Bitwise CIO Says Crypto's Biggest Opportunity May Lie Outside Crypto

Investors may be measuring the crypto industry's addressable market against the wrong benchmark, according to Bitwise Chief Investment Officer Matt Hougan.

In a recent note, Hougan argued that markets continue to value crypto applications largely based on the assets and transaction volumes they serve today, even as tokenization could expand blockchain infrastructure into equities, bonds and other traditional financial assets.

He also points to the resilience of crypto-native companies against traditional financial incumbents and argues that 24/7 markets and AI-driven trading could eventually generate substantially more blockchain transaction activity than exists today.

Together, the arguments point to a broader thesis: the potential market for crypto infrastructure may be considerably larger than the crypto market itself.

The Market Crypto Apps Could Target Is Much Larger

Hougan's first argument is that investors may be underestimating the markets crypto applications could eventually serve.

He uses Uniswap as an example. The decentralized exchange was originally built around trading crypto assets, but tokenization could eventually allow similar infrastructure to facilitate trading in tokenized stocks, bonds and other assets.

The difference in market size is substantial. Hougan compares a roughly $2 trillion crypto market with approximately $150 trillion in equities and $350 trillion in bonds.

That does not mean decentralized applications will automatically capture a share of those markets. Tokenized securities still face questions around regulation, custody, liquidity, market structure and investor adoption.

But if blockchain applications become infrastructure for tokenized traditional assets, their potential revenue would no longer be determined solely by the size of today's crypto economy.

Hougan applies the same argument to Aave, Hyperliquid and Chainlink, arguing that investors risk treating them as products for today's crypto market rather than platforms that could serve a much broader onchain financial system.

TradFi's Brand Advantage Has Not Automatically Translated to Crypto

Hougan's second argument challenges the assumption that established financial companies will eventually displace crypto-native firms once they enter the market.

The stablecoin market provides one example.

PayPal launched PYUSD in 2023, bringing the credibility and distribution of one of the world's largest payments companies into stablecoins. Yet established crypto issuers have continued to dominate the sector.

Circle reported that USDC held a 27% share of the fiat-backed stablecoin market at the end of the second quarter of 2026, based on its stated methodology. Tether remains the largest stablecoin issuer, while PYUSD remains a much smaller competitor.

The same dynamic can be seen in crypto custody.

Traditional financial institutions including Fidelity have built regulated digital-asset custody businesses, but Coinbase remains a dominant institutional custodian. Coinbase reported in its first-quarter 2026 results that it held approximately 12% of global crypto assets and served as custodian for more than 80% of U.S. Bitcoin and Ether ETF assets.

The evidence does not show that traditional financial institutions cannot compete in crypto. BlackRock's success in Bitcoin ETFs is an important counterexample.

Instead, it suggests that competitive advantages do not transfer evenly between markets. Traditional financial firms retain advantages where established distribution and client relationships matter, while crypto-native firms can retain an edge in markets where they already have users, liquidity and infrastructure.

Tokenization Could Increase Transaction Volumes

Hougan's third argument concerns the amount of activity that blockchain networks could eventually process.

Investors often estimate the potential value of blockchain infrastructure by looking at the transaction activity generated by financial markets today. Hougan argues that this could underestimate future volumes because tokenization may change when and how frequently assets are traded.

U.S. equities, for example, currently trade during defined market hours on business days. A fully tokenized market could operate continuously.

Hougan points out that U.S. equities currently trade for roughly 33 hours per week, compared with 168 hours in a 24/7 market.

That does not mean trading volume would automatically increase fivefold. But removing market-hour restrictions could create more opportunities for transactions.

The bigger potential change could come from artificial intelligence. As AI agents increasingly monitor portfolios and execute financial tasks, trading activity could become less dependent on humans initiating individual transactions.

Hougan argues that this could eventually increase transaction volumes by multiples of today's levels, potentially reaching 10 to 100 times current activity in some markets.

That figure should be treated as a forward-looking thesis rather than an established market forecast.

The underlying question is nevertheless significant: if tokenization expands the assets that can move onchain, and automation increases the frequency of those movements, how much larger could the transaction economy become?

The Investment Question Is What Crypto Infrastructure Will Capture

Hougan's three arguments point to the same gap between current market perception and potential future use.

Tokenization could expand the assets available onchain. Crypto-native companies could retain competitive advantages in markets where they already have users and liquidity. And 24/7 markets combined with automated agents could increase the frequency with which assets and money move.

None of these developments is guaranteed.

Tokenized securities still face regulatory and market-structure constraints. Traditional financial institutions have demonstrated that they can succeed in crypto when they find the right distribution model. And the scale of future AI-driven transaction activity remains uncertain.

But the direction is becoming clearer: the distinction between crypto infrastructure and financial infrastructure is becoming less defined.

That may ultimately be the more important valuation question.

If blockchain becomes infrastructure for a much larger set of assets and transactions, measuring its opportunity by today's crypto market could underestimate what the industry is building.