Bitwise Chief Information Officer: Two Drivers of the Next Bull Market

Author: Matt Hougan, Chief Information Officer of Bitwise

Compiled by: Hu Tao, ChainCatcher

Cryptocurrency is finally showing signs of bottoming out. Since July 1, Bitcoin has risen by 9%, while the Nasdaq 100 index has fallen by 6%. ETF fund flows have turned positive, and market sentiment is improving. While it is still too early to declare a full market recovery, the current signs are encouraging enough that I have started receiving inquiries about the next market trends.

A consultant asked last Friday, "If the cryptocurrency market has bottomed out, what will trigger the next bull market?"

I believe the answer is clear: the integration of on-chain finance and traditional finance. In other words, the next cryptocurrency bull market will revolve around stablecoins, tokenization, 24/7 trading, instant settlement, and the scaling of institutional-grade decentralized finance (DeFi) to trillions of dollars, disrupting the financial industry much like the internet disrupted media and shopping in the early 21st century.

You might say, "Matt, that's too obvious! Tokenization will certainly lead the next bull market! Stablecoins will definitely scale to trillions! Wall Street will surely build on-chain!"

I agree! The chairman of the U.S. Securities and Exchange Commission (SEC), the CEOs of the world's largest asset management companies, and the CEOs of the world's largest banks would agree as well. After all, there are many obvious advantages to crypto: 24/7 availability is better than 9:30 AM to 4 PM; instant settlement is better than T+1; global reach is better than local; and so on.

However, despite how obvious it seems, most investors are not currently positioned for this. Most of them are still asking whether crypto is "over." The opportunity lies within this gap. So, how should you start positioning for the new bull market? You can focus on entities leading this integration from two opposing directions: Hyperliquid (HYPE) and Robinhood (HOOD).

Entering from the Crypto Side

Hyperliquid (HYPE) is a Layer 1 blockchain designed specifically for the crypto perpetual derivatives market. Investors initially use the Hyperliquid App to speculate on Bitcoin, Ethereum, and other pure crypto assets. However, its technology is extremely smooth—user-friendly, instant settlement, 24/7 trading, etc.—and thus quickly expands to other markets.

Today, nearly half of the trading volume on Hyperliquid comes from traditional assets such as oil, silver, and the S&P 500. It is expanding into spot commodities, prediction markets, and options. Its success has made competitors anxious. For example, CME is suing the CFTC to slow down the agency's acceptance of the perpetual futures pioneered by Hyperliquid. Other institutions like Nasdaq, Coinbase, and ICE are also on alert.

Despite being in a crypto winter, Hyperliquid's token has still risen by 146% this year, supported by real growth. The platform is expected to generate $800 million in revenue this year, using 99% of that to buy back its native HYPE token on the open market, thereby reducing supply. I believe it still has a reasonable valuation even if the token price doubles.

Entering from the TradFi Side

Robinhood is advancing this integration from the traditional finance side. It is a traditional brokerage competing with firms like Charles Schwab for retail and professional investors.

But Robinhood fully believes in the "integration" narrative. Its CEO, Vlad Tenev, stated that tokenization "will consume the entire financial ecosystem," and that crypto and finance "have been living in two parallel worlds for some time, but are about to fully merge." He predicts that the boundaries between the two will ultimately "disappear." Robinhood was one of the first brokerages to offer crypto trading.

On July 1, Robinhood went all in and launched its own Layer 2 blockchain—Robinhood Chain. This chain allows users from 120 countries (the U.S. is not yet supported) to trade tokenized stocks 24/7/365. It also integrates with standard DeFi protocols: users can swap assets on Uniswap, lend on Morpho, or trade perpetual futures on Lighter with margin. In just two weeks, deposits on Robinhood Chain exceeded $300 million, with daily trading volume reaching 3.6 million transactions.

It's worth reading again: just earlier this month, Robinhood launched a financial service in 120 countries with the push of a button, allowing people to buy and sell, margin trade, and leverage trade tokenized stocks instantly around the clock. And people are indeed participating on a large scale. Skeptics might point out that early activity was primarily in meme coins rather than stocks, which is true. But stock trading volume is significant, and the users are real; I expect both to scale over time.

One thing I can say for sure is that every major competitor of Robinhood is paying attention to this and asking themselves, "Should we be doing this too?" Do we need a Schwab Chain? A UBS Chain? A Bank of America Chain? Given Robinhood's performance in the first few weeks, no one will ignore it.

Two Types of Investments That Will Win

I believe the upcoming bull market will be large enough to uplift the entire sector. I am optimistic about mainstream coins—Bitcoin, Ethereum, Solana, etc.—as well as crypto-related stocks. But there are two types of investments that I believe are particularly well-positioned.

1. Hyperliquid Path: Crypto financial applications with real revenue and strong token economics

What sets Hyperliquid apart from other crypto applications is its real revenue and robust token economics (as mentioned, 99% of revenue is used for buybacks and burning HYPE). This is appealing to investors who see crypto applications accumulating large user bases and trading volumes but whose tokens are stagnant. Over time, I believe a new wave of crypto assets will replicate HYPE's token economics and bring exciting "next-generation" token opportunities.

But before that, I prefer existing projects that already have real scale and are actively linking token value to usage. For example, Uniswap and Aave are operating at scale and are rapidly improving their token economics; Morpho is also working in the same direction.

2. Robinhood Path: Existing companies building on the crypto track

Disruption will reshuffle market shares. Advancing toward stablecoins, tokenization, and blockchain tracks represents the biggest technological shift in financial markets in fifty years. Significant changes are happening. To find winners, I will look for companies that are experimenting with crypto at scale, rather than just doing proof of concepts (which are low-cost, headline-grabbing, but teach little).

What Robinhood learns in real-time on-chain from 120 countries is 10,000 times more than any pilot project. The institutions I am watching include Coinbase, Figure, and BlackRock; I would also consider Visa, Stripe, and even JPMorgan—though its public stance is reserved, it is actually doing a lot. There are other companies, but these are the players truly invested in the space.

Finding the Integration Point

There has long been a belief in the crypto world that its greatest successes will occur when it is most "invisible"—when blockchain technology is so deeply embedded in the architecture of the financial system that people do not even realize it exists. I am more convinced than ever that the next bull market will come when traditional finance and crypto are inextricably linked. Until then, investors would do well to position themselves accordingly.