HYPE: smaller market cap, earlier in the cycle, and it will be a beneficiary of the next bull market. Matt wants both, but considers HOOD a "heirloom asset you can buy and hold for ten years—a great company with remarkable execution."

Host: Lighter at 30 or 50?

Ryan said quite a few people at Bitwise are bullish on Lighter internally—the perpetuals space will grow significantly over the next few years, and $30 looks more like a ceiling than a floor. Matt felt it's too difficult to predict for a very new platform and deferred to Ryan.