Investors Miss Wall Street’s Crypto Momentum, Says Bitwise Chief Matt Hougan
Traditional market participants appear detached from the accelerating on‑chain shift that major financial firms are already embracing, according to a note from Bitwise Investments.
Overview
In a memorandum circulated on Tuesday, Matt Hougan, chief investment officer at Bitwise, warned that many conventional investors remain anchored to the early‑stage image of cryptocurrency as a niche, underground technology. While Wall Street firms are increasingly integrating blockchain‑based solutions—particularly tokenized assets and stablecoins—Hougan argues that this structural change is not yet reflected in mainstream portfolio allocations.
Why the Disconnect?
- Anchoring bias: Hougan describes a psychological lock‑in where investors still associate crypto with its “punk‑skateboarder” origins, overlooking the professionalisation that has taken place over the past several years.
- “Boy‑who‑cried‑wolf” fatigue: Even crypto‑focused investors may have become desensitised after years of promises of institutional adoption that have yet to materialise in a sustained, measurable way.
- Information lag: The rapid rollout of on‑chain initiatives by banks and asset managers is outpacing the market’s ability to internalise the implications for traditional asset classes.
Wall Street’s On‑Chain Playbook
Regulatory support appears to be a key catalyst. The U.S. Securities and Exchange Commission’s “Project Crypto,” announced in July by Chairman Paul Atkins, is designed to enable the nation’s capital markets to transition onto blockchain infrastructure. Since then, several noteworthy developments have emerged:
- Tokenized assets: The aggregate value of blockchain‑based representations of securities such as U.S. Treasurys and commodities is approaching $20 billion, a figure Hougan describes as “steeper than Everest.” This represents a multi‑fold increase from the start of 2025.
- Institutional fund launches: Asset‑manager BlackRock and private‑equity firm Apollo have each introduced tokenized funds worth billions of dollars, signalling confidence in the durability of the technology.
- Stablecoin negotiations: Major banks—including JPMorgan, Bank of America, Citigroup and Wells Fargo—are reportedly in advanced talks to issue or adopt stablecoin solutions, further embedding digital assets within traditional banking operations.
Market Implications
The gap between perception and reality, Hougan contends, creates an opportunity for investors who can capture “broad exposure” to the crypto ecosystem before pricing fully adjusts. He cautions against trying to “pick winners” at this early stage; instead, a diversified approach may better align with the anticipated growth trajectory of tokenisation, which could potentially expand 10,000‑fold given the trillions of dollars seated in ETFs, equities and bond markets.
Analyst Perspective
Industry observers note that the tokenisation trend is still nascent but gaining momentum as custodial, settlement and regulatory frameworks mature. The SEC’s proactive stance provides a degree of legal clarity that may accelerate adoption among risk‑averse institutions. However, skepticism remains, particularly around the scalability of stablecoin infrastructure and the integration of legacy systems with blockchain platforms.
Key Takeaways
- Perception lag: Many traditional investors still view crypto through a legacy lens, missing the emerging on‑chain activities of major financial institutions.
- Regulatory tailwind: SEC’s Project Crypto is a significant driver, offering a policy environment conducive to blockchain adoption in capital markets.
- Rapid growth of tokenized assets: Valuations are nearing $20 bn and could expand exponentially as more asset classes become digitised.
- Institutional involvement: BlackRock, Apollo, JPMorgan and other heavyweight firms are actively deploying tokenized funds and exploring stablecoins, underscoring mainstream acceptance.
- Investment strategy: A diversified, broad‑exposure stance to the crypto sector may be preferable to selective stock‑picking given current market mispricing.
As the on‑chain transition gathers pace, the disparity between market sentiment and operational reality is likely to narrow, offering a potential entry point for investors willing to look beyond entrenched preconceptions about the cryptocurrency space.
The analysis above is based on a note from Bitwise Investments and publicly available information from regulatory announcements and corporate press releases.
Source: https://cointelegraph.com/news/wall-street-loud-crypto-investors-not-listening-bitwise?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
