Matt Hougan is leaving the exchange-traded-fund industry after 15 years and going all-in on cryptocurrencies as he predicts digital assets will transform investments just like ETFs did.
Hougan is joining Bitwise Asset Management Inc. as vice president of research and development. He previously served as chief executive officer at educational company Inside ETFs.
"When I think about individual applications, like gold which is a $3 trillion market, there's the idea of Bitcoin as millennial gold," Hougan said in an interview. "It's a multitrillion-dollar opportunity, and then when you get into utility tokens, each of those markets can be substantial."
How fast the market gets there, how it breaks down between the coins, and the volatility in between are hard to predict, so investors should be in for the long term and diversify, said Hougan, who was head of ETF.com, a ratings and analytics service, before leading Inside ETFs. The cryptocurrency market has grown 25 times in the past year to about $500 billion, with Bitcoin making up a little more than a third of it, according to CoinMarketCap data.
Hougan said he's working on defining index methodology for the digital-assets market, saying that criteria such as market capitalization and weightings should be structured differently from traditional asset classes. Bitwise, backed by investors including Khosla Ventures and General Catalyst, launched its first fund last year. The Bitwise HOLD 10 Private Index Fund holds the 10 largest crypto assets.
Hougan is experiencing a little bit of deja-vu from his early days researching about ETFs. Retail investors are taking the lead in crypto, while institutions remain skeptical but eager to learn, he said.
"Institutions are in learning mode," Hougan said. "That will translate into investing mode and we'll see the early adopters as early as this year and really significant activity in 2019 and beyond."