Bitwise CIO Says Crypto Is Underpriced as Bitwise Sells Exposure to Tokens He Cites

MakeCryippreferred on

Bitwise Investments operates commercial products built on Hyperliquid, Uniswap and Aave, the three tokens its chief investment officer, Matt Hougan, named as proof this week that crypto valuations are set to double. Bitwise runs a spot Hyperliquid ETF that launched on the NYSE in May, has offered Uniswap and Aave funds since 2021, and filed in December for a new ETF tracking Aave.

The memo, titled Crypto’s Revenue Revolution and published, argues that crypto has spent years being penalized for generating no revenue, and that this is now reversing as protocols route fees back to token holders through buybacks and burns. “For years, revenue was the best argument against crypto,” Hougan wrote. “It’s about to become the best argument for it.” He expects the shift to spread across DeFi and layer-1 networks over the next 12 to 24 months, and says valuations “could double or more” once investors price it in.

The revenue growth underlying that claim is real. 1kx’s first Onchain Revenue Report, published in October, found protocols generated roughly $20 billion in combined fees in 2025, with more than 1,100 reaching profitability. That figure is the foundation Hougan’s thesis and most of the coverage of it are built on. What’s less settled is whether that revenue is reaching token holders the way Hougan’s memo suggests.

Hyperliquid, the flagship example, is still growing its supply

Hougan’s memo says Hyperliquid generated more than $800 million in revenue last year and burns about 99% of its fees through its Assistance Fund, putting $1.3 billion of HYPE toward buybacks since launch. In the second quarter of this year, the memo says, the protocol brought in $169 million and directed $141 million of it, about 83%, to HYPE purchases.

Hyperliquid’s buyback model has also faced the challenge of new token supply entering circulation. HYPE has a maximum supply of 1 billion tokens, while a substantial portion remains subject to vesting and future releases. Recent reporting has highlighted scheduled unlocks worth hundreds of millions of dollars, meaning the protocol’s buybacks must continue absorbing new supply to create sustained deflationary pressure.

Uniswap and Aave: early, and not the same story

Uniswap activated its “UNIfication” mechanism on December 22, tying protocol fees to UNI burns, and the memo credits it with roughly 100 million tokens burned from treasury and a 35% price gain since July 1.

Aave is further along. Founder Stani Kulechov has said on the record that “100% of Aave Protocol and GHO revenue goes to the $AAVE token,” and the protocol has bought back more than 205,000 AAVE, about 1.28% of total supply, in the first ten months of a program that started in April 2025. Pump.fun runs a genuine burn too, the memo notes, its circulating supply still grows about 14% a year because new emissions outpace it.

Protocol Revenue Does Not Guarantee Tokenholder Returns

A separate analysis of 1kx’s own $20 billion dataset found that only about 20 of the roughly 1,244 profitable protocols it tracked distributed more than $10 million to token holders, roughly 1.6%. High fees, in other words, don’t automatically become tokenholder cash flow. Curve and Sushi have built the mechanics to make that happen, but those remain the exception rather than the norm.

Token holders also don’t have the legal standing that comes with owning equity. Hougan’s memo and the coverage of it both note that a governance vote can alter or reverse a token’s buyback program at any time, something no shareholder vote can do to a dividend already declared.

A regulatory vote two days later

Hougan’s memo points to a friendlier regulatory environment as a second reason the shift is happening now, citing the SEC’s 2023 loss in its case against Ripple and Paul Atkins succeeding Gary Gensler as chair. Separately, the SEC has scheduled an open meeting for Friday to advance “Regulation Crypto,” a proposed framework for token offerings. That rulemaking does not, on its own, authorize the kind of revenue-sharing token structures Hougan is describing.

What would make Hougan’s thesis hold

Hougan’s own timeline gives the thesis a test. If revenue-capture mechanisms spread the way he expects over the next 12 to 24 months, and if that spread starts showing up as actual net-deflationary supply rather than the earlier stage most of these programs are still in, the case for a valuation re-rating gets stronger. This also ties into the Bitwise CIO Bitcoin $1 million forecast, as stronger revenue capture and broader crypto adoption could support higher valuations.