Institutional Crypto Investors Adopt Wall Street’s Stock-Picking Playbook, Says Bitwise CEO

Institutional investors are increasingly turning to sophisticated, fundamentals-based analysis to guide their crypto allocations, marking a decisive shift from the industry’s early reliance on market capitalization metrics, according to Bitwise CEO Hunter Horsley.

Over the past decade, the digital asset market has matured from a niche ecosystem into a cornerstone of global finance, attracting participation from Wall Street institutions, retail investors, and even sovereign entities. Exchange-traded funds (ETFs) and regulated financial products have helped legitimize the space, yet many investors still default to market capitalization as their primary valuation tool.

That approach is changing fast, Horsley told CoinDesk during the Token2049 conference in Singapore.
“Historically, institutions viewed the crypto market through a Bitcoin-only lens—seeing it as digital gold and making allocation decisions based on size,” he said. “But now, they’re recognizing the market’s diversity, where each project has its own use case, economic model, and growth potential.”

From Market Cap to Fundamentals

Horsley noted that institutions are shifting away from simplistic metrics toward a stock-like, fundamentals-driven investment strategy—an approach mirroring traditional equity markets.
“This shift reflects the growing sophistication of crypto investors,” he added. “They’re evaluating blockchain projects much like they would individual companies, analyzing use cases, token economics, developer activity, and governance models.”

The strategy echoes traditional stock-picking, where investors seek undervalued or high-growth assets through detailed analysis rather than passive exposure. Horsley said this approach aligns with the growing demand for risk-adjusted yield and tailored derivatives solutions across institutional portfolios.

Beyond Bitcoin

Asked whether it remains challenging to convince institutions to diversify beyond Bitcoin, Horsley acknowledged that BTC remains the gateway asset for most investors.
“Bitcoin’s simplicity—its store-of-value narrative—makes it easy to understand,” he said. “But as investors gain comfort, they begin exploring other networks like Ethereum and Solana, which have distinct value propositions tied to smart contracts, staking, and yield generation.”

The diversification trend is visible in the rise of non-Bitcoin ETFs, including funds targeting assets such as Avalanche (AVAX) and even Dogecoin (DOGE). Bitwise itself recently filed an S-1 with the U.S. SEC to launch a spot AVAX ETF, reflecting growing institutional appetite for diversified crypto exposure.

A New Macro Regime

The evolving strategy also reflects a broader macroeconomic shift. During the 2020 bull run, ultra-low interest rates and minimal inflation fueled an “everything rally,” sending even speculative tokens soaring.
Now, with U.S. interest rates near 4% and inflation still elevated, institutions are returning to fundamentals. “It’s no longer about chasing momentum,” Horsley said. “It’s about finding assets that can sustain value in a high-rate environment.”

This mirrors views held by prominent economists such as Mohamed El-Erian and Russell Napier, who advocate for stock selection and dynamic asset allocation amid today’s “financial repression” era.

Bitcoin’s Dual Identity

Horsley also weighed in on the long-running debate over Bitcoin’s role—as a store of value or payments network.
“For Bitcoin to succeed as a payments tool, it first needs to be universally accepted as a store of value,” he said. “Once governments, corporations, and institutions recognize its worth, transactional use will naturally follow. Why spend something whose value you haven’t agreed upon yet?”

He praised ongoing development efforts in the Bitcoin ecosystem, including Lightning Network and David Marcus’s Lightspark, calling them “critical building blocks” for scalable payments infrastructure.

A Maturing Market Cycle

Finally, Horsley addressed the familiar four-year Bitcoin halving cycle, which historically sees bull markets peak 16–18 months post-halving—suggesting a potential slowdown ahead.
While past bear markets have followed spectacular collapses, such as FTX and Terra, Horsley believes the risk of similar systemic shocks has diminished.

“The ecosystem has matured, counterparties are stronger, and institutional oversight is higher,” he said. “If a correction does come, it’s unlikely to mirror the 80% drawdowns of prior cycles.”

Overall, Horsley argued, crypto’s volatility profile is trending lower as it integrates deeper with Wall Street-style risk management—a sign that the asset class is entering a new, more sustainable phase of maturity.