Source: New Era Finance Podcast
Release Date: March 10
Editor: Felix, PANews
Bitwise Chief Information Officer Matt Hougan manages $15 billion in crypto assets. In an interview on the New Era Finance Podcast, Matt Hougan analyzed the current market conditions, believing that the market will peak in December 2024, rather than when Bitcoin hits a new high of $125,000. The process of emerging from the bear market will be slower and more painful than previous cycles. The next bull market will feature lower volatility and a gradual rise. Additionally, Hougan considers Ethereum undervalued and proposed the “Four Kings” of cryptocurrencies. Below are highlights from the conversation.
Bitcoin’s plunge was driven by long-seller pressure, not derivatives
Host: What caused Bitcoin to crash a few months ago? Was it the so-called “paper Bitcoin (derivatives)”?
Matt Hougan: I strongly oppose that view. The main reason for Bitcoin’s price collapse was that many holders sold early to prepare for the “four-year cycle,” or used options hedging strategies to sell upside gains. On-chain data didn’t show large-scale selling because much of the trading was done through options strategies. Although these are categorized as “paper” factors, their essence is that longs decided to sell, leading to a sharp price drop.
Host: But many Bitcoin enthusiasts strongly oppose “paper Bitcoin,” believing it interferes with free markets.
Matt Hougan: I understand that concern, but in reality, derivatives mostly convert into physical demand. For example, when someone goes long in futures, the counterparty usually needs to buy an equivalent amount of physical Bitcoin to hedge. Of course, in extreme cases like the October 10 crash, derivatives amplified volatility through “cascade liquidations,” which can worsen short-term dynamics. But in the long run, these derivatives settle back into physical Bitcoin. The core reason for Bitcoin’s nearly 50% decline was still people selling their holdings.
Bitcoin may be decoupled from gold but remains bullish long-term
Host: From your perspective, how much did the recent rally in gold influence Bitcoin in the short term?
Matt Hougan: It had a significant impact in two ways. First, attention shifted to gold and AI. Second, the strengthening of gold while Bitcoin weakened caused a “narrative disconnect.” Institutional investors ask: “If Bitcoin is digital gold, why is it falling while gold is rising?”
Explaining this takes time. Since the U.S. seized Russia’s foreign reserves in 2022, global central banks increased gold purchases from 400 tons to over 1,000 tons. But they haven’t started buying Bitcoin yet. Bitcoin is in a typical four-year cycle correction year, coinciding with central banks’ massive gold buying, causing divergence in their price movements.
But this doesn’t mean Bitcoin is failing. The world is still digitalizing, and young people trust digital assets more. Also, when gold ETFs launched in 2004, gold’s market cap was $2.5 trillion; now it exceeds $30 trillion. This indicates that the store of value market is rapidly expanding, and Bitcoin’s market share will grow accordingly. From a growth potential perspective, Bitcoin is now more attractive than gold.
Retail investors’ ammunition exhausted; institutional funds drive slow bull
Host: Although the four-year cycle theory suggests Bitcoin will top at $125,000, why do you believe the actual peak will be in December 2024?
Matt Hougan: Because there are two disconnected markets now. One is the institutional market, starting to build positions from scratch; the other is traditional crypto investors following the four-year cycle. Data shows that from December 2024 onward, institutional investors are heavily buying Bitcoin via ETFs, while long-term holders and retail investors are selling off. Look at L1 altcoins like Avalanche, Sui, Aptos, which lack ETF support—they entered a “crypto winter” from January 1, 2025, with declines up to 70%. Therefore, crypto holders are now at the bottom, with RSI and “Fear & Greed Index” at historic lows. I really don’t think the turning point is in October. The data indicates it likely started around January 1, or during Trump’s inauguration. Everything except ETFs has been relentlessly declining.
Host: So, are we truly in a bull market? Honestly, the only reason Bitcoin’s price is rising is because of ETFs and the attraction of more institutional adoption. Without that, we wouldn’t see new all-time highs.
Matt Hougan: That’s true, and it’s something we need to consider. It might mean retail money that fueled the crypto boom has been exhausted. They are out of funds after FTX and meme hype. The process of emerging from this bear market will be slower and more painful than before. Retail funds may be depleted, while new institutional money enters gradually and steadily. It might be a bit boring. I believe this will be a great bull market, but it could be somewhat dull compared to previous cycles.
Host: Maybe the trend will resemble gold, gradually reaching a peak over the next five years.
Matt Hougan: Who knows? The institutional market is just beginning. Although figures like Larry Fink (BlackRock CEO) and Kevin Warsh (a top Fed candidate) publicly support Bitcoin, institutional inflows are slow, with each quarter seeing only small investments. This is very different from the “hot money” in the past that moved quickly. My basic assumption is: we will enter a new bull market characterized by lower volatility and slow, steady growth, especially for Bitcoin.
Host: Compared to the launch of ETFs, how are institutions doing now? Amid market crashes or events like October 10, is there still sustainable optimism or only negative sentiment?
Matt Hougan: Yes, there remains sustained optimism, with only a few caveats. Regarding institutions, they haven’t yet completed their allocations. Also, the question of “why gold rose but Bitcoin didn’t” is straightforward and not a real contradiction. The real concern is quantum computing.
Long-term education needed for Bitcoin adoption; stablecoins as lifeline
Host: Although Bitcoin’s fundamentals are stronger than ever, public perception is more negative than ever. How can we reverse this narrative and make people realize now is the time to focus on Bitcoin?
Matt Hougan: I believe the reversal is happening. The reason is that many respected figures are now talking about Bitcoin. You hear BlackRock CEO Larry Fink discussing Bitcoin. You hear Kevin Warsh, soon to be Fed Chair, saying, “If you’re under 40, Bitcoin is your gold.” You hear Ray Dalio advocating holding 15% in gold and Bitcoin. These are thought leaders gradually shifting attitudes toward Bitcoin. For the general public, it’s a process of ongoing education—helping them understand how bad the fiat monetary system is and the amazing things Bitcoin can offer. It takes time. For global fund managers, Bitcoin’s reputation is now better than at any time I’ve been full-time in this space. I’ve been in crypto for eight years, and its current position is the best ever.
Host: I also feel the situation has completely flipped. Previously, retail was prioritized; now, institutional adoption leads, with retail following. How much impact do you think stablecoins will have in driving Bitcoin adoption?
Matt Hougan: Their impact is definitely huge. Whether people realize it or not, in recent years everyone has interacted with stablecoins and tokenized assets. It will become as natural as using WhatsApp. The proliferation of tokenization and stablecoins will also be like that. This is important because it introduces people into the digital asset ecosystem—they’re just “one click away” from Bitcoin, and the concept of digital wealth is no longer so unfamiliar. If you could snap your fingers and give everyone a crypto wallet, do you think that would be good or bad for Bitcoin? Clearly, good—because it brings more people closer to owning Bitcoin.
For billions without bank accounts, stablecoins are a lifeline. Payment giants like Stripe are entering this space aggressively. Even more, Meta plans to launch stablecoin access on Facebook, WhatsApp, and Instagram, exposing 3 billion people directly to digital wealth. Even if only 10% end up buying Bitcoin, that would be a huge incremental market.
Host: Let’s talk politics and regulation. Since Trump took office, the much-anticipated “Bitcoin strategic reserve” seems to have no movement?
Matt Hougan: People might be a bit impatient. Governments are much slower than retail investors. Retailers make decisions in a minute; central banks might take ten years. But there’s good news: leadership changes at the SEC, no longer prosecuting the top 12 crypto firms; the GENIUS Act has ended discriminatory policies against crypto companies. The key now is the Congressional CLARITY Act—if passed, Wall Street’s big banks will start large-scale involvement.
No need to worry about quantum attacks; Bitcoin can benefit from AI boom
Host: What do you think about the threat of quantum computing?
Matt Hougan: Quantum computing is a “big institution-level FUD (fear, uncertainty, doubt).” While it does pose risks, Bitcoin can upgrade. If quantum computing could easily crack Bitcoin, then nuclear codes and banking systems would have already been compromised—Bitcoin is the last thing you’d need to worry about.
Host: Regarding AI, many say miners are shifting hash power from Bitcoin mining to AI.
Matt Hougan: That’s an extreme scenario. If assets used for AI generate better profits, miners will pursue that. But I’m not worried. If enough miners switch to AI, Bitcoin mining difficulty will decrease, lowering costs and increasing profits. Over the past 16 years, the system has self-corrected through threats like government crackdowns and hash power fleeing. It will continue to do so for the next 160 years.
Host: Overall, what impact will AI have on the economy? Will it cause massive deflation?
Matt Hougan: No one can say for sure. But ultimately, positive effects will benefit Bitcoin. If AI just boosts productivity and the economy performs well, that’s good for risk assets like Bitcoin. In an extreme doomsday scenario—AI replacing all jobs, causing huge deflation, and people not spending—governments would respond by printing money wildly, inflating asset prices, which is very favorable for scarce digital assets like Bitcoin. But my basic assumption is: AI will lead to fundamental business restructuring—reducing costs, increasing efficiency, making the world wealthier—and that’s also good for crypto.
Multiple catalysts driving crypto revival; agentic finance as growth engine
Host: When talking about the crypto winter, what narrative will pull us out of this low?
Matt Hougan: It will never be just one thing. I believe the rise of “Agentic Finance,” growth in institutional DeFi (like lending worth trillions), the four-year cycle, more dovish rate cuts than expected, reduced quantum risks, the growth of stablecoins and tokenization, and the passage of the Clarity Act—all these factors combined will propel us out of the bear market.
Host: Why does agentic finance impact tokens?
Matt Hougan: Top payment giants like Stripe have stated that agentic finance will dominate most internet transactions, all happening on blockchain and stablecoins. AI agents won’t open accounts at JPMorgan; they will only hold stablecoin wallets. When they represent the majority of economic activity, it creates a huge growth flywheel.
Ethereum is undervalued; the “Four Kings” of crypto
Host: So projects like Near, which build quality tech in the ecosystem, are very fitting. Also, is the market currently severely undervaluing Ethereum?
Matt Hougan: Yes, the market underestimates Ethereum and Solana, the two dominant players. I’m very bullish on Ethereum, especially with Vitalik returning to the community as a key force and a faster tech roadmap. As leaders in stablecoins and tokenization, they are gaining most institutional endorsement.
Solana also benefits from being a challenger in the same space. When talking to institutions, their interest is now roughly split evenly between Bitcoin and ETH/SOL (stablecoins and tokenized assets).
Host: I’ve been a Chainlink supporter for nine years. Many focus only on its token price, ignoring the complexity of its underlying technology. Why are you so optimistic about it?
Matt Hougan: I believe the “Four Kings” of crypto are: BTC, ETH, SOL, and LINK. Institutional investors might not even know what a “oracle” is—they’re missing the bigger picture.
My simple logic: blockchains will increasingly interact with the real world, and Chainlink holds about 75% of the market share, connecting data, providing audits, and cross-chain bridging. If it were a traditional software company, it would be one of the hottest tech stocks today. Chainlink isn’t more popular just because its tokenomics seem complex to ordinary people. But once you understand that “connecting the real world requires bridges,” its massive and dominant value becomes obvious.
Advice for young investors
Host: If a 25-year-old wants to enter the market now, what advice would you give?
Matt Hougan: First, buy some crypto, but avoid Meme coins. A 25-year-old has a long time horizon, so allocate most of their portfolio to diversified crypto index funds and hold long-term. Also, spend time understanding a few specific assets and invest in them. Whether or not investments yield huge profits, the process itself will generate tremendous cognitive returns over time. The key is to invest with “personal stake.”
Host: How do you stay rational amid market volatility and external noise?
Matt Hougan: I measure my investment horizon in “decades.” If you ask the most pessimistic in crypto, they’ll still tell you: in ten years, Bitcoin will be bigger, stablecoins will be huge, and tokenization will be widespread. The current fluctuations are just noise.
I’ve experienced two crypto winters. The first was the hardest, but once you truly understand the long-term drivers of crypto and realize they still exist, volatility no longer bothers you. Focus on the “big prize in ten years,” not the quick wins in ten minutes.
Related: Interview with Dalio: AI is consuming everything, gold remains the first choice, and Bitcoin still has a long way to go.
