Bitwise’s chief investment officer Matt Hougan outlined how the firm is targeting institutional-scale exposure to digital assets through its new Avalanche Exchange-Traded Product (ETP), in a conversation on the Layer One podcast with hosts Kelvin Sparks and John Wu.
The product, which recently began trading on the New York Stock Exchange, is designed to give regulated access to the Avalanche network while layering in yield from staking. It aims to track Avalanche’s price and deliver an estimated 5.4% average staking yield, a structure Hougan said is meant to feel familiar to traditional portfolio managers.
Regulated structures gain ground
Hougan framed the Avalanche ETP as part of a broader shift toward regulated, exchange-listed vehicles as the preferred route into crypto.
According to recent survey data he cited, 81% of large market participants now favor registered products for their digital asset exposure, with the use of ETFs and ETPs reaching 66%. That demand has already shown up in flows: U.S.-listed spot Bitcoin ETFs recorded four straight weeks of net inflows totaling about $2 billion by late March 2026.
Hougan argued that clearer regulation and improved product design are drawing more institutional capital, particularly into structures that blend traditional compliance standards with on-chain yield mechanisms like staking.
How the Avalanche ETP is structured
Hougan said the Avalanche ETP is built to balance three elements:
- exposure to the Avalanche layer-one blockchain
- staking to generate yield within the vehicle
- adherence to traditional finance rules and reporting standards
By staking the underlying AVAX held in the ETP, the product seeks to generate ongoing rewards, which are reflected in returns to holders. Hougan positioned this as a way to capture a key on-chain feature—staking yield—without requiring direct token custody or operational complexity on the part of large institutions.
Avalanche network fundamentals in focus
Part of the rationale for a dedicated Avalanche product, Hougan said, lies in the network’s recent usage metrics. Daily transactions on Avalanche have climbed above 3.5 million, roughly ten times the level seen a year earlier.
He noted that activity appears to be driven primarily by unique users rather than automated bots, a pattern that is drawing attention from large entities looking for networks with both scale and real user engagement.
Differences among layer-one chains—such as throughput, decentralization models, and fee levels—are now starting to shape institutional preferences, Hougan added, with some opting for “macro” exposure while others target specific networks with growing application ecosystems.
Two parallel market narratives
Hougan described the current digital asset market as driven by two intertwined but distinct stories:
- Bitcoin as a macro asset
- blockchains as platforms for decentralized applications
Bitcoin, he argued, is increasingly trading like a global macro asset, reacting to geopolitical developments and liquidity conditions. As an example, he pointed to the recent pullback in digital assets after the closure of the Strait of Hormuz, which coincided with Bitcoin’s drop to around $74,000.
At the same time, the application-focused segment is building on strong growth forecasts. The decentralized application market is projected to reach $50.03 billion by 2026, implying a compound annual growth rate above 20%. Hougan suggested this growth path is becoming a core driver for interest in networks like Avalanche that position themselves as high-throughput platforms for on-chain applications.
These dual narratives, he said, are already influencing how large allocators think about future asset mixes—distinguishing between “digital gold” style exposure and exposure to networks powering new forms of infrastructure and services.
Where AI and blockchain converge
The discussion closed on the emerging overlap between artificial intelligence and blockchain technology. Hougan said major institutions are moving from theoretical exploration to practical pilots that combine the two.
One core concept involves using AI tools for real-time fraud detection and pattern analysis across transaction data, while relying on blockchains as a tamper-resistant, verifiable data source. In this model, blockchain provides transparent, auditable records, and AI processes that data at scale to flag anomalies, improve risk controls, and streamline operations.
Hougan argued that these experiments point toward a new category of digital infrastructure where AI-driven analytics and blockchain-based data integrity work together, potentially reshaping how large organizations manage security, compliance, and transaction-heavy business lines.
Structural shift in access to digital assets
Taken together, Hougan said, the launch of regulated products like the Bitwise Avalanche ETP and the strong traction of spot Bitcoin ETFs mark a structural change in how large pools of capital can engage with digital assets.
By blending traditional listing venues, compliance frameworks, and on-chain yield features, these vehicles aim to make it easier for institutions and other large traders to participate in both sides of the market’s evolving story: Bitcoin as a macro asset and blockchains as platforms for the next wave of digital applications.
Interested in regulated crypto exposure and yields? Explore how exchange-traded products (ETPs) work in today’s evolving market landscape.
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