Author: Matt Hougan, Chief Investment Officer of Bitwise

Translation by: Golden Finance Claw

Cryptocurrency has finally shown signs of hitting bottom. Since July 1, Bitcoin has risen by 9%, while the Nasdaq 100 Index has fallen by 6%. ETF fund flows have turned positive, and market sentiment is improving. While it is still too early to declare a full market recovery, the current signs are encouraging enough that I have started receiving inquiries about the next market trends.

An investment advisor asked last Friday: “If the cryptocurrency market has hit bottom, what will trigger the next bull market?”

Typically, this question cannot be answered during a crypto winter. The next bull market is often only conspicuous in hindsight.

But this time, I believe the answer is right before us: The next crypto bull market will be the result of the convergence of on-chain finance and traditional finance.

In other words, I believe future developments will revolve around stablecoins, tokenization, 24/7 trading, instant settlement, and institutional-level DeFi scaling to trillion-dollar levels, which will disrupt the financial industry just as the internet disrupted media and shopping in the early 21st century. I anticipate that this will be the largest cycle to date for two reasons: First, it will be the most genuine, driven by utility and revenue rather than hype; Second, it will challenge a market larger than any previous cycle (global finance, not just cryptocurrency).

Some may say that all of this is obvious. Tokenization will certainly lead the next bull market. Stablecoins will undoubtedly expand to trillion-dollar levels. Wall Street will certainly be fully on-chain. After all, cryptocurrencies have many advantages over traditional finance: 24/7 service is better than 9 to 5; instant settlement is better than T+1; globalization is better than localization. Moreover, this is not just my personal view. The Chair of the U.S. SEC, the CEO of the world's largest asset management company BlackRock, and the CEO of the largest bank JPMorgan all agree on this.

However, despite seeming obvious, most investors are not yet prepared for it. The majority of them are still questioning whether cryptocurrencies are "outdated." And the opportunity lies within this cognitive gap.

So how can one prepare for the new bull market? The answer is: focus on two companies leading this trend, representing both ends of the market: Hyperliquid (HYPE) and Robinhood (HOOD).

Cryptocurrency Side

Hyperliquid (HYPE) is a Layer 1 blockchain (similar to Ethereum and Solana) designed to host a perpetual derivatives market focused on cryptocurrency. Investors initially use the Hyperliquid app to speculate on Bitcoin, Ethereum, and other purely cryptocurrency investments.

But this technology is so sophisticated—easy to use, instant settlement, 24/7 trading, etc.—that it quickly expanded to other markets. Today, nearly half of the trading volume on the Hyperliquid platform is concentrated on traditional assets like oil, silver, and the S&P 500 index. It is expanding into spot commodities, prediction markets, and options. It poses a challenge to all exchanges from the Chicago Mercantile Exchange (CME), Nasdaq, Intercontinental Exchange, to Kalshi and Coinbase.

It is so successful that competitors are feeling anxious. The Chicago Mercantile Exchange (CME) is suing the U.S. Commodity Futures Trading Commission (CFTC) in an attempt to prevent the agency from promoting the perpetual futures pioneered by Hyperliquid.

Despite experiencing a cryptocurrency winter, Hyperliquid's token has still risen by 146% this year. The growth momentum is strong: Hyperliquid's platform reached over $1 billion in accumulated revenue in June and is expected to achieve $800 million in revenue this year. The company uses 99% of its revenue to repurchase its native token HYPE in the open market, thereby reducing the token supply. I believe even if the price doubles, HYPE's valuation will still be reasonable.

TradFi Side

Robinhood is addressing this issue from the traditional finance sector.

Robinhood is a traditional brokerage firm that competes with companies like Charles Schwab, serving retail and professional investors. For a long time, Robinhood has been more friendly toward cryptocurrency; for example, it was the first large brokerage firm to offer direct cryptocurrency trading.

It also fully aligns with the "convergence" argument I present here. Its CEO Vlad Tenev states that tokenization “will consume the entire financial system,” and that cryptocurrency and finance “have long existed independently but will ultimately fully converge.” He predicts that the distinctions between the two will eventually “disappear.”

On July 1, Robinhood fully embraced this concept by launching a Layer 2 blockchain called Robinhood Chain. This blockchain allows users from 120 countries (excluding the U.S.) to trade tokenized stocks around the clock. It also integrates standard DeFi protocols: users can swap assets on Uniswap, borrow against assets on Morpho, or trade perpetual futures on Lighter. In just two weeks, deposits on Robinhood Chain exceeded $300 million, with daily trading volume reaching 3.6 million transactions.

This statement is worth rereading. Since the beginning of this month, with just a click, Robinhood has launched a financial service across 120 regions, allowing people to buy and sell, engage in leveraged trading, and trade tokenized stocks anytime, anywhere. And people are indeed using this service on a large scale.

Skeptics may point out that much of the early trading consists of Meme coins rather than stocks, which is true. However, the trading volume of stocks is substantial, users actually exist, and I expect both will see scaled growth over time.

One thing I can be sure of: all of Robinhood's major competitors are paying attention to this and asking themselves, “Should we be doing this too? Do we need Schwab Chain, UBS Chain, or Bank of America Chain?” Given Robinhood's level of activity in the initial weeks, no one will overlook this.

Two Types of Investments Will Win

I anticipate that the upcoming bull market will be large enough to boost most of the cryptocurrency sector. I am optimistic about mainstream cryptocurrencies—such as Bitcoin, Ethereum, Solana—and cryptocurrency stocks.

But I believe there are two types of investments that are particularly advantageous.

1. Hyperliquid type: cryptocurrency financial applications with real revenue and a good token economic model

The biggest difference between Hyperliquid and other crypto applications is its real revenue and strong token economic model (99% of revenue is used to buy and burn HYPE tokens). This resonates with investors who have witnessed many crypto applications with surging user numbers and trading volumes, yet the tokens had no value.

I believe that over time, a new generation of crypto assets will follow HYPE's token economic model and bring exciting "next-generation" token opportunities. But for now, I am more focused on existing projects with significant scale that actively tie token value to usage. For example, Uniswap and Aave both have huge operating scales and are rapidly improving their token economic models; Morpho is also moving in the same direction.

2. The Robinhood Path: existing companies building businesses on the cryptocurrency track

Disruptive change reshapes market share. The shift towards stablecoins, tokenization, and blockchain-based payment systems is the biggest technological transformation in financial markets in fifty years. A major change is coming.

To find the winners, I look for companies that are genuinely attempting to scale cryptocurrencies, not just low-cost, attention-grabbing proof-of-concept projects that learn nothing. The experience Robinhood gained from its real-time blockchain covering 120 countries is 10,000 times that of any pilot project.

Companies I am watching include Coinbase, Figure, and BlackRock; I will also consider Visa, Stripe, and even JPMorgan. Of course, there are other companies, but these are truly strong contenders in the space.

Finding Convergence Points

For a long time, there has been a view in the cryptocurrency field that its greatest success will come when it is most obscure—when blockchain technology is deeply embedded in the architecture of the financial system to the point that people are not even aware of its existence.

I still firmly believe that the next bull market—when traditional finance and cryptocurrency will be inextricably intertwined—will coincide with this situation. In the meantime, investors would do well to prepare accordingly.

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