Podcast Source: Empire
Broadcast Date: December 8, 2025
Guest: Matt Hougan, Chief Investment Officer (CIO) of Bitwise
The following content is compiled from the latest episode of the crypto podcast Empire, titled "Institutional Flows Will Overpower the 4-Year Cycle." The guest is Matt Hougan, Chief Investment Officer (CIO) of Bitwise.
During the program, Matt discussed key topics such as whether Bitcoin's four-year cycle is losing influence, the acceleration of institutional capital inflows, and whether there is a real risk of Strategy being forced to sell Bitcoin. He also provided his assessment on the debate between Haseeb and Santi regarding L1 public chain valuations and shared 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 experienced significant volatility recently, with sharp declines often occurring over the weekends. What are your thoughts on this?
Matt Hougan:
Short-term volatility itself doesn't indicate much, but over the past few months, a 'weekend panic pattern' has indeed formed. Since the crypto market operates 24/7, while humans do not stay awake all the time, liquidity naturally weakens over weekends. Additionally, major macroeconomic policies are often announced on Friday afternoons, which forces the market to preemptively digest information, often amplifying price movements over the weekend.
Therefore, I don't see this as a change in fundamentals. In fact, we are discussing a market that remains flat overall this year, yet sentiment has been exaggerated as if it has collapsed. Much of the current investor anxiety stems from the perception that 'something always happens on weekends.' This is not a signal of long-term trends.
Q2: From a broader perspective, how do you assess the market for 2025–2026? Is the four-year cycle still valid?
Matt:
I have said this many times before—I believe the so-called 'four-year cycle' has largely become ineffective. In the past, it held true due to the convergence of certain specific factors, but these factors no longer carry sufficient influence today.
The supply shock caused by halving is impacting the market at a diminishing rate; the interest rate environment is entirely different from the two previous 'cycle correction years' (2018, 2022), as we are now in a rate-cutting cycle; and the risk of 'systemic blow-ups' that caused significant corrections in prior cycles has also significantly decreased. In other words, the original forces driving the cycle have all weakened.
On the other hand, one force has grown increasingly powerful—the entry of institutional capital. Over the past six months, traditional giants such as Bank of America, Morgan Stanley, UBS, and Wells Fargo have gradually opened up cryptocurrency asset allocations, with a total scale exceeding USD 15 trillion. This is a decade-level force, strong enough to override the so-called four-year cycle.
So I am very clear in saying: I do not think 2026 will be a bearish year; on the contrary, I believe it will be very strong.
Q3: You mentioned that much of the 'selling pressure from veteran traders' does not come from on-chain addresses. Where does this selling pressure originate?
Matt:
Many OG Bitcoin holders have not directly sold their coins in recent years, so on-chain data does not reflect 'old wallet movements.' However, they have engaged in an equivalent form of selling pressure: covered calls.
Simply put, they do not want to sell the Bitcoin they have held for many years (due to high tax burdens) but still wish to monetize gains. They achieve this by collateralizing their Bitcoin to write options, earning annualized returns of 10%–20%. This operation essentially 'sells' future upside potential to the market, exerting price pressure equivalent to partial selling, without being marked on-chain as 'outflows from old addresses.'
This type of business is growing very rapidly at Bitwise, and we are not the only provider. I estimate that there may already be billions of dollars' worth of hidden selling pressure in the market stemming from these structured sell-offs.
Q4: Does Strategy really face the risk of being forced to sell Bitcoin? Why does the market repeatedly worry about this?
Matt:
There is absolutely no need to worry. I even think this is a misunderstanding.
MicroStrategy’s annual interest expenses are approximately USD 800 million, while it holds USD 14.4 billion in cash on its balance sheet, sufficient to cover the next 18 months. Its debt stands at around USD 8 billion, whereas the value of its Bitcoin holdings exceeds USD 60 billion. More importantly, its earliest debt repayment is not due until 2027.
Unless the price of Bitcoin plummets by 90%, there is simply no scenario of being 'forced to sell Bitcoin.' And if it did fall by 90%, the entire industry would be in far worse shape than MicroStrategy.
So the correct concern isn’t 'Will they sell?' but rather 'They might buy less in the future than before.' That’s the marginal impact.
Q5: Which companies or institutions’ selling pressure do you worry about more?
Matt:
If we refer to the 'Missionaries and Mercenaries' model, I believe that:
Missionary-type (e.g., Saylor): Almost impossible to sell.
Mercenary-type (small companies imitating MicroStrategy): They will exit in the future, but their scale is too small— even if they sell everything, it won’t cause a systemic impact.
Q6: In your meetings with large financial institutions, what are they most concerned about?
Matt:
I spend a significant amount of time communicating with these institutions. The questions they ask are very fundamental: Why does Bitcoin have value? How is it valued? What is its correlation with existing assets? What role does it play in an investment portfolio?
One key fact is often overlooked: Institutional decision-making is extremely slow.
The average institutional client of Bitwise typically requires eight meetings before making an actual purchase, and these meetings sometimes occur quarterly. This explains why Harvard University has only recently increased its Bitcoin position—they began researching it on the day the ETF was listed, and it took exactly one year for approval.
Giant institutions like Bank of America manage $3.5 trillion in assets. Even allocating just 1% would amount to $35 billion, which is more than the total net inflows of all current Bitcoin ETFs.
This is why I say: Institutional adoption will be the most important force in the market in the coming years.
Q7: Why are financial advisors (FAs) so slow to embrace crypto assets?
Matt:
Because their goal is not to maximize portfolio returns, but rather:
“Avoid being fired by clients due to losses.”
If FAs allocated client funds into Bitcoin in 2021, and the FTX event in 2022 caused a 75% decline in asset value, clients would undoubtedly fire them immediately.
While AI stocks like Nvidia may also drop by 50%, the market narrative is about “future trends,” whereas the media narrative for cryptocurrencies remains under scrutiny, making the “risk of being fired” higher.
As volatility declines and the narratives around stablecoins and asset tokenization (RWA) strengthen, crypto assets are becoming more “acceptable to professional advisors.”
Q8: Regarding Layer 1 blockchains such as Ethereum and Solana, how do you explain their differences to institutions?
Matt:
The strategy is simple:
First, emphasize the differences (technical approaches, speed, cost, design philosophies).
It was then suggested to 'buy a little of everything.'
The reason is that advisors spend an average of only five hours per week researching portfolios, of which only three minutes may be allocated to crypto assets.
Matt said:
"If I only have three minutes per week to study crypto, there's no way I could determine which chain will ultimately prevail. Therefore, the most rational approach is to hold a diversified portfolio."
In terms of comprehensibility:
Uniswap and Aave are the easiest to understand because they can be described as 'decentralized Coinbase' and 'crypto-version lending banks,' respectively.
Chainlink is also very popular among institutional investors because it can be directly referred to as:
"Chainlink is the Bloomberg data terminal of the blockchain world."
Q9: What is your view on the debate between Haseeb and Santi regarding L1 valuation?
(Note from Bitpush: Haseeb Qureshi is a partner at the crypto venture capital firm Dragonfly Capital. He represents a long-term perspective, believing that the market significantly underestimates the future transaction volume and network effects of public blockchains (L1). Valuing them based on current data would underestimate their long-term potential.)
Santi Santos is a crypto investor and researcher, representing the more traditional finance-oriented rational valuation school. He emphasizes that public blockchains must ultimately be priced based on revenue, transaction fees, and real economic value, arguing that the valuations of some Layer 1 (L1) projects currently overestimate future expectations.
Matt:
I believe both of them are correct, but they focus on different aspects.
From a long-term structural perspective, I do lean closer to Haseeb's view. Our current imagination of on-chain transaction volume, economic activity, and asset settlement frequency is too conservative. For example: Why are salaries paid every two weeks? They could be settled hourly or even by the minute, and such a shift would imply exponential growth in on-chain transaction volumes.
However, I agree with Santi on one point: Ultimately, all Layer 1 (L1) projects must be valued based on real economic metrics. Revenue, transaction fees, and protocol-captured value—these factors cannot be ignored. It’s just that the financial data we see now does not adequately reflect the scale of future networks.
Here’s how I would summarize it—
Valuations will eventually depend on financial performance (Santi is right), but the scale of the economy in the future will far exceed today’s 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 transitioning from the 'pure community narrative era' to the 'quasi-public company era.' This means project teams need to adopt mature practices from traditional capital markets, such as:
Regularly release transparent operational and financial data.
Host quarterly update conference calls.
Establish an Investor Relations (IR) team.
Clearly explain the protocol's revenue, economic model, and long-term vision.
In recent years, many foundations have raised excessive funds with low capital efficiency. I believe that project teams in the future should manage their treasuries like Arbitrum—as a genuine investment portfolio rather than a short-term subsidy mechanism.
These measures are not formalities but proven effective communication methods validated by capital markets over the past century.
Q11: What changes do you foresee in IC*0 and token issuance models in the future?
Matt:
I have always believed that the 2017 IC*0 was a 'premature but correct' attempt. The concept itself was not flawed; it was the immature economic models and unclear regulatory frameworks at the time that led to many projects failing to fulfill their promises.
In the future, I believe IC*0 will make a comeback on an even larger scale than in 2017. Compared to traditional IPOs, it is faster, more democratic, and less costly. Moreover, the current regulatory environment allows tokens to be directly linked to protocol-related economic activities, which gives tokens real economic value.
In the long term, I even believe that the method of going public will gradually shift from IPOs to native token issuance, or a fusion of both.
Q12: What is your view on the institutional landscape for privacy coins like Zcash?
Matt:
The narrative around Zcash is very clear, but regulatory concerns remain sensitive at present, especially in discussions about compliance with 'default privacy vs optional privacy.'
As a result, ETFs and institutional products find it difficult to access Zcash.
However, he emphasized:
"In the future, the crypto space will expand from one narrative to ten narratives, and privacy will be one of them."
It’s just that now is not the right time for institutions to invest in privacy assets.
Q13: What is your final outlook for 2026?
Matt Hougan:
I believe 2026 will be very strong. Institutional inflows are gaining 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 become disappointed with these narratives at certain stages, but that would be a matter of timing, not direction.
If I were to summarize in one sentence:
We are only standing at the gateway to the next massive growth cycle.
