Bitwise Sees 100% Upside in DeFi Tokens, Eyes ETFs for Sui, Aptos

Bitwise, a prominent digital asset manager, has expressed a bullish outlook on decentralized finance (DeFi) linked tokens, despite a recent lull in the crypto market. The firm's Chief Investment Officer, Matt Hougan, highlighted that the DeFi sector is significantly undervalued and that Layer-1 blockchains such as Sui and Aptos have the potential to attract institutional investors. Hougan believes that these tokens could be suitable for exchange-traded funds (ETFs) in the U.S., which could drive renewed investment into these altcoins. Bitwise has already filed for an Aptos ETF, although no such application is pending for a SUI-based fund.

Hougan emphasized that projects led by former Meta stablecoin team members meet Bitwise's criteria for serious technology and team, as well as technological differentiation. He noted that while he wouldn't allocate 100% of his portfolio to Sui, he also wouldn't exclude it entirely. Bitwise is among several investment firms that have submitted numerous crypto ETF applications to federal regulators in the U.S. This surge in applications follows signals from the Securities and Exchange Commission indicating a more crypto-friendly stance under the current administration.

Issuers have requested approval for funds tracking a wide range of cryptocurrencies, from meme coins to larger market-cap assets. Bitwise is currently seeking approval for single-asset ETFs tracking XRP, Solana, and Dogecoin, which are popular among DeFi proponents. Despite these altcoins being down from their January highs, Hougan believes that a changing regulatory environment could boost DeFi tokens and their associated projects. He cited Uniswap, Ondo, and Aave as projects with significant growth potential, noting that a new regulatory climate could allow utility tokens with value drivers to thrive, addressing a major issue in DeFi—the prevalence of "squishy governance tokens."

Hougan suggested that the potential for growth in DeFi tokens and other non-blue chip assets could make them suitable for inclusion in ETF wrappers in the future. He also mentioned that Bitwise and other issuers aim to file for new ETFs frequently, a common practice in the ETF industry. While Hougan did not specify which assets Bitwise's future funds could track, he indicated that the firm is looking at tokens linked to high-quality projects with real potential. Bitwise also considers client feedback when deciding which assets to offer in ETF wrappers, aiming to provide ample options for investment.

Hougan emphasized the importance of offering clients exposure to a variety of assets, even those not highly recommended, as long as they are not linked to rug pulls or scams. He compared this approach to Blackrock's offering of various bond funds, noting that while he wouldn't personally invest in a 30-year Treasury fund, he would advise clients on the benefits of investing in certain assets through ETFs. Hougan concluded by stating that while he wouldn't recommend investing in Dogecoin, he would advise clients that if they choose to do so, it might be cheaper and less risky through an ETF.