Matt Hougan’s Perspective on Cryptocurrency Portfolios
Matt Hougan, the Chief Investment Officer at Bitwise, argues that crafting a comprehensive cryptocurrency portfolio is not solely about investing in leading cryptocurrencies like Bitcoin 
$ 0.000037, Ethereum 
$ 0.000092, or Solana 
$ 150, nor about investing in applications like Uniswap. Instead, he suggests that stocks related to cryptocurrency should also play a role in such portfolios. Hougan highlights Circle’s recent public offering as an illustration of this approach. Circle, the issuer of the USDC stablecoin, made its market debut under the ticker CRCL and surged 167% on its first day. The stock currently trades at $105.91 as of June 10 and has reached a market capitalization of $28 billion, drawing substantial interest from investors focused on the stablecoin industry.
Circle’s Public Offering and Stablecoin Market Growth
Circle’s initial public offering (IPO) drew demand 25 times the availability, culminating in a pricing above the indicated range at $31. The CRCL stock made a significant leap of 167% on its first trading day. This captivating performance underlines investor enthusiasm for a company at the heart of the stablecoin ecosystem. 
CRCL Hissesi Hougan notes that assets under management (AUM) in stablecoins have grown significantly from $4 billion to $250 billion over the past five years, with projections by the US Treasury Department anticipating this figure to surpass $2 trillion by 2030. “It’s hard to find another sector with government forecasts for 700% growth over the next five years,” Hougan comments.
Issuers of stablecoins profit from interest income on Treasury bills they hold in reserve since they don’t pay interest to users. With current short-term Treasury rates, the sector’s annual income is about $10 billion, and this could rise to $80 billion if AUM hits $2 trillion.
Diversification Strategy in Crypto Portfolios
Hougan points to a fundamental debate about where value will accumulate in the crypto market beyond Bitcoin. The essential question is whether to focus on foundational ecosystems like Ethereum or Solana or revenue-generating applications like Uniswap. Despite many crypto enthusiasts remaining within decentralized ecosystems, Hougan argues that crypto-linked stocks like Circle offer classic application plays. These companies leverage publicly available blockchains but incur only minimal fees for this privilege.
Hougan describes Circle’s ability to issue a stablecoin on Ethereum for a fraction of a cent, yet this stablecoin is instantly accessible to hundreds of millions globally. It can be transferred worldwide at low cost and used in DeFi applications, or programmed with smart contracts. He likens this to how the internet democratized content production globally 30 years ago, suggesting public blockchains do the same for finance.
Infrastructure or Applications?
Circle is not the only crypto-associated stock building businesses on blockchains. Hougan points out that Coinbase profits from its Layer 2 Base network, Galaxy earns about $100 million annually from staking, and Mastercard runs a platform integrated with blockchains like Ethereum and Avalanche for efficient cross-border payments and lending.
Hougan believes these developments form the basis for expecting long-term astronomical growth in many parts of the crypto market, stating, “As more applications are used, the underlying infrastructure becomes more valuable, and as infrastructure improves, applications gain value.” While conceding that it’s challenging to determine whether value will accrue to blockchains or the companies built on them, Hougan concludes, “That’s why I think the best strategy is to own both.”
