Bitwise CEO has a message for Crypto investors chasing AI stocks

Hunter Horsley, the CEO of Bitwise Asset Management, encouraged crypto investors on June 8 to focus less on volatile prices and more on the fundamentals of the projects involved. This advice is worth noting since Bitcoin is currently trading at around $62,800, while the overall market is way behind AI stocks.

This statement follows from the tough situation of crypto allocators. As the Nasdaq-100 rises by 43%, with lots of money being invested in the robotics industry and SpaceX, the appeal of momentum-trading crypto has disappeared. However, according to Hunter Horsley, the change is no reason to stop trading cryptocurrencies. But it does demand a different investing posture.

Bitwise sees a new era for Crypto investing

On his post on X, Horsley advised investors to take a step back and not concentrate on the news of the week or the month’s price movements. Instead, he urged people to focus on two things – real progress in the project and year-on-year performance of the assets.

Horsley explained what he meant by “real progress,” namely, on-chain adoption stats, technological products with good product/market fit, integration with corporations and institutions, and the competency of the teams behind the projects.

Two days prior, Horsley made a more straightforward point regarding the frustrations of the crypto market. The author acknowledged that crypto investors are green-eyed with envy towards the profits brought by AI and space technology, but the reality is that the breakthroughs in technology took much longer to accomplish. For example, SpaceX was founded in 2002 and faced numerous failures, while OpenAI was established back in 2015, seven years before ChatGPT became widely known.

Horsley pointed out that there is a gap between crypto natives and institutional capital coming into the market. As Horsley noted, crypto investors “are not used to an environment in which an hour is fast. A day is fast. A week is a meaningful period of time, and nobody can recall what was going on 4 weeks ago,” quoting an interview with Milk Road on June 5. The institutional capital works to a different timeline and will likely be better suited for the times ahead.

That view is consistent with the comments from Matt Hougan, chief investment officer at Bitwise, writing in a market memo on June 2 that crypto was going through “a painful transformation – from momentum trade to contrarian investment.” Hougan believed that investors’ focus shifted to artificial intelligence stocks, robotics firms, and private companies like SpaceX, leaving crypto to rely on long-term fundamentals rather than momentum-based storytelling. The memo is one of the most prominent admissions from Bitwise yet that the next stage of crypto requires something else beyond speculators’ inflows.

Why some Crypto assets are outperforming

According to Hougan, there was evidence that the market had started recognizing value based on fundamentals, not the macro story. Examples of cryptocurrencies that increased in price by 72%, 50%, 44%, and 17% included Hyperliquid, Zcash, Stellar, and BNB, respectively; none of these assets moved because of the market’s strength.

“When crypto stops being a momentum trade, fundamentals start to matter,” Hougan wrote.

In addition to the SEC Rule, Hougan pointed out the Digital Asset Market Clarity Act, more commonly referred to as the CLARITY Act, as another highly significant but unresolved variable for institutional cryptocurrency adoption. The proposed legislation aims to provide greater clarity on the issue of jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). It will establish a regulatory structure for digital commodity trading platforms, brokers, and dealers. Proponents believe that the legislation may help alleviate the uncertainty issues preventing the entry of large allocators into the cryptocurrency market, despite criticism from opponents.

Both Horsley and Hougan have placed the same bet, but from opposite perspectives, as both believe that the next wave of growth in the crypto market will come from people evaluating their projects as they would evaluate any company, rather than how they speculate on memecoins. Whether the bet pays off will depend on whether the institutional money follows through and whether there is regulatory clarity in Congress.

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