Bitwise CIO Bullish on DeFi, Sees Aptos and Sui as ETF Contenders

Digital asset manager Bitwise is bullish on decentralized finance-linked tokens, even as the sector’s staunchest proponents retreat from altcoins amid a lull in the crypto market.  

The DeFi sector is “substantially undervalued,” Bitwise CIO Matt Hougan said Tuesday in an interview with Decrypt, arguing Layer-1 blockchains such as Sui and Aptos “definitely tick the boxes” for courting institutional investors. 

The executive said he sees a case for issuers launching SUI and Apots ETFs in the U.S.—a development that may bring renewed investments into those altcoins. The asset manager already filed for an Aptos ETF earlier this month, but it has no such application pending for a SUI-based fund.

Still, projects led by ex-Meta stablecoin team members “definitely tick the boxes of serious team, serious technology [and] technological differentiation,” Hougan said, referencing a few of Bitwise’s requirements for the assets held by its funds.

“I wouldn’t put 100% of my portfolio in Sui, but I wouldn’t put [in] zero,” he said.

Bitwise is one of several investment firms that has filed a flurry of crypto ETF applications with federal regulators in the U.S. 

The spate of applications comes as the Securities and Exchange Commission— the crypto industry’s main regulator in the U.S.—has signaled its willingness to adopt a more crypto-friendly stance under recently elected President Donald Trump. 

Issuers have requested to roll out funds tracking the prices of a wide range of cryptos, from meme coins such as Bonk and Dogecoin to larger market-cap assets like XRP and Solana to Official Trump. Bitwise itself is in the process of securing approval for single-asset ETFs that track XRP, Solana, and Dogecoin—tokens that are especially popular with DeFi proponents. 

Although those altcoins are down from the highs they brushed last January, Hougan believes changing tides in the U.S. regulatory climate could boost DeFi tokens and the projects to which they are linked.

“The market hasn’t come to grips with the fact that these tokens could change their tokenomics and be money printing machines in a new regulatory environment,” Hougan said, citing Uniswap, Ondo, and Aave as projects with enormous potential for growth. 

That new regulatory climate may allow utility tokens with value drivers to thrive, he said, eliminating a major issue in DeFi—the pervasiveness of “squishy governance tokens.” 

According to Hougan, that potential for growth could render DeFi tokens and other non-blue chip assets well-suited for inclusion in ETF wrappers in the future.

Increasing access to crypto-based ETFs

Although Bitwise is hardly “throwing spaghetti against the wall” when it picks assets to include in its funds, Hougan noted that Bitwise and other issuers aims to file for new ETFs often.  

“In ETF land, not in crypto land, this is normal,” Hougan said. “ETF issuers file for a lot of ETFs all the time. 

Although Hougan declined to specify which assets Bitwise’s future funds could track, he said the firm is looking at tokens linked to “high quality” and “interesting” projects with “real potential” to track in single-asset ETFs. 

The asset manager also listens to its clients when deciding which assets it should offer in ETF wrappers. The firm’s idea, he said, is to give its clients ample options for where to put their money. 

“I don’t want to be paternalistic about what they should access,” Hougan said. 

The executive said it’s reasonable for issuers to provide clients exposure to all kinds of assets—even those they might not highly recommend—as long as those assets aren’t linked to rug pulls or scams.

“Blackrock offers a lot of bond funds, but I wouldn’t buy a 30-year Treasury fund if you held a gun to my head,” Hougan said. 

He added, “I’m not going to tell anyone to invest in Doge, but I could tell someone if you’re going to invest in Doge, it’s probably cheaper to do in the ETF, and there’s probably less risk.” 

Edited by Sebastian Sinclair