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April 23, 2025

Bitcoin: The Alternative You Can No Longer Ignore

In this episode of Fund Shack, Ross Butler speaks with Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, the firm that launched the first crypto index fund and now oversees over $10 billion in assets. Previously CEO of ETF.com and chairman of Inside ETFs, Matthew has been at the vanguard of two financial revolutions: exchange-traded funds and now crypto investing.

They explore why Bitcoin is no longer an asset institutional investors can afford to ignore, why it fits comfortably into modern portfolios, and how it is evolving into a global macro asset, one that could redefine value, collateral, and even the foundations of finance itself.

From Retail Phenomenon to Institutional Essential

Bitcoin has long been dismissed as a retail-driven speculation. But institutional adoption is accelerating fast. Since 2023, US Bitcoin ETFs have amassed over $37 billion in assets, eclipsing every ETF launch in history. A third of that capital is institutional, and Bitwise alone has seen its AUM tenfold in just 18 months.

Institutions are realising that Bitcoin, when stripped of its reputation, offers a compelling asset profile: high historical returns, low correlation with stocks and bonds, deep liquidity, and rising relevance in macro portfolios.

Rethinking Bitcoin’s Role in the Portfolio

Many asset allocators are re-examining where Bitcoin fits. Some bucket it within high-beta equities or emerging tech. Increasingly, though, it’s being treated as an alternative asset due to its unique risk-return characteristics and lack of correlation.

Institutions are beginning to see that a 1–2% Bitcoin allocation can materially improve a portfolio’s Sharpe ratio. For the first time, regulatory clarity and ETF wrappers allow them to express that view efficiently, with custody, liquidity and compliance challenges largely solved.

Bitcoin as Digital Gold… and More

Bitcoin is optimised not for speed or smart contracts, but for decentralised value storage. Its clearest comparable is gold, yet it improves on it by being portable, programmable, and verifiable in real time. Today, Bitcoin’s market cap is under $2 trillion; gold’s is over $21 trillion. That gap represents upside for investors who believe in the digital gold thesis.

But Bitcoin isn’t just a store of value. It’s a non-political currency in a fragmenting world. As global trade moves away from sole reliance on the US dollar, Bitcoin could become a neutral bridge currency, used by countries that want a settlement mechanism free from geopolitical alignment.

A Macro Asset in the Making

Macro hedge funds increasingly use Bitcoin for after-hours positioning, risk-on trades, and global hedging. It trades 24/7, settles instantly, and provides pristine collateral, all features traditional finance struggles to match.

Bitwise’s own ETFs give institutions this exposure in a low-cost, fully regulated wrapper, with Coinbase custody, cold storage, and full on-chain visibility.

Looking Ahead: Finance on the Blockchain

Bitcoin’s potential doesn’t stop with passive holding. The crypto ecosystem is already redefining capital markets. On-chain lending, instant collateralised loans, and programmable money are standard in decentralised finance. For traditional dealmakers and credit investors, this foreshadows faster, more transparent, and radically more efficient transaction rails.

Hougan believes traditional finance is slowly merging with this future. Complexity is not a flaw but a sign of technological evolution. In time, Bitcoin’s programmability and security could replace many financial intermediaries, not just as an asset, but as a layer of infrastructure.

Advice for Professionals and Allocators

For financial professionals, Matthew’s message is simple: start experimenting. Buy Bitcoin. Try DeFi. Use it as tuition for a new era of finance. He draws a parallel to the ETF boom, those who got in early didn’t just profit; they rewrote the rules.

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Contact Information: About Fund Shack: Fund Shack is a private equity podcast and digital media channel for alternative investment professionals. Fund Shack is produced by Linear B Group Limited.