Bitwise Asset Management Keynote: Navigating The Crypto Landscape | EBC11

Transcript

Thank you so much. How's everybody doing? >> Good. All right. I love this conference because you can sit down with anyone and spend an hour debating ZK's versus optimistic roll-ups. It's so much fun to be in in in the room with so many deep crypto experts. I'm going to talk about something completely different because the reality of this market is that the people who will set the price, who will drive this market forward for the next decade wouldn't know what most of we us are talking about. So I want to give you a view from Bitwise's perspective about how we talk to traditional institutional investors about this emerging crypto landscape, how they navigate 17,000 different crypto assets. My goal is not

to educate you, but to give you sort of tools and analogies you can use when you talk to institutions as well. So the reality, the thing to realize about crypto is that it's confusing to most traditional investors. Bitwise does 15,000 meetings with Tradfi investors each year. And I can tell you it can be confusing. Simple terms like Bitcoin, even athereum get to be confusing. But when they start to look at 17,000 crypto assets, when you start to talk to them about Monero and Monad and Zcash, when you talk to them about Appto and Avalanche and Suie, uh, they lose their mind. And so I want to give you an analogy that we use to help them understand this huge array of different crypto assets. And the analogy is

simple. It's just the internet. If you imagine it was 2024 and you were investing in the internet, you very well may have bought the number one company in the number one space. That was Google in search. That was the internet. And if you did, you would have had a fantastic return. It's up about 90x over the last 21 years. The internet was a way to move information over computer networks. And of course, Google was not the only way you could do that. You could also have invested in Amazon. that was moving ret using the internet to do retail. And you could see from this chart that there were periods where Amazon outperformed, periods where it underperformed. It ended up being in a pretty good place.

But it wasn't just Google and Amazon. You could also have done business over the internet. The number one player in that space was Salesforce. Again, periods where it outperformed, in fact, for the first like 15 years, it outperformed Google and Amazon, even though it's fallen back since then. Back then, the number one thing people talked about was the internet replacing travel agents. You could have invested in that. That was a company called Expedia. You can see that you got very different performance. But of course, it wasn't just search and retail and business and travel. There were also things people didn't expect like Netflix. It turned out that video over the internet was actually the killer app. That's the best performing internet stock you could have

bought in 2024. you're up an enormous amount. And then along the way, there were other firms, too. Here's Nvidia. That's intelligence over the internet. These were all different ways to play the internet, whether it was search or travel or uh or shopping or video. And they all had different returns. There were even things that I promise you seemed completely crazy at the time. I got here from the airport by summoning a stranger who doesn't speak my language to pick me up in their own car using a cell phone. We call that Uber and it's become a 100 plus billion dollar company. The same thing is true of crypto. If you were investing crypto last year at the dawn of the ETF era, you could have bought the biggest asset

in the biggest market. That was Bitcoin in the digital gold store of value market and you would have done quite well. Even with today's pullback, you would have done quite well. And what does Bitcoin do? The way we describe it to institutions is it provides a service which is the ability to store wealth in a digital format without relying on a government or a bank. And the reason it has value is that more and more people want this service. Just like Google provided a service which was to be able to search the internet for information. Bitcoin provides a service which is the ability to store wealth without a government or a bank. And that's a big market. This slide's out of date. That should say $28 trillion. And the Bitcoin number should be like 1.5 million. But

if Bitcoin matches gold, of course, that's an enormous market. I think for the next 20 years, you will do quite well owning Bitcoin. Just like for the first 20 years, you did quite well owning Google. But Bitcoin is not the only thing you can do with this new amazing technology called blockchain. The internet moved information over computers. Blockchain moves money over computers. You could also have invested in Ethereum. Ethereum also provides a service with this new technology. It did quite well. What's Ethereum service?

Among other things, I don't want to offend any ETH maxis who will tackle me and tell me it's a store of value after this, but among other things, it lets you transfer dollars, stocks, bonds, and other assets over blockchains globally 24/7, 365 at the speed of light. And guess what? Just like the gold market is a very large market, so is the ability to transfer these assets globally at the speed of light. This is a chart of stablecoin aum 0 to300 billion in 5 years. The US Treasury projects this to be $3.7 trillion by 2030. And I think they're probably underestimating it.

Here's real world assets. This is the most up only chart in crypto aside from the US federal debt. All of these are primarily moving over Ethereum, an amazing service. But it's not just Ethereum. You could also have invested in Salana. Salana is an Ethereum competitor just like uh internet companies in the early days had their own competitors. You could have invested in Salana. And it's not just Salana. Just like there was Netflix in the internet era, there are assets that do many different things. Chain link in my view is one of the most important assets in crypto. I know somewhat controversial but uh but really resonates with institutional investors. You could have

bought that in 2024. It's done quite well. You could have bought unis swap which is trading using this new technology. You could have bought a which is tokenized stocks and lending using this economy. You could have bought XRP which is another tool. You could add a million different things to this chart. We could list companies. We just had some incredible dats. they would fit on this chart. You could list traditional companies like PayPal and Black Rockck that are experimenting on this space just like there were traditional companies like Walmart and Target that made big businesses in the internet. There will be things that emerge in this space that we don't expect right now that will be as strange to us as the idea of summoning a

stranger using your phone to pick you up at the airport would have been to somebody 20 years ago. There will also be things like pets.com and Cosmo.com that go straight to zero. The point of this is I think we're at the point where institutional investors are waking up to the reality that crypto is not just Bitcoin. It's Bitcoin and many other assets. One of the jobs we're going to have as an as an industry is helping people navigate this space, helping them understand how all these different assets fit. And I think this analogy back to the internet in 2004 when you could have bought Google or you could have bought Amazon or you could have bought Salesforce or you could have

bought Expedia or you could have bought Netflix or along came Uber is going to be very similar to what we experience in crypto over the next 10 years with Bitcoin and ETH and Salana and all the rest. I'll just close. It's amazing. They gave me 10 minutes. I'm actually going to finish in in eight, which is pretty good. Um, I'll just close with how we think about this at at Bitwise. Our view is that for most of these investors who are coming into the market for the right first time, the right answer is going to be to follow the wisdom of John Bogle. I know putting up a quote from the founder of Vanguard is somewhat ironic at a crypto conference, but I think it's a good quote. Uh, he said, "Don't just try to find the needle

in the haystack, just buy the haystack." And I think the majority of investors coming into the market are going to take this broad-based indexed approach. I come from an ETF background. We've seen the huge success of Bitcoin ETFs. Everyone's excited for each new asset to get an ETF. So am I. We're launching them at Bitwise. I think the next biggest market after Bitcoin is actually going to be indexbased strategies that give diversified exposure. And the reason is amongst all these bets outside of Bitcoin, the one that I have the most confidence in being true over the next 10 years, much more confidence than ETH versus Salana versus Avalanche, much more confidence than the stickiness of a or unis swap or chain link is that

crypto and blockchain and the services it provide will be a 100x more important in 10 years than they are today. And the way to make sure that you capture that 100% return is to not to try to find the needle in the haystack, but just to buy the haystack, which is a diversified basket of crypto assets. That's it for me except for disclaimers. Everything crypto in 9 minutes and 15 seconds. Thanks everyone for your time. Appreciate it.