The crypto ETF era is just getting started, according to Matt Hougan, the chief investment officer of crypto fund issuer Bitwise.
Crypto-native investors that have soured on Ethereum's ether (ETH) are underestimating its appeal to TradFi investors and developers.
Crypto is in a great spot no matter who wins the U.S. election, he argues.
It’s been a great year for Bitwise Asset Management.
The specialist in developing crypto investment products launched two of the most successful exchange-traded funds (ETFs) of all time. Its spot bitcoin ETF has amassed more than $1.2 billion in the span of nine months, while its spot ether ETF has raked in over $250 million in 84 days.
“We’re holding our own against BlackRock and Fidelity,” Bitwise Chief Investment Officer Matt Hougan told CoinDesk, referring to two giants of traditional finance that have vastly larger operations than Bitwise. “There are people who want a crypto-native asset manager to survive.”
That’s not all. The company grew its assets under management from roughly $1 billion to $5 billion, Hougan said, and Bitwise’s acquisition of ETC Group – Europe’s largest bitcoin exchange-traded product (ETP) issuer – means the firm now has a solid footing on the old continent.
If you listen to Hougan, they’re just getting started.
“We’ve entered the ETF era of crypto,” he said. That means crypto is going to be normalized in people’s portfolios, and a growing cohort of investors will want access to a wide array of crypto investment vehicles, be it single-asset (like the spot bitcoin ETFs) or multi-asset products (which could combine bitcoin and ether, for example).
Case in point, on Oct. 7 Bitwise filed to convert three of its crypto futures ETFs into strategy-based trend-following funds, which rotate out of the market when it loses momentum, with the goal of providing exposure to volatility to investors while minimizing downside risk.
Bitwise’s ascent is happening in a context of quick technological innovation in crypto, with settlement times and transaction fees getting ever lower – which means crypto applications can now become mainstream much faster than people think, according to Hougan. And shifting political tides in Washington could indicate that, as far as regulatory roadblocks go, the worst is behind us.
“It won’t be all sunshine and roses, it will still be imperfect. I just think it will be better than in the past,” Hougan said.
Ethereum’s appeal
If the tremendous success of bitcoin ETFs is the story of the year, the comparatively disappointing ether ETF flows has turned sentiment – at least on Crypto Twitter – against the second-largest cryptocurrency by market capitalization.
“Inside crypto, many people look at Ethereum as old tech and would rather talk about Solana or Sui or Monad or Aptos or whatever,” Hougan said.
But for him, they’re missing the bigger picture.
The bulk of the $170 billion stablecoin market is issued on Ethereum, Hougan pointed out, and the majority of tokenization projects – like BlackRock’s BUIDL fund or DeFi protocol Ondo – are being built on it, too. Same with the most popular crypto apps, like Uniswap or Aave.
“It’s the Microsoft of blockchains, because Microsoft is like this really boring old tech company from the '70s and it's still the third-largest company in the world,” Hougan said. “If you work at a large bank and you're trying to tokenize an asset, you're not going to get fired for putting it on Ethereum.”
In that sense, Ethereum is the platform for killer crypto applications. So, the network is being sold to investors because it has utility – the fact that it also produces cash flow doesn’t hurt at all.
In fact, Hougan said that among clients, interest for bitcoin {{BTC}} and Ethereum's ether {{ETH}} is neatly divided in half. Those with concerns about the monetary situation and the fate of the U.S. dollar will naturally gravitate toward bitcoin, while the rest tend to be much more excited about everything being built on top of Ethereum.
“One thing that I'm really confident about is that 2025 flows in ether ETFs will exceed 2024 flows. And I bet 2026 flows will exceed 2025 flows,” Hougan said. “I just think Ethereum takes somewhat more education than bitcoin, but that education is happening.”
The complexities of Washington
Another major development this year? The feeling that in Washington, crypto isn’t taboo anymore.
The White House took an adversarial stance towards crypto through most of U.S. President Joe Biden’s term – for example, going out of its way to veto a controversial accounting measure, SAB 121, which makes it hard for banks to custody crypto.But things started to change when former President Donald Trump said in May that he’d champion the industry. He then doubled down by vowing to constitute a strategic bitcoin reserve, to free Silk Road creator Ross Ulbricht from prison and to help the bitcoin mining industry develop in the U.S.
Trump’s promises stood in stark contrast to the Biden administration’s cold antagonism. And with half of all corporate election spending coming from crypto companies, the Democratic Party softened its stance. Vice President Kamala Harris, the party’s candidate for the presidential election, pithily expressed support toward blockchain technology in September.
The important thing for crypto investors to understand is that, no matter who wins the presidential election in three weeks, things are never completely black and white, Hougan said.
It’s not that “Washington is either pro-crypto or anti-crypto,” Hougan said. “Politicians can be overtly hostile and absurdly positive … and they can be anything in between.”
For example, in 2024 the crypto industry obtained the approval of bitcoin ETFs and ether ETFs, Hougan said, and suffered in September from a “lighter SEC enforcement season than we have in any of the past three years.”
“Compare that track record to what we got in 2022 or 2023. In those years, we just got kicked in the shins, and in this year, we got some wins,” Hougan said. “Did we get a solana ETF? No, but it’s a spectrum.”
That’s why a Harris presidency probably wouldn’t be as bad for crypto as the Biden administration has been – even if she doesn’t end up really supporting blockchain development. Moving forward, questions may revolve more around which sectors of the industry benefit over others.
For example, Congress is likely to pass a stablecoin bill no matter who wins the election. But under Harris, the bill may favor large banks, whereas under Trump, the bill may foster “entrepreneurial creativity,” Hougan said.
Similarly, a Harris win may end up benefiting Ethereum at the expense of other smart contract platforms like Solana {{SOL}} or Avalanche {{AVAX}}, simply because these newer blockchains haven’t cleared the same regulatory hurdles.
“Crypto will do well regardless of the outcome,” Hougan said. “Like, Bitcoin doesn't need Washington. It just needs Washington to get out of the way.”
