The integration of on-chain finance and traditional finance may spark what could become the largest cycle in crypto history.

Written by Matt Hougan, Bitwise CIO

Compiled by Saoirse, Foresight News

The crypto market is finally showing signs that a bottom may be in. Since July 1, Bitcoin has risen 9%, while the Nasdaq 100 has fallen 6% over the same period. Crypto ETF flows have turned from negative to positive, and market sentiment continues to recover. While it’s still too early to say the market has fully stabilized, all these encouraging signals have led many people to start asking what the next leg of the market will look like.

Last Friday, an investment adviser asked me: “If the market has already hit bottom, which assets will lead the next crypto bull market?”

Generally speaking, during a crypto winter, it’s hard to answer this question. In a new bull market, the main narrative is often only clearly visible after the market run has already played out.

But this time, I think the answer is already right in front of us: in the next crypto bull market, the core narrative will be the convergence of on-chain finance and traditional finance.

In other words, the main points of the future market will revolve around stablecoins, asset tokenization, trading around the clock, instant settlement, and the growth of institutional-grade decentralized finance (DeFi) into the multi-trillion-dollar range. Blockchain will upend the current financial system—just as the internet in the early 21st century reshaped the media and retail industries. I believe this may be the largest crypto cycle in history for two reasons: first, this rally is driven by real application value and revenue rather than mere market hype; second, the market targeted by this cycle is far bigger than in previous cycles—aimed at global financial markets, not limited to the crypto industry itself.

Some people think these trends are self-evident: asset tokenization will inevitably lead the next bull market; stablecoin scale will eventually surpass the multi-trillion-dollar mark; and major Wall Street institutions will eventually migrate onto the chain. After all, compared with the traditional financial system, crypto infrastructure has many natural advantages: trading around the clock is more convenient than limited trading windows; instant settlement is better than T+1 delivery; and global interoperability goes beyond regional restrictions. People who share this view aren’t just me—U.S. Securities and Exchange Commission Chair, the CEO of the world’s largest asset management company, and the CEO of the world’s largest bank also agree.

However, even if the trend seems clear, the vast majority of investors have not yet positioned their assets for this future. Many people are still wondering whether the crypto industry is already “all but over.” Within this gap in perception lies a huge investment opportunity.

So, how should we position ourselves for the next bull market? You can look at two representative players that drive industry convergence from different directions: Hyperliquid (token HYPE) and Robinhood (stock code HOOD).

Breaking out of the crypto industry and going mainstream

Hyperliquid (HYPE) is a single-layer blockchain (similar to Ethereum or Solana). Its native positioning is to build a perpetual derivatives trading market primarily focused on crypto assets. Initially, investors used the Hyperliquid platform to speculate by trading cryptocurrencies such as Bitcoin and Ethereum.

But the platform has rapidly expanded its business footprint thanks to excellent technical experience—easy operation, instant settlement, and round-the-clock trading, among other advantages. Today, nearly half of the trading volume on the Hyperliquid platform comes from traditional assets such as oil, silver, and the S&P 500 index. The platform continues to expand into spot trading for commodities, prediction markets, and options businesses, while also creating competitive pressure on a range of trading venues including the CME, Nasdaq, Intercontinental Exchange, Kalshi, and Coinbase.

Hyperliquid is developing at a rapid pace, putting significant pressure on competitors. Even the CME sued the U.S. Commodity Futures Trading Commission (CFTC) in an attempt to prevent regulators from accepting the perpetual futures products that Hyperliquid launched first.

Even during a crypto winter, the HYPE token has still achieved a 146% gain within the year. The growth data has real support: Hyperliquid’s cumulative total revenue exceeded $100 million in June, and it is expected to reach $800 million in full-year revenue. The platform will use 99% of its revenue to buy back and burn the native token HYPE in the public market, continuously reducing circulating supply. In my view, even if the HYPE price doubles again, the valuation would still remain in a reasonable range.

From traditional finance cutting inward

Robinhood chose to stand on the side of traditional finance and push this industry convergence.

Robinhood itself is a traditional securities brokerage firm, competing with institutions like Charles Schwab for retail and professional investors. For a long time, Robinhood has been far more open-minded toward crypto assets than its peers, and it was also the first large broker to launch direct trading functionality for cryptocurrencies.

At the same time, Robinhood fully agrees with my view of “industry convergence.” Vlad Tenev, the company’s CEO, said that asset tokenization will “ultimately reshape the entire financial system”; crypto and traditional finance have “long been two independent systems, but they will eventually fully merge.” He predicts that the boundary between the two will ultimately disappear completely.

On July 1, Robinhood doubled down on this trend and launched its self-developed Layer-2 blockchain, Robinhood Chain. This public chain is open to users in 120 countries (not supporting the U.S. region for now). Users can trade tokenized stocks all year round, 24/7. On-chain, it also supports mainstream decentralized finance (DeFi) protocols: users can swap assets on Uniswap, borrow assets by collateralizing them on Morpho, or use staked assets as collateral to trade perpetual contracts on the Lighter platform. Within just two weeks of the launch, Robinhood Chain’s custodied assets surpassed $300 million, handling 3.6 million trades per day.

This content is worth reading carefully: early this month, Robinhood, relying solely on its technical rollout, deployed a set of financial services in 120 countries. Users can buy and sell tokenized stocks in real time and without interruption, conduct margin trading, and perform leveraged operations—and many users have already taken part.

Skeptics may argue that in the early days, most trading on-chain concentrated on meme coins rather than stocks—which is indeed true. But tokenized stock trading volume already has real scale; the user base is genuinely there. I expect that both categories of trading scale will continue to grow.

Here’s something I’m absolutely certain about: all of Robinhood’s major competitors are closely watching this project and already thinking, “Should we also follow and set up our own play? Do we need to build a Schwab chain, a UBS chain, a Bank of America chain?” No institution can ignore the trading activity that Robinhood showed in its early launch.

Two types of investment targets that will stand out

I believe the next bull market will be large enough in scale to lift most assets across the industry. I’ve long been bullish on mainstream crypto assets such as Bitcoin, Ethereum, and Solana, as well as on crypto-related listed companies.

But there are two types of investment targets that will have especially strong upside potential.

1. The Hyperliquid track: a native crypto financial application with real revenue and strong token-economic fundamentals

The core advantage of Hyperliquid versus other crypto applications is stable, real revenue and well-designed token mechanics (99% of revenue is used to buy back and burn HYPE). Many investors have seen crypto apps with huge user bases and trading volumes, but token prices stay sluggish. Hyperliquid’s model precisely matches what these investors want.

Looking ahead, I believe many new emerging crypto projects will emulate HYPE’s token mechanism and create a new wave of promising token investment opportunities. At the same time, I’m also watching mature projects that have already formed substantial business scale and actively link token value and platform usage more deeply. For example, Uniswap and Aave—both platforms are huge in size and are rapidly optimizing their tokenomics. Morpho is also moving in the same direction.

2. The Robinhood track: mature traditional companies building businesses on crypto infrastructure

Industry disruption will reshape the market-share landscape. The widespread adoption of stablecoins, asset tokenization, and the rollout of blockchain trading infrastructure are the biggest technological changes the financial markets have seen in the past fifty years—huge change is quietly underway.

If you want to find the winners, focus on companies that have already scaled up their crypto businesses—not those that are merely stuck at the proof-of-concept stage. Concept pilot projects are cheap and easy to attract media attention, but they can’t accumulate truly useful experience. Robinhood’s industry understanding, built on its officially running public chain across 120 countries, is far beyond what any small pilot project could compare to.

The companies I continue to watch include Coinbase, Figure, and BlackRock; I also keep an eye on Visa and Stripe, and even JPMorgan. Of course, there are other participants, but the companies above are truly and deeply committed to this transformation.

Capitalize on the big-picture trend of industry convergence

For a long time, the crypto industry has had a consensus: the biggest marker of blockchain success is “invisibility” of the technology—when blockchain is deeply embedded in the underlying architecture of the financial system, users may not even notice that blockchain exists when using the service.

I’ve always firmly believed that when the next bull market arrives and traditional finance becomes inseparable from the crypto industry, the vision above will become reality. Investors should ride this trend and position themselves early.

Note: Sometimes, when judging how a company is positioning itself in the crypto space, you should look at its actual actions rather than the messaging it puts out externally.