#1536 Hunter Horsley & Matt Hougan | Did The Bitcoin ETF End The 4-Year Cycle?
🎯 Summary
Podcast Episode Summary: #1536 Hunter Horsley & Matt Hougan | Did The Bitcoin ETF End The 4-Year Cycle?
This episode of the Pom Podcast features Anthony Pompliano in conversation with Hunter Horsley (CEO) and Matt Hougan (CIO) of Bitwise, discussing the profound impact of the spot Bitcoin ETFs on market structure, investor behavior, and the traditional four-year Bitcoin cycle.
1. Focus Area
The discussion centers on the institutionalization of Bitcoin investment following the approval of spot Bitcoin ETFs in the US. Key themes include the shift in investor sentiment (retail vs. institutional), the competitive landscape among asset managers, Bitwise’s specialized market positioning, and the potential obsolescence of the traditional four-year Bitcoin halving cycle due to new capital inflows.
2. Key Technical Insights
- ETF as the “IPO Moment”: The Bitcoin ETFs served as the crucial inflection point, similar to a major company IPO, allowing traditional investors who couldn’t use crypto apps to finally consider Bitcoin as a legitimate, tradable asset class.
- Elimination of the “Left Tail Risk”: The ETF structure, backed by regulated custodians and major financial institutions, effectively eliminated the existential fear (the “left tail risk”) that Bitcoin might go to zero, making it palatable for conservative investors.
- Diversification of Services: Bitwise is expanding beyond just the ETF product, actively engaging in derivative strategies (like running yield strategies for institutional SMAs) and supporting staking infrastructure (evidenced by their acquisition of Atestant), signaling a move toward comprehensive crypto asset management.
3. Market/Investment Angle
- Universal Adoption of the ETF: The spot Bitcoin ETF has become the primary tool for everyone—retail, hedge funds (for basis trading), RIAs, and family offices—due to its low cost (20 bps for Bitwise) and integrated structure.
- Divergent Sentiment: There is a stark divergence: retail investors feel lukewarm or sad, while institutional investors are experiencing the “best time ever” due to multi-year adoption timelines, regulatory clarity (fewer SEC lawsuits), and the ETF launch. Institutions are currently “right.”
- Private Wealth Onboarding Timeline: The onboarding process for large wirehouses is slow but inevitable. RIAs are already allocating 2.5% to 5%, and the larger, slower wirehouses are showing massive internal senior-level engagement, suggesting significant future inflows.
4. Notable Companies/People
- Bitwise: Highlighted for successfully competing against giants like BlackRock and Fidelity by positioning itself as a crypto specialist trusted by the community for retaining Bitcoin’s “soul” (e.g., donating to open-source developers).
- BlackRock/Fidelity: Mentioned as the major incumbent firms leveraging massive distribution power in the ETF space.
- Atestant: Bitwise’s acquisition, known for developing open-source Ethereum staking libraries (Dirk and Vouch), showcasing Bitwise’s commitment to supporting broader crypto infrastructure.
- Sovereign Wealth Funds (Abu Dhabi): Noted for buying the ETF to gain quick price exposure, suggesting a future where large pools of capital hold both regulated ETPs and self-custodied assets (mirroring the gold market).
5. Regulatory/Policy Discussion
The conversation notes that the election in November is seen as the next major catalyst, potentially accelerating institutional adoption even further by changing the regulatory landscape. The consistent removal of SEC lawsuits against crypto entities is cited as a positive sign of improving regulatory clarity, which institutions value highly.
6. Future Implications
The traditional four-year Bitcoin cycle is likely over. The ETF inflows represent a larger, longer-term capital base than the previous retail-driven cycles (2011, 2015, 2019). This new cycle is expected to be much longer, with strong years predicted through 2027, bulldozing over any natural pullbacks caused by leverage cycling out. The industry is moving toward a dual structure where investors hold both regulated ETPs and direct custody assets.
7. Target Audience
Financial Professionals, Asset Managers, and Sophisticated Crypto Investors. The discussion is highly relevant for those tracking institutional adoption trends, ETF mechanics, competitive positioning in the asset management space, and macro predictions for the next crypto market cycle.
🏢 Companies Mentioned
đź’¬ Key Insights
"I think this cycle is going to be much longer than people think. I definitely don't think this pullback is the end. I think 2025 will be a great year. I think 2026 will be a great year. I think 2027 will be a great year."
"As they want to do additional things, I mentioned to you that we have large institutional clients now asking us to run derivative strategies and separately managed accounts. Maybe at some point they want to stake their Bitcoin through Babylon or Corda..."
"For one very large institutional client, we just set up a separately managed account where we run a derivative strategy on top of their Bitcoin position from the custodian where they currently hold their Bitcoin."
"Another thing that is emerging is that many of our clients are interested in doing additional things. So we've been getting more questions recently about, can you help us earn yield on our Bitcoin?"
"We publish the public wallet addresses of the Bitcoin held by the ETF. And they see that we want to bring the fundamental characteristics and value of Bitcoin into the traditional system and not to forget about what made Bitcoin important in the first place and just hand the dollars over to Wall Street."
"The other thing that changed is we chopped off the left tail. I think the real reason people didn't invest before the ETF, before the election was this thing in the back of their mind that said this thing might go to zero."