Dialogue Bitwise: Institutions see the current as a good opportunity to enter Bitcoin and need to clarify the roadmap for responding to quantum attacks.

Source: “Milk Road” Podcast

整理：Felix, PANews

Bitwise Chief Investment Officer Matt Hougan and Head of Research Ryan Rasmussen appeared on the “Milk Road Show” (recorded on April 6), delving into the true drivers of the current crypto market and why institutional demand might be the key to Bitcoin’s next move.

They pointed out that despite the overall pessimistic sentiment in the crypto market, institutional investors are quietly increasing their holdings. From ETF capital inflows to regulatory developments and macroeconomic shifts, several key signals could push Bitcoin to break through $95k by 2026. PANews has summarized the highlights of the conversation.

Host: Ryan, I saw an article where you predicted Bitcoin would reach the $95k range by the end of the year. Is that true?

Ryan: That was an interesting discussion because we talked about many long-term positive factors that could drive the market higher. One example I gave was that by 2026, we see certain catalysts that could bring the market back to the $95k level—exactly where we need to break the four-year cycle. I believe this is very likely to happen, and we might even close the year above $95k. Several very specific catalysts will push us toward that target, of course contingent on some conditions. I did say this and believe it will happen.

Host: What are these catalysts?

Ryan: There are three specific environmental factors that need to turn favorable for Bitcoin to push prices higher. The first is macro and geopolitical situations, which I strongly believe will subside in a relatively short period. Many worry that this prolonged conflict could last many months and trigger chain reactions in inflation, interest rates, and the US and global economies. I don’t believe it will be that way. I see it as a short-term shock that will gradually fade. In six months, our discussion about it will be similar to how we talk about tariffs or other short-term market shocks triggered by Trump. So I think the macro geopolitical environment needs to shift from uncertainty, instability, and ongoing chaos to a more normalized state. I believe this will happen in the coming months. We’ll have Kevin Wars stepping up, and I think we’ll see interest rates holding steady or even cutting. I don’t expect rate hikes, which would be positive for Bitcoin’s price returns.

The next is regulatory clarity. Bitcoin’s regulatory environment has been very uncertain, with the “Clarity Act” pending, but I believe the “Clarity Act” will pass before the 2026 window closes. I see this as positive news for Bitcoin and other crypto assets.

And the biggest catalyst (not just for 2026 but a long-term driver) is the strong demand from institutions for Bitcoin. Last month, despite all the geopolitical macro uncertainties and regulatory ambiguities I just mentioned, Bitcoin ETF inflows still exceeded $1 billion. So you can imagine what would happen if these issues ease and become tailwinds for crypto. From an institutional demand perspective, I think these factors will push Bitcoin back above $95k before the end of the year.

Host: Is there a possibility that these positive factors do occur, but conflicts also persist? Could they cancel each other out?

Ryan: That’s possible. If interest rate hikes happen and conflicts continue for six months or longer, it would be difficult for any financial asset to perform strongly. But interestingly, the market’s reaction to these threats or statements is starting to become less sensitive. For example, Trump’s final ultimatum, Iran’s response that they won’t comply, Trump changing the deadline again—each time, the market’s reaction weakens. So I see this as a gradual desensitization, after which other forces will take the lead.

Ultimately, Bitcoin’s price is driven by supply and demand, so institutional demand will be the strongest force. From our conversations with investors, they see current prices as a good entry point and are making many long-term allocations in their portfolios. I believe this long-term demand won’t be offset, though whether it arrives in a month, six months, or nine months remains to be seen.

Host: Matt, do you feel there’s momentum for Bitcoin to reach $95k before the end of the year?

Matt: I do think that depends on what Ryan just mentioned. I’d add another catalyst: we need some resolution or clear roadmap to address growing concerns about quantum computing threats to Bitcoin. The only point I might disagree with Ryan on is that if all our cards turn positive, I think the price could go well above $95k; if it’s mixed, we might range sideways; if everything worsens, we could close at a lower level. My view is more dispersed. But if we get regulatory clarity, the Iran issue is resolved, and we address quantum computing, I think the end of the year could be very bullish. It all depends on a series of events moving in a favorable direction.

Host: Is quantum computing really that easy to solve? I recently interviewed some guests, and it sounds quite complex—you need to get everyone in the Bitcoin space to reach a consensus on solving it. Meanwhile, Ethereum Foundation seems more proactive lately, and their system is quite different. Is this something that can be quickly solved or prevented in Bitcoin?

Matt: My view is that steps to address the quantum threat are actually happening. That is, credible figures are raising concerns, and more and more people are paying attention, willing to weigh the pros and cons. From a preparedness standpoint, we’re in a much better position than 12 months ago. I don’t think we need to solve all problems; we need a reliable roadmap to unlock the demand from early Bitcoin investors, leading us out of winter into the spring of the four-year cycle. That’s not to say Ethereum has fully solved the problem—they just have a reliable roadmap. If we also have a clear plan and commitments, enough to bring back early OG investors, I believe institutional investors will come regardless, because they realize their current Bitcoin allocations are off-market and holding zero is no longer tolerable. My view is that to break through Ryan’s $95k upside, we need those OG crypto players and retail crypto investors involved, and I think they want a clear roadmap.

Host: You mean these OGs must feel that after Google and last week’s warnings, the situation is being addressed or will soon be under control. So Matt, for those OGs who started selling large holdings last year, is this concern the initial reason for demand erosion?

Matt: Yes. I usually think that attributing it to a single cause is wrong, but it’s a contributing factor. Is it as important as the four-year cycle or avoiding a historic 75% retracement? No. But it’s definitely an excuse—people tend to take emotional actions to adjust their risk exposure before the cycle arrives. It’s complicated, but it’s a factor. Their attention has increased significantly. And I think that’s a good thing—it shows the system is self-healing. But I do believe that if well-organized, it could serve as a catalyst now.

Host: Ryan, was this quantum issue discussed at the Digital Asset Summit? If not, what are people talking about?

Ryan: Quantum computing was mentioned at the Digital Asset Summit, but not to the extent you might think. The article from Google about accelerating quantum risk timelines was actually published after the conference, so it only gained attention last week. I’d say most of the focus at the summit was on institutional adoption, regulatory clarity, tokenization, stablecoins, and vaults, with less emphasis on quantum risks—even though it’s a top concern for investors. Over the past month, many investors have asked about Bitcoin and Ethereum’s quantum risks. They see the efforts to address these risks, which provides some reassurance, but we really need to see concrete actions to truly ease long-term worries.

Host: Ryan, you said institutional investors are “curious.” Does that mean they still have an information gap, not understanding these assets, or are they trying to gain internal support? What do you mean by “curious”?

Ryan: When you talk to different institutional and professional investors about their focus on crypto and specific developments in the industry, you find a wide range. Many professional investors spend very little time thinking about Bitcoin or broader crypto. Their information usually comes from headlines in The Wall Street Journal or CNBC, or from listening to market risk discussions on CNBC. So when they hear about quantum computing or Google’s important paper, they come to us asking: how big is this risk? As professional asset managers who follow the space 24/7 and talk to Bitcoin core developers and support them, how do you see it? So the information gap is that they rely on us to understand what’s real versus noise.

Host: Matt, at the summit, what other risks or opportunities are institutional folks most concerned about? Or what have you learned that was previously underestimated?

Matt: One big takeaway is that in the past five years, the dress code at the summit has changed. Five years ago, only two or three people wore suits; this year, about 80% to 85% did, which is remarkable. It signals an unstoppable institutional bull market in crypto, reflected in stablecoins, tokenization, and vaults—fundamentally, the nature of crypto is evolving. Just compare photos from 2020 and now; the difference is huge. Another hot topic is “Vaults.” There’s enormous interest in vaults, which I see as the next ETF. I think institutional interest in vaults even exceeds the current market assets and growth levels.

Host: What exactly is the difference between ETFs and vaults?

Matt: Historically, asset management solves the problem that individuals want to invest in markets but lack the diversification and management skills (since it’s not their full-time job), so they entrust money to asset managers. 300 years ago (17th century), asset management was very cumbersome and expensive. By the 1920s, we had open-end funds; in the 1990s, ETFs emerged, making things more efficient. Vaults take this further by increasing efficiency. In the traditional world, asset managers handle custody, auditing, and tax reporting, combining these with intellectual property (IP) of investment strategies. Vaults strip away all those “tedious real-world tasks,” leaving only the IP. Investors fund smart contracts, which allocate assets based on the asset manager’s operations. It’s a more streamlined, efficient, and perfect version of asset management, leaving other cumbersome parts to the individual.

Host: Ryan, I have a question. Are vaults an area where AI will have a huge impact? Because, as Matt described, it sounds like it involves very advanced strategies. I ask because last week you posted a tweet saying AI folks are more excited about crypto than crypto people themselves.

Ryan: Absolutely correct. That was a very compelling tweet. Over the past 6 to 9 months, crypto sentiment has been near all-time lows, close to the lows during the FTX collapse in 2022, with prices plunging and liquidity drying up. But when you talk to institutional investors, they don’t see a bear market in prices—they see positive factors that will drive the market higher long-term: vaults, tokenization, stablecoins, etc. When you talk to AI product builders, they see many benefits in the underlying tech: AI needs identity solutions, which crypto/blockchain does very well; privacy solutions, which crypto does very well; and ways for AI agents to transact without bank accounts, which stablecoins and blockchain are also very good at. So AI developers see synergies and are extremely bullish; institutional investors see the synergy between traditional finance and crypto tech and are increasingly bullish. Meanwhile, crypto-native investors only see falling prices, liquidity drying up, liquidations, meme coin crashes—they think it’s all over. It’s a huge disconnect. It’s like crypto holding an umbrella in the rain while the sun shines.

Host: Why is the crypto space so emotional? Is it because it’s more volatile? Can it escape this rollercoaster of emotion?

Ryan: I think part of it is the difference in investment time horizons. Many crypto investors entered the space to get rich quickly and beat institutions. As markets go through cycles of boom and bust, they become disillusioned and hurt. But the wealth management firms and professional investors we deal with are usually long-term oriented. They plan for 5 or even 45 years of retirement, see big trends, and get excited. Crypto investors tend to be overly concentrated, and when markets fluctuate, they behave very emotionally—extremely risky. Professional investors are better at systematic investing for long-term returns; they’re positioning now because they foresee these technologies paying off in 10 years.

Matt: I agree. I’d add that certain areas of the crypto market—like meme coins, alt L1s, air tokens—are definitely “winter.” Many hold these assets with bleak prospects. That’s a completely different mindset from starting fresh with new allocations. If you’re entering now, seeing stablecoins and tokenization booming, but these assets have dropped 50%, you might see opportunity. But if you hold assets down 90% or more, with a potential 99% drop, your perspective is totally different.

Host: Matt, you released a great memo today addressing the five biggest questions about market predictions. As a seasoned “Degen,” I like betting on all kinds of weird stuff, but prediction markets are currently quite controversial and problematic. You hinted in your article that prediction markets are one of the most important tools in finance. Why?

Matt: Because they provide new critical information and are useful portfolio tools. First is data quality. We’re frustrated that the Fed always looks at lagging data—employment figures are often heavily revised, which greatly impacts economic and investment decisions. Improving the quality of economic data would make the world run better.

I referenced a Fed paper showing that prediction markets like Kalshi (even small ones) are already more accurate than Bloomberg’s top economists and the Fed’s own expectations surveys in predicting Fed rate cuts, GDP, CPI, etc., and they do so in real time. From a portfolio perspective, the real world is affected by political and economic events. If you think Elizabeth Warren might become SEC chair after a few years, that could impact crypto, but you can’t easily hedge that probability today. It’s not just crypto—defense stocks, AI stocks are affected, but current portfolios can’t express that. Packaging these risks into prediction markets to create hedging tools would be very valuable. They’re not perfect—some markets need reform—but overall, I see them as very positive.

Host: The biggest criticism of prediction markets is that they’re just another form of gambling, especially when linked to crypto, like meme coins. How do you respond?

Matt: Some are indeed gambling. If you bet on football in prediction markets, it’s no different from sports betting, which is fine. But if you’re predicting Fed rate outcomes, that’s equivalent to CME’s federal funds futures—one of the largest financial markets, with daily trading volume of $95k to $1.5 trillion, which we call investing. Prediction markets can cover both. We can separate complex financial investments/hedging from sports or pop culture events. They’re very powerful tools.

Host: Will prediction markets eventually differentiate? For example, now on Polymarket, there are thousands of topics, overwhelming people. Will there be markets dedicated solely to financial categories in the future?

Matt: That’s definitely possible. When considering launching ETFs based on prediction markets, we’d focus on financial indicators—not Taylor Swift concert revenues. Just like existing ETFs, which include the S&P 500 or 3x leveraged stocks, search tools will distinguish between general and specialized ETFs. As more financial users adopt these markets, I expect them to differentiate. I wouldn’t be surprised if sports betting separates out, given the additional legal risks involved.

Ryan: For investors, I think prediction markets allow them to express their views on binary outcomes, which is very important. Previously, it was hard to break down expectations like “who will win the election” into complex cross-asset portfolios—commodities, tech, gold, bonds. Prediction markets greatly simplify the ability to hedge or plan portfolios. Packaging specific prediction events into ETFs or financial products makes operations straightforward. Also, as Matt mentioned, the accuracy of prediction markets on macro or economic events (like Kalshi) even surpasses traditional polls and expert consensus, with very strong information aggregation.

Matt: I completely agree. One point often overlooked is that the world’s largest institutions have their own ways of directly obtaining these odds—like hedge funds paying high salaries to lobbyists in Washington to gather intel. I like prediction markets because they surface this information for everyone, creating a fairer playing field. It’s an egalitarian advantage, very important for the fairness of the investment ecosystem.

Host: Could there come a day when people stop reading news and just look at what Polymarket reports?

Matt: That’s my favorite point. I think Polymarket should win a Pulitzer for its coverage of Trump’s election victory. It’s the only place that accurately predicted what would happen, better than polls or any media outlet. If that’s not news, I don’t know what is. It was the most important news at the time, and it got it right. So I think many will turn to Polymarket and Kalshi, like reading The New York Times or Wall Street Journal, to understand what’s happening in the world—and they might get better information.