Matt Hougan, CIO of Bitwise and a prominent figure in the world of crypto and finance, will be returning to the Future Proof stage in 2023. In a recent insightful conversation with Matt, we delved into the latest developments surrounding SVB and the implications for the financial system, as well as the transformative potential of crypto and blockchain technology in shaping the future of banking.
During our discussion, Matt shared his observations on the sentiment in the Bay Area, where fears were palpable as individuals with ties to SVB faced the potential negative impact on their lives and businesses. Notably, Matt’s typically optimistic outlook was tinged with a realization that the monetary experiments of the past decade carry consequences. While the banking system remains fragile, he acknowledged that the legitimate fears of contagion have been partly contained due to the intervention of the Federal Reserve.
One of the key takeaways from our conversation was Matt’s perspective on the future of the banking sector. He anticipates monumental changes, with mid-size and regional banks giving way to larger institutions that will dominate the industry, akin to the banking landscape in Canada. This transformation could usher in a new era where a few massive banks wield significant power.
We also explored the role of the Federal Reserve in perpetuating the financial experiment. Matt underscored how their extraordinary measures often exacerbate existing problems, leading to the need for even more extraordinary interventions. He expressed concerns about a potential hard landing resulting from the Fed’s stimulus, criticizing their timing in raising interest rates as too slow and then too fast.
Naturally, we couldn’t neglect the topic of crypto and its implications. Matt sees tremendous potential for crypto and blockchain technology to revitalize and reinvent the financial system. He envisions a parallel and competitive system built on these technologies, offering alternatives and serving as a check-and-balance for traditional systems. Notably, he highlighted the rally in crypto following the SVB failure and the Fed’s intervention.
Matt outlined four main reasons for the rise in crypto: the radicalization of a small community, a significant re-rating of interest rate expectations, institutional capital entering the market, and the cyclical nature of crypto as an asset. While acknowledging the inherent volatility, he expressed confidence in the emergence of a new bull market for crypto, anticipating positive years ahead.
Beyond the institutional landscape, we touched upon the role of retail investors. According to Matt, retail investors have yet to fully reenter the market, while professional investors continue to show sustained interest in crypto. He predicts a rise in institutional involvement and foresees retail investors returning once the uptrend is confirmed.
The current financial system’s fragility is undeniable, while the potential of crypto and blockchain technology to shape the future of banking is significant. Although short-term optimism may be subdued, Matt remains positive about the long-term prospects of crypto in fostering a resilient and competitive financial landscape.
We are thrilled to have Matt back on the Future Proof stage this year! Future Proof, The Largest Independent Gathering of Financial Advisors, will take place on September 10-13 in Huntington Beach, CA. Get your ticket today!