Bitwise CIO Matt Hougan believes that the future of cryptocurrency adoption through exchange-traded funds (ETFs) will be driven by broad-market index funds rather than single-asset products. He anticipates that the competition among ETF issuers will focus on who can first dominate the broad-market crypto index fund space.
As institutional investors' spending habits become more apparent, a trend is emerging: a significant number of investors seek exposure to the crypto market without the burden of selecting individual blockchain ecosystems that are likely to outperform. This demand is actively shaping the strategies of major ETF issuers as they prepare for the coming years.
From "Pick a Coin" to "Buy the Whole Market"
Hougan posits that the next significant phase of adoption in the crypto market will mirror the evolution seen in traditional finance, where stock-picking gradually gave way to index-based investing, such as S&P 500-style indexing. Institutional allocators are reportedly less interested in debating the relative merits of different blockchains like Ethereum versus Solana, or which Layer-1 solution will achieve faster scaling. Instead, they are looking for a diversified basket that represents the sector as a whole – a single-decision investment that can be held for an extended period.
He forecasts that this shift will lead to a substantial expansion in the number of crypto exchange-traded products available. During an appearance on CNBC, Hougan projected that over 100 new ETFs and ETPs could be operational by 2026, with strategies focused on indexing becoming the primary offerings rather than supplementary options.
Market Volatility Isn’t Slowing Product Development
Despite Bitcoin's recent price pullback, which temporarily pushed its value below $90,000 and reduced some of its year-to-date gains, Bitwise's outlook on future ETF demand remains unchanged. The company anticipates that inflows into crypto ETFs will stay resilient, even during periods of cooling market sentiment. Hougan suggests that the continued willingness of investors to allocate capital during market downturns is a strong indicator of the asset class's growing maturity.
Bitwise's Solana Staking ETF exemplifies this investment philosophy. Rather than focusing on speculative trends, this product stakes the underlying SOL cryptocurrency and compounds the yield. Although the product is currently trading below its launch price, it demonstrated a 9% rebound on Tuesday, indicating sustained demand for staking-linked exposure even amidst volatile market conditions.
Political Winds May Accelerate the Launch Timeline
The evolving regulatory landscape under the Trump administration is also influencing expectations regarding the speed of crypto ETF launches. Fundstrat's Tom Lee suggests that a political climate that encourages innovation could potentially shorten the approval timelines for these products, thereby enabling the ETF industry to scale more rapidly rather than incrementally.
Why This Matters
Hougan's perspective is clear: for the cryptocurrency market to evolve into a multi-trillion-dollar asset class, it must move beyond appealing solely to enthusiasts who actively select individual coins. Mainstream portfolio allocation will only be achieved when investors have the capability to invest in the entire industry through a single, straightforward transaction.