Bitcoin takes back seat to stablecoins and tokenization among financial advisors: Bitwise CIO

Financial advisors are now showing more interest in stablecoins and tokenization than bitcoin, according to Bitwise Chief Investment Officer Matt Hougan, who based the view on meetings with more than 40 advisors this week.

Hougan said he held eight sales calls in a single day, speaking with teams of advisors that highlighted two key themes: financial advisors remain interested in crypto despite the current bear market, but their attention is increasingly shifting beyond bitcoin.

"Their eyes are on stablecoins and tokenization more than bitcoin," Hougan wrote in his latest memo published Wednesday.

The shift comes even as Hougan said he personally finds the current bitcoin price above $60,000 "incredibly attractive" for long-term investors and acknowledges that bitcoin has historically led crypto out of previous bear markets because it is the largest and most established digital asset.

However, Hougan said advisors showed much greater curiosity about crypto's real-world applications, particularly stablecoins and tokenization, which are increasingly being adopted across payments and capital markets.

"The reason, I think, is twofold," Hougan wrote. "On the one hand, the fiat debasement trade has receded from investors’ minds generally." He pointed to gold trading about 20% below its all-time high as an example.

At the same time, Hougan said stablecoins and tokenization have moved to the center of industry discussions, with figures including Securities and Exchange Commission Chair Paul Atkins, Goldman Sachs CEO David Solomon and BlackRock CEO Larry Fink regularly discussing the themes.

"Investors want to be a part of that," Hougan wrote.

Still interested in crypto

Hougan also said the conversations suggest financial advisors remain interested in crypto despite the market downturn, which he views as an encouraging sign for the industry's next growth phase.

Throughout crypto's history, Hougan said each major bull market has been driven by a combination of new products and new investor groups. He pointed to Ethereum's launch and early retail investors after the 2014 bear market, DeFi Summer and Covid-era retail investors deploying stimulus checks after 2018, and spot bitcoin exchange-traded funds together with mass retail and hedge fund investors following the 2022 FTX collapse.

Looking ahead, Hougan said new products such as stablecoins, tokenization, perpetual futures and other real-world applications could provide the next catalyst. But for a sustained recovery, he said crypto also needs a new wave of investors.

"The best hope in my view is financial advisors and institutional investors—many of whom still face hurdles to accessing crypto exposure," Hougan wrote. "The fact that they remain interested despite the pullback is good news."

ETH, SOL, HYPE and more

If financial advisors become the next major source of crypto inflows, Hougan said money may first flow into stablecoin- and tokenization-linked investments rather than bitcoin.

Among the assets he highlighted were Ethereum, Solana, Canton, Chainlink and Avalanche, all of which came up during his meetings, Hougan said. He also pointed to newer trading-focused tokens such as Hyperliquid and crypto-related companies including Figure, Circle and Coinbase as potential beneficiaries.

Hougan noted that financial advisors collectively manage more than $175 trillion and said his discussions suggest they now "have a much broader and more nuanced view of crypto’s potential than they did even two years ago."

"That’s a big deal," he wrote. "It might also be the thing that leads us into the next bull market."