The Crypto market has really matured since the early days of a decade ago that evolved from a niche community to an increasing adoption on both Wall Street and Main Street, marked with exchange-traded funds (ETFs) and even superb adoption.
Despite this growth and sophistication, most crypto market participants continue across the globe clinging to a metric – market value. It is still the primary way in which people evaluate and rank cryptocurrencies by multiplying the overall supply of the current price per day. Coin, giving a snapshot of each asset value on the market.
Institutions also did the same for years and saw the entire crypto market primarily through a Bitcoin lens. However, they have since moved to more sophisticated and reliable investment analysis methods, according to Hunter Horsley, CEO of BitWise Investments, which manages over $ 15 billion in assets.
“Historically, institutions saw the entire crypto market similar to Bitcoin, essentially digital gold, and made broader decisions based on market capital. However, they gradually recognize that Crypto Space is more diverse, like the stock market, with each project offering unique use cases and value propositions,” Horsley told Coindesk during the token2049 conference in the Singapore last week.
“This realization promotes a shift from a size -based approach to a more nuanced, stock -like strategy for the choice of active,” he added.
A stock picking strategy is an investment method where funds choose individual shares with strong potential for growth or value. Unlike passive investment, where funds track a broad market index, stock picking involves detailed analysis of companies’ financial health, industrial position and other factors to identify opportunities for higher returns.
According to Horsley, institutions are increasingly doing the same in the crypto market and choosing to invest in coins based on their basic elements.
In addition to Bitcoin
Horsley’s response came after he was asked if Bitwise, as a asset manager, faced difficulties in convincing institutions to invest in assets beyond Bitcoin.
The question arose because a prominent bitcoin defi -investor at the Dubai conference told Coindesk that BTC, often seen as digital gold, is easier for investors to understand and have attracted billions of dollars. In contrast, institutions often struggle to understand Ethereum, Solana and other smart contract blockchains along with the complexity of inserting, yield generation and related dynamics, including regulatory aspects.
The growing willingness to explore cryptocurrencies in addition to Bitcoin is shown in the number of new ETFs launched this year aimed at alternative digital assets, including Joke Cryptocurrency DOGE.
Recently, BitWise filed an S-1 to the US Securities and Exchange Commission (SEC) to launch a spot exchange traded fund focusing on Avalanche’s Avax token.
Change in strategy
The stock -like investment strategy is in line with today’s macroeconomic environment, which differs markedly from 2020.
Back then, interest rates were close to zero over the developed world, including the United States, and inflation was practically not -existing. This rare combination triggered an “Everything Rally”, where even the most unclear altcoins and memcoins increased in value.
Today, the US interest rates sit around 4%, with bond yields grossly matching this level, and inflation remains stubbornly high. In this climate, only crypto assets with strong basic conditions and proven quality are likely to thrive, just as analysts who choose individual warehouses based on basic elements.
Several experts, including economist Mohamed El-Erian and stock market historian and global share strategist Russel Napier, have proposed to use the strategy for stock market investment.
According to them, the current era justifies economic oppression, inflation and fiscal dominance smart structure and dynamic asset allocation, in short, stock picking.
Is Bitcoin still a value of value?
One of the most heated debates when institutions and corporate chains started collecting Bitcoin is whether it serves better as a value of value or as a payment network. This debate matters because activity on the chain is significantly slowed down, causing an observer to notice, “Bitcoin is on a constant, yet blocks are completely empty.”
This situation in particular relates to miners who face periodic halving of block payments about every four years. They may prefer Bitcoin to develop as a payment network to maintain transaction fees rather than solely as a value of value.
Horsley believes that both roles are possible for Bitcoin, but probably one at a time, rather than at the same time.
“Currently, Bitcoin is widely recognized and accepted as a value of value. Once it gets acceptance among governments, businesses and institutions, and they have it as a valuable asset, the next logical step is that it should be used for transactions,” he said. “In order for Bitcoin to be used as a payment method, it must first be recognized and adopted as a legitimate value.”
“Why would anyone want to pay with it if they don’t yet agree on its value?” He asked.
When asked about Bitcoin Defi and other development efforts, Horsley said he “is encouraged by the work done in the payment area, including initiatives such as Lightning and David Marcus’s Lightspark.”
Bitcoin Lightning is another layer scaling solution that enables faster, lower costs and higher volumer-interests by processing payments off-chain through payment channels.
Another cycle
Eventually, Horsley commented on the widely discussed four-year-old Bitcoin cycle tied to the square halving event. Historically, the bull market has tended to reach the peak 16 to 18 months after every half assessment.
Given that the last halving took place in April 2024, this timeline suggests the possibility that a bear market appeared in the coming months. Former bear markets after halving cycles have seen Bitcoin prices fall by 80% or more from their bull market heights.
The bear market in 2022 was characterized by the collapses for larger players such as StableCOin Project Terra, the three Pile Capital Hedge Fund and FTX Exchange, each causing massive wealth destruction across the crypto ecosystem.
Similarly, 2018 Bear Market saw the blast of the ICO bubble and regulatory crashes at crypto trade in China and South Korea – two countries that accounted for a significant part of the global trading volume at that time.
Do we have similar catalysts this time? It’s a good thought exercise, Horsley said.
“The four -year cycle of Bitcoin has traditionally been characterized in a bear market, often triggered by an unexpected and significant counterparty event. Whether the story will repeat itself and lead to a downward next year depends largely on whether such a counterparty blasting can occur again.
Horsley added that if the bear arrives at all, the disadvantage of volatility could be much milder than before when prices collapsed by over 80% from tops.
The Cryptocurrency Market has matured, with BTC volatility lower throughout the ongoing bull market that exhibits Wall Street-like dynamics.
