'I smell opportunity,' Bitwise CIO says amid retail and institutional crypto sentiment dichotomy

Bitwise Chief Investment Officer Matt Hougan said the current bad retail sentiment in the crypto market signaled an opportunity amid the contrast with institutional demand.

“There is a fascinating dichotomy in crypto right now between institutional and retail investors,” Hougan said in a note to clients on Wednesday. “On the one hand, institutional sentiment towards crypto is the most bullish I’ve ever seen,” while “retail investors are wallowing in despair.”

The Bitwise CIO said investment professionals now look at crypto as a space institutional capital is allocating to in record amounts via exchange-traded funds, Washington has gone from being one of the industry’s “biggest threats” to one of its biggest champions under the Trump administration and further nation-state adoption could be on the cards.

However, for retail investors, "it's almost as if they are living in an alternate reality,” Hougan added, pointing toward Bitwise’s proprietary onchain sentiment score currently registering one of the lowest readings of all time.

Hougan believes the index aligns with other sentiment indicators and the general vibes of “Crypto Twitter," with retail sad because their overweight altcoin investments are doing poorly this time around compared to bitcoin, with few exceptions.

'I smell opportunity'

However, Hougan said every bone in his body tells him the institutions are right, and while it is “very easy” to be bullish on bitcoin right now — with ETFs and corporations already scooping up more than 100,000 BTC so far this year compared to the 18,000 BTC mined — long-term, the setup for altcoins is “stronger than at any point in history.”

He conceded that the altcoin picture was more complex, with no major new application driving the interest that DeFi and ICOs did in prior cycles, outside of the short-term “memecoin casino” boom.

However, with regulatory clarity on the agenda, the U.S. making stablecoins a “national priority” and growing institutional confidence, the industry will “bring DeFi applications to the masses,” Hougan claimed.

“Retail sentiment in crypto is terrible even though the fundamentals are great. I smell opportunity,” he said. “In a year or two, my guess is that you’re not going to have to squint to see the transformation in altcoins; the impact will be self-evident. And overwhelming.”