Written by: Matt Hougan, Chief Investment Officer of Bitwise

Translated by: Saoirse, Foresight News

The greatest excess returns (Alpha) in financial markets often come from behavioral biases. Investors always make mistakes, and if you can exploit these mistakes, you can achieve substantial returns.

One behavioral bias I love to exploit is the anchoring effect: people cling to the first piece of information they receive and are reluctant to change. This is also why retailers price something at $9.99 instead of $10.00 – once you remember "9," it’s hard for your brain to let go.

The anchoring effect is one of the reasons I decided to dive into the cryptocurrency industry full-time in 2018.

At that time, most people still viewed cryptocurrencies as a joke. They first encountered cryptocurrencies during the Silk Road scandal in 2013 and the Mt. Gox exchange bankruptcy in 2014, witnessing its dramatic boom and bust cycles.

Fortunately, a few people I trust urged me to take cryptocurrencies seriously.

When I looked past the surface to see what it actually was, rather than what people thought it was, I was completely shocked. This technology is far more mature than most people realize, and the opportunities are much greater. Meanwhile, people are still stuck in their outdated impressions from 2014.

At this moment, I feel like I am back to that time.

The Whole World is Shouting at You

Looking around, Wall Street is loudly proclaiming: the financial industry is moving on-chain. Not a small part, but the whole.

Last July, U.S. SEC Chairman Paul Atkins launched the "Cryptocurrency Project," a committee-level initiative aimed at modernizing securities regulation. In his words, it is to allow the U.S. financial markets to "operate on-chain." And indeed, the market has started to go on-chain:

• In October, BlackRock CEO Larry Fink publicly stated that we are at the starting point of asset tokenization. Two weeks ago, BlackRock launched a BUIDL tokenized treasury fund on Uniswap, the world's largest decentralized exchange, with current assets exceeding $2 billion; as part of the collaboration, BlackRock also invested in the native token UNI of Uniswap.
• Apollo, a credit institution managing $700 billion, partnered with Securitize to tokenize its diversified credit fund and launched it on six public chains. Since January 2025, this product has attracted over $100 million in investment. The company recently announced plans to acquire a 9% stake in the leading decentralized lending protocol Morpho.
• J.P. Morgan, Bank of America, Citigroup, and Wells Fargo are discussing a joint launch of a stablecoin.

Meanwhile, J.P. Morgan has issued deposit tokens on Coinbase's Base network; Fidelity is hiring a head of decentralized finance vaults... similar actions are emerging one after another.

The scale of the related markets is extremely large: the ETF market is $30 trillion, the stock market is $110 trillion, and the bond market is $145 trillion.

In comparison, the total size of the global tokenization market is only $20 billion.

If Larry Fink is correct — "every stock, every bond... will eventually be tokenized," it suggests that this market has thousands of times the potential for growth.

Cognitive Disconnection

But traditional investors simply cannot hear it.

They cannot hear it because of the anchoring effect.

When cryptocurrencies are mentioned, the images that come to their minds are still the tattooed, punk, skateboarder. They fail to realize that this person has already shaved their beard, put on a suit, and is building the infrastructure for the next generation of capital markets.

Ironically, cryptocurrency investors themselves seem not to hear it either.

They have developed a "wolf is coming" syndrome. After hearing the promise of "institutions are about to enter" for so long, when it actually happens, they become numb.

But the data does not lie.

Look at the growth curve of tokenized real-world assets (RWAs), its steepness is comparable to Mount Everest.

The value of tokenized real-world assets (RWAs):

Source: Bitwise Asset Management, data from RWA.xyz. Data range is from January 1, 2020, to December 31, 2025.

Note: Issuers of stablecoins such as Circle and Tether are intentionally omitted.

Seizing Opportunities

The difficulty lies in the fact that it is hard to know exactly how to profit from it.

Because the cryptocurrency industry still has a series of key questions unresolved, such as:

• Will the value brought by tokenization flow to underlying protocols like Ethereum or Solana, or will the underlying blockchain space become commoditized?
• If value accumulates on the underlying public chains, will new semi-private chains like Canton Network and Tempo outperform public chains?
• As institutions like BlackRock and Apollo embrace DeFi, will DeFi tokens experience a surge, or will the economic model challenges of DeFi tokens prove difficult to overcome?
• If ultimately, the value flows to builder companies rather than blockchains themselves, will the beneficiaries be traditional giants like BlackRock and J.P. Morgan, or cryptocurrency-native institutions?

I have my own judgments on these questions and will share them in writings in the coming months. But to be frank, the answers to most of these questions are currently: nobody knows.

The only thing I am certain about is:

There is a huge gap between what people think the cryptocurrency market is and what is actually happening in the cryptocurrency market.

In my view, this gap represents a significant opportunity — not to rush to pick winners in advance, but to broadly position oneself in the entire track while the market is still mispricing this structural change.

The biggest excess return opportunities often arise when market consensus is outdated, reality has moved forward, and investors are still anchored to old narratives.

The cryptocurrency industry is currently at this juncture.

If you can see its essence, opportunities abound.