Where Will the Next Bull Market Take Place? The Answer Lies in These Two Asset Classes

The integration of on-chain finance and traditional finance may give rise to the largest cycle in cryptocurrency history.

Written by: Matt Hougan, Bitwise CIO

Compiled by: Saoirse, Foresight News

The cryptocurrency market has finally shown signs of bottoming out. Since July 1, Bitcoin has risen by 9%, while the Nasdaq 100 index has fallen by 6% during the same period. Inflows into cryptocurrency ETFs have turned positive, and market sentiment continues to improve. Although it is still too early to determine if the market has stabilized, various positive signals have prompted many to start questioning the direction of future trends.

Last Friday, an investment advisor asked me, "If the market has bottomed out, which assets will lead the next cryptocurrency bull market?"

Generally speaking, this question is difficult to answer during a crypto winter. The main narrative of a new bull market often becomes clear only after the market has completed its cycle.

However, this time, I believe the answer is already in front of us: the core narrative of the next cryptocurrency bull market will be the integration of on-chain finance and traditional finance.

In other words, the future market's core focus will revolve around stablecoins, asset tokenization, 24/7 trading, instant settlement, and the growth of institutional-grade decentralized finance (DeFi) to a multi-trillion-dollar scale. Blockchain will disrupt the existing financial system, just as the internet reshaped the media and retail industries in the early 21st century. I expect this to be the largest cryptocurrency cycle in history for two reasons: first, this cycle is driven by real application value and revenue, rather than mere market speculation; second, the market targeted in this cycle is far larger than previous cycles—aimed at the global financial market rather than being confined to the crypto industry.

Some may feel that these trends are self-evident: asset tokenization will inevitably lead the next bull market, the scale of stablecoins will eventually exceed trillions of dollars, and major Wall Street institutions will eventually migrate on-chain. After all, cryptocurrency infrastructure has many inherent advantages over traditional financial systems: 24/7 trading is much more convenient than limited trading hours; instant settlement is superior to T+1 delivery; and global interoperability surpasses regional limitations. I am not alone in this view; the chairman of the U.S. Securities and Exchange Commission, the CEO of the world's largest asset management company, and the CEO of the world's largest bank all agree.

However, even if the trends seem clear, the vast majority of investors have not yet positioned their assets for this outlook. Many are still wondering if the crypto industry has already "missed the boat." Within this cognitive gap lies a significant investment opportunity.

So, how should we position ourselves for the new bull market? We can focus on two representative entities driving industry integration from different directions: Hyperliquid (token HYPE) and Robinhood (stock code HOOD).

Breaking Out of the Crypto Industry

Hyperliquid (HYPE) is a Layer 1 public chain (similar to Ethereum and Solana), with its native positioning as a perpetual derivatives trading market primarily for crypto assets. Initially, investors speculated on cryptocurrencies like Bitcoin and Ethereum through the Hyperliquid platform.

However, the platform quickly expanded its business landscape due to its excellent technical experience—convenient operations, instant settlement, and 24/7 trading. Today, nearly half of Hyperliquid's trading volume comes from traditional assets such as oil, silver, and the S&P 500 index. The platform is also continuously expanding into commodities spot trading, prediction markets, and options trading, while competing with trading platforms like CME, Nasdaq, Intercontinental Exchange, Kalshi, and Coinbase.

Hyperliquid's rapid development has put pressure on its competitors. The CME even sued the U.S. Commodity Futures Trading Commission (CFTC) in an attempt to hinder the regulatory body from accepting the perpetual futures products launched by Hyperliquid.

Even in the midst of a crypto winter, the HYPE token has still seen a 146% increase this year. The growth data is supported by real figures: Hyperliquid's cumulative total revenue surpassed $1 billion in June, and the annual revenue is expected to reach $800 million. The platform will use 99% of its revenue to repurchase its native token HYPE on the open market, continuously reducing the circulating supply. In my view, even if the HYPE price doubles again, its valuation will still be within a reasonable range.

Cutting Into Traditional Finance

Robinhood has chosen to stand on the side of traditional finance to promote this industry integration.

Robinhood itself is a traditional securities brokerage, competing with firms like Charles Schwab for retail and professional investors. For a long time, Robinhood has been much more open to cryptocurrency assets than its peers, being the first major brokerage to launch direct cryptocurrency trading features.

At the same time, Robinhood fully agrees with my proposed view of "industry integration." The company's CEO, Vlad Tenev, stated that asset tokenization "will ultimately reshape the entire financial system"; the crypto industry and traditional finance have "long been two independent systems, but they will eventually fully integrate." He predicts that the boundaries between the two will ultimately disappear.

On July 1, Robinhood fully bet on this trend by launching its self-developed Layer 2 blockchain, Robinhood Chain. This public chain is open to users in 120 countries (not yet available in the U.S.), allowing users to trade tokenized stocks year-round, 24/7. The chain is also compatible with mainstream decentralized finance protocols: users can exchange assets on Uniswap, collateralize assets for loans on Morpho, or stake assets as margin to trade perpetual contracts on the Lighter platform. Within just two weeks of its launch, the assets hosted on Robinhood Chain surpassed $300 million, processing 3.6 million transactions daily.

This content is worth reading carefully: earlier this month, Robinhood launched a complete financial service in 120 countries solely based on technology, allowing users to buy and sell tokenized stocks in real-time, engage in margin trading and leverage operations, with a large number of users already participating.

Skeptics may point out that early on-chain trading was heavily concentrated in meme coins rather than stocks, which is indeed true. However, the trading volume of tokenized stocks has already reached a practical scale, and there is a real user base; I expect both types of trading volumes to continue to grow.

One thing I am very certain of: Robinhood's competitors are closely watching this project and are beginning to think: should we also follow suit? Do we need to create Schwab Chain, UBS Chain, or Bank of America Chain? The trading activity demonstrated by Robinhood in its early stages cannot be ignored by any institution.

Two Types of Investment Targets That Will Stand Out

I believe the new bull market will be large enough to drive most assets in the industry upward. I am bullish on mainstream crypto assets like Bitcoin, Ethereum, and Solana, as well as publicly traded companies related to crypto.

However, there are two types of investment targets that will have particularly outstanding upside potential.

1. Hyperliquid Sector: Native Crypto Financial Applications with Real Revenue and Quality Token Economic Models

Hyperliquid's core advantage over other crypto applications is its stable real income and well-structured token mechanism (99% of revenue is used to repurchase and burn HYPE). Many investors have seen numerous crypto applications with large user bases and trading volumes, but token prices remain sluggish, while Hyperliquid's model precisely meets the demands of these investors.

In the long run, I believe many emerging crypto projects will emulate HYPE's token mechanism, giving rise to a new generation of token investment opportunities with potential. At the same time, I am also paying attention to mature projects that have already formed business scales and are actively binding token value with platform usage. For example, Uniswap and Aave are two large platforms that are optimizing their token economics rapidly; Morpho is also moving in the same direction.

2. Robinhood Sector: Mature Traditional Enterprises Conducting Business Based on Crypto Infrastructure

Industry disruption will reshape market share dynamics. The proliferation of stablecoins, asset tokenization, and the establishment of blockchain trading infrastructure represent the largest technological transformation the financial market has seen in the past fifty years, and a significant change is quietly occurring.

To identify the winners, focus on those companies that have already launched large-scale crypto businesses, rather than those merely at the concept validation stage. Concept pilot projects are low-cost and can easily attract media attention, but they struggle to accumulate effective experience. Robinhood's industry insights, based on its public chain operating in 120 countries, far surpass any small pilot project.

The companies I am continuously monitoring include Coinbase, Figure, and BlackRock; I am also keeping an eye on Visa, Stripe, and even JPMorgan Chase. Of course, there are other participants, but the aforementioned companies are genuinely deeply involved in this transformation.

Grasping the Major Trend of Industry Integration

For a long time, there has been a consensus in the crypto industry: the hallmark of blockchain's greatest success is its "invisibility"—when blockchain is deeply embedded in the underlying architecture of the financial system, users may not even perceive the existence of blockchain when using services.

I firmly believe that when the next bull market arrives, and traditional finance and the crypto industry become inseparable, the vision mentioned above will become a reality. Investors should align their strategies with this trend in advance.

Note: Sometimes, assessing a company's positioning in the crypto space requires looking at its actual actions rather than its external promotional rhetoric.

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