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Bitwise CIO warned that crypto investors may be focusing too narrowly on today’s market while missing where the industry could go next.
ByChayanika Deka
Crypto investors may be underestimating where the industry is heading, according to Bitwise Chief Investment Officer Matt Hougan, who has pointed to three mistakes he sees in the market right now.
In a recent post, Hougan said that investors are using today’s market size, established brands, and current activity to judge crypto’s future. Those are normally reasonable approaches, but the space is evolving so quickly that these assumptions are becoming outdated.
Investors Missing the Bigger Market
His first point is that investors are underestimating what crypto applications could eventually be used for. Uniswap, for example, was built as a platform for trading cryptocurrencies, but Hougan said it should not necessarily be valued only against the roughly $2 trillion market. As stocks, bonds, real estate, and other assets move onto blockchains, the addressable market for platforms such as Uniswap could become much larger.
The stock and bond markets are worth about $150 trillion and $350 trillion, respectively. Tapping these spaces could create an opportunity roughly 100x larger than crypto alone. Hougan said the same applies to applications such as Hyperliquid, Aave and Chainlink, which investors often view simply as crypto platforms.
The second mistake is assuming that the biggest TradFi companies will eventually take over crypto-native businesses. The exec pointed to PayPal’s stablecoin launch in 2023 as an example. Despite its global brand and position in payments, PYUSD only accounts for 1% of the stablecoin market, while Tether and Circle dominate 88%.
Fidelity faced a similar situation after launching its crypto custody service in 2019. While Fidelity has performed well in the market, Coinbase has become the largest crypto custodian in the US. The same goes for CME’s position in crypto derivatives and Bakkt, which was backed by Intercontinental Exchange, as examples of traditional finance companies that did not end up dominating their respective markets.
He said crypto-native firms have an advantage because they tend to move faster, focus entirely on crypto, and already have users and trust within the sector.
Source: cryptopotato.com