The crypto landscape is shifting rapidly, with Bitcoin and Ethereum ETFs leading the charge. Host of The Wolf of All Streets Podcast, Scott Melker, sat down with Matt Hougan, CIO at Bitwise, to explore the implications of these developments and what surprises might lie ahead in the ETF and institutional space.

Their discussion highlighted the transformative potential of crypto assets as they gain traction among traditional financial giants.

Melker opened the discussion by acknowledging the unexpected speed at which Ethereum ETFs followed Bitcoin ETFs. Hougan highlighted the broader implications for the crypto market, emphasizing the imminent changes that could unlock significant institutional flows into both assets. On Wednesday, for example, one of the major U.S. banks in Morgan Stanley finally began allowing wealth advisors to begin selling Bitcoin ETFs.

"If you look at most assets in the world, institutions own at least half of them. In order for that to happen, we're going to need to see [institutions add] a trillion dollars," Hougan said. "We're like a few percentage points into that trade. That's a multi-year trade. It's not going to take place overnight, but a very small fraction can even buy these. That's going to change in the second half of the year, and I think you'll start to see that in the flows as we get into October and November and December."

The discussion shifted to the current accessibility of crypto assets for institutions and retail investors. Hougan estimated that only about 10-20% of institutions currently have access to purchase these assets through their preferred brokers. This percentage is set to increase, as the approval process within traditional financial institutions, though slow compared to the crypto world, is progressing faster than usual due to high demand.

Melker and Hougan also delved into the allocation strategies of financial advisors. Most advisors recommend a 60/40 portfolio, typically excluding physical gold. However, Hougan mentioned that some advisors are starting to include bitcoin in their equity portfolios, viewing it as a risky asset similar to stocks. Interestingly, ethereum is gaining traction as a tech asset, with some advisors considering it essential for a diversified tech portfolio.

The conversation touched on the future of crypto ETFs, with Hougan expressing optimism about the potential for index-based ETFs. Bitwise, known for creating the first crypto index fund, sees this as the ultimate solution for investors who want to bet on the overall growth of public blockchains.

In closing, Hougan reflected on the current market conditions, describing them as the most constructive setup for crypto he has ever seen. He highlighted the influx of funds into ETFs, changing attitudes in Washington, and increasing institutional interest as key factors contributing to a favorable environment for crypto.