Crypto Investors Embrace Stock-Picking: Bitwise CEO's Insight

Bitwise CEO Hunter Horsley highlights the shift in crypto investment towards stock-picking strategies and the rise of borrowing/lending in the DeFi space.

The crypto landscape is evolving, and savvy investors are adapting. Bitwise CEO Hunter Horsley sheds light on the emerging trends: a shift towards stock-picking strategies and the explosive growth of borrowing and lending in DeFi.

From Market Cap to Stock-Picking: A Maturing Crypto Market

Remember when crypto was all about market cap? Those days are fading. According to Hunter Horsley, CEO of Bitwise Investments, institutions are increasingly adopting a "stock-picking strategy" in crypto. This means analyzing individual projects based on their fundamentals, much like picking stocks in the traditional market. This is a significant departure from the past, where institutions primarily viewed crypto through a Bitcoin lens.

Horsley noted at the Token2049 conference in Singapore that institutions are recognizing the diversity within the crypto space, understanding that each project offers unique value. They're moving beyond simply looking at the size of a cryptocurrency to evaluating its potential for growth and real-world utility.

Beyond Bitcoin: Exploring New Horizons

The willingness to venture beyond Bitcoin is evident in the rise of new ETFs targeting alternative digital assets. Bitwise itself has filed for a spot ETF focused on Avalanche's AVAX token. This shift reflects a broader understanding that the crypto market offers more than just digital gold.

The Macroeconomic Shift and the Importance of Fundamentals

The current macroeconomic environment, characterized by higher interest rates and persistent inflation, favors crypto assets with strong fundamentals. In an "everything rally" environment, even memecoins could thrive. Now, projects need to demonstrate real value to attract investment. Experts like Mohamed El-Erian and Russel Napier advocate for stock picking in this era of financial repression, and the same logic applies to crypto.

Bitcoin: Store of Value or Payment Network?

The debate continues: is Bitcoin primarily a store of value or a payment network? Horsley believes it can be both, but likely one at a time. He suggests that Bitcoin needs to be widely accepted as a store of value before it can be effectively used for transactions. He is, however, encouraged by efforts in the payments space, such as Lightning and Lightspark.

The Four-Year Cycle: Will History Repeat Itself?

The crypto world is no stranger to the four-year Bitcoin cycle, tied to the halving event. Historically, bear markets have followed bull market peaks, often triggered by unexpected events. Horsley suggests that while a downturn is possible, the ecosystem's increased maturity and diversification might lead to milder volatility compared to past cycles. The potential for a counterparty blowup, while still present, is diminishing.

The Rise of Crypto Borrowing and Credit

Looking ahead, Horsley predicts that borrowing and credit will be the next explosive sector in crypto. With trillions of dollars in crypto assets circulating, investors will increasingly borrow against their holdings rather than sell. The tokenization of traditional assets will further fuel this trend, allowing smaller investors to borrow against assets directly on-chain. The DeFi lending sector is already booming, with tokenized credit markets gathering pace.

New Crypto Investors and Altcoin Choices

As meme coin hype fades, new investors are prioritizing utility. Projects like Remittix, which focuses on PayFi with instant crypto-to-bank transfers, are gaining traction. These projects offer security, innovation, and real-world adoption, standing apart from speculation-driven assets.

Final Thoughts

The crypto market is maturing, becoming more sophisticated, and attracting a new wave of investors who are focused on fundamentals and utility. As Bitwise CEO Hunter Horsley points out, it's no longer just about market cap; it's about picking the right projects with real-world value. Who knew crypto investing could be so much like…well, investing? Time to dust off those finance textbooks, folks!