Author: Matt Hougan, CIO of Bitwise & Translation: AididioJP, Foresight News
A core idea behind investing in cryptocurrencies is that they will reshape the infrastructure of the financial industry.
So far, we can cite three areas where real progress has been made:
Bitcoin is reshaping gold's inflation-hedging properties
Stablecoins are reshaping the US dollar
Tokenization is reshaping trading and settlement
While these changes are still in their early stages, the trends are already very clear. I believe that eventually most assets will be tokenized, most US dollars will circulate through stablecoins, and Bitcoin will be as widely accepted as gold.
These are opportunities worth trillions of dollars, enough to drive a generation-long bull market in the cryptocurrency market. But this Monday, we saw a fourth important area: capital formation. I believe this will be a key theme in the cryptocurrency space in 2026. Next, I will explain what exactly is happening, why this is so important, and how to seize this investment opportunity if I'm right. First, let's review some background. Capital formation is one of the most important functions in the financial sector. Through this process, entrepreneurs are able to raise funds, start new companies, develop products, and create jobs. Unfortunately, the current system is not only rigid and inefficient, but also extremely unfriendly to individual investors. Institutional funds flow to top venture capital firms, which then reinvest in the best startups. These companies remain private for a long time, continuously accumulating value for early shareholders. When the shares finally went public, they were primarily sold to other institutional investors. Ordinary investors could only participate in the final stages. This system was costly and cumbersome to regulate, resulting in a far lower number of IPOs today. Cryptocurrencies attempted to change this in 2017 and 2018 with the Initial Coin Offering (ICO) boom. ICOs allowed ordinary people to invest before a project went public, directly connecting entrepreneurs and retail investors. But frankly, the result was a disaster. Due to a lack of regulation, the vast majority of ICOs ultimately proved to be scams. Scammers raised billions of dollars from an unsuspecting public and then absconded with the money. The situation worsened to the point that the U.S. Securities and Exchange Commission (SEC) had to intervene, even threatening to pursue criminal charges against promoters. The crackdown in 2018 ended the ICO boom and plunged the cryptocurrency market into a long winter. So, what's different now? Most people who experienced the 2017-2018 ICO boom consider it a complete failure, fully exposing the opaque nature of the cryptocurrency space. But a small minority saw potential in it. Despite the problems with ICOs, they did prove one thing: cryptocurrencies can quickly raise funds for new projects. Compared to the high costs, cumbersome procedures, and bias towards the wealthy associated with traditional IPOs, ICOs are indeed cheaper, faster, and more equitable. Paul Atkins, the current chairman of the U.S. Securities and Exchange Commission (SEC), is one of those who saw this potential. His support for ICO-type projects is not surprising: before joining the SEC, he served as co-chairman of the Token Alliance, an organization dedicated to promoting innovation in ICO-type tokens. He also served on the board of Securitize, a company focused on tokenization. In July of this year, Atkins publicly called for the establishment of a new regulatory framework and risk prevention system to create conditions for high-quality ICOs. He argued that as long as the problems of ICO 1.0 can be solved, we can expect to usher in a capital formation boom led by cryptocurrencies. This Monday, Coinbase took a significant step in this direction, announcing the launch of its ICO platform. From now on, Coinbase will launch one rigorously vetted cryptocurrency project each month. This allows investors to participate in the investment before the project is launched, and also allows project teams to explore new financing channels. Coinbase will enforce strict standards, including team background checks, information disclosure requirements, and ensure that insiders cannot sell tokens within six months of the project's launch. In short, through self-regulation, they aim to solve many of the problems of the 2017-2018 ICO era. My Predictions and Outlook I anticipate at least six multi-billion dollar ICOs through platforms like Coinbase by 2026. While still small compared to the traditional IPO market (176 IPOs in the US in 2024, raising $33 billion), the success of these ICOs will demonstrate that entrepreneurs can raise funds directly from investors, often with better terms than traditional IPOs. Over time, I believe more projects will choose direct ICOs over traditional fundraising paths. Regarding investment in this area, I have a few thoughts: If I'm correct, the most direct investment target is Coinbase. This company is leveraging its dominant position in cryptocurrency trading to expand into new markets. It's not just Charles Schwab in the crypto world; it's a combination of Charles Schwab, Goldman Sachs, and the NYSE. A healthy ICO market will also benefit large-scale programmable blockchains like Ethereum and Solana, as many ICO projects are built on these platforms. More broadly, the ICO resurgence will be another significant milestone in the cryptocurrency space. Cryptocurrencies are more promising now than they were a few years ago because we have the story of stablecoins and tokenization. Add to that the billions of dollars raised through ICOs, and this narrative becomes even more compelling. This trend tells us we should adopt a broader market strategy: for example, investing in index funds that include a basket of crypto assets or crypto stocks. In other words, don't get bogged down in choosing a particular horse; bet on the whole race getting better and better. The race is getting increasingly exciting.
Catherine
Weatherly
Kikyo
Anais