The dynamics of the digital asset market is undergoing structural changes, which may ultimately lead to an imbalance between institutional production and consumption.
Matt Hogan, chief investment officer at Bitwise, predicts a scenario in which ETF demand for Bitcoin supply will be huge in 2026 due to the consolidation of the world’s largest financial advisory platforms.
This phenomenon is not a response to temporary euphoria, but to historical patterns of behavior in exchange-traded funds, the executive said. We are just barely passing the initial stages of expansion into traditional capital..
ETF demand growth cycle
Hogan’s paper is based on observations of how these types of financial products mature. The Bitcoin ETF has $114 billion in assets under management. Rather than expressing the roof, This number is the starting point for an uptrend that will stimulate demand for ETFs. And by 2026, the supply of Bitcoin will be in jeopardy.
Managers have established direct analogies to gold to explain the trajectory they expect over the next few years. “If you take a gold ETF as an example, it had $3 billion inflows in its first year, and then it grew for seven consecutive years: $5 billion, $7 billion, $10 billion, $18 billion. So this is just what happens with ETFs,” the expert explains.
This graph shows the evolution of net inflows into gold ETFs over the past five years.
Under this logic, The first year of a Bitcoin fund is typically the most modest compared to capital flows This comes into effect once the product is normalized within the investment portfolio.
This acceleration is further enhanced by the opening up of large banks’ distribution channels. “Large advisory platforms like Morgan Stanley and Merrill Lynch have taken a long time to allow exposure to[Bitcoin and crypto]ETFs. In fact, advisors from Morgan Stanley, Merrill Lynch, UBS and Wells Fargo have only been able to invest in Bitcoin and Ether (ETH) ETFs in the last six months,” Hogan explains.
The door is now wide open. So we’re dealing with a different audience,” Hogan says. Refers to departments that collectively manage over $10 billion..
Gap between issuance amount and institutional investor demand
Hogan’s core theory lies in supply and demand calculations that predict the scarcity of units available in the institutional market.
The executive elaborated that the price of digital assets is determined by supply and demand. According to their analysis, while the network has fixed sources of issuance, “there is a new source of incredible demand: ETFs.”
Looking to the near future, the expert says bluntly, “If you look to 2026, you can predict pretty accurately.” According to forecasts, the Bitcoin network will produce about $15.1 billion in new coins, but institutional demand could absorb more than $24 billion, experts say.
“We’re right in the sweet spot of adoption. “People can’t believe it, but we’ve been doing this at Bitwise for eight years,” Hogan points out.
The arrival of patient capital
Hogan theorizes that one reason this phenomenon will take hold in 2026 is the time it takes for traditional investors to enter the BTC market. “The average institutional investor requires a lengthy due diligence process,” the expert said.
For experts, many of the processes that began with the launch of the BTC fund in January 2024 are now culminating, as reported by CriptoNoticias.
This dynamic is not limited to Bitcoin. Hogan predicts the situation will be even more serious for ETH. “Net new supply of ETH next year is estimated to be around $3 billion. ETF inflows this year will be $10 billion and will probably reach $11 billion by the end of the year. “Next year it could be 15 billion or 20 billion.” That means the demand for ETH from financial instruments will be up to five times the net supply.
Other cryptocurrencies are also showing signs of this depletion of supply. Hogan observes: Solana ETF (SOL) has already raised over $600 million in a short period of timeis beginning to exceed its own annual emissions.
Mr. Hogan concluded that the market is heading toward an “adoption sweet spot,” where the Wall Street machine mobilizes funds faster than networks can meet plan issuances, and the lack of sufficient net supply will inevitably put upward pressure on prices.
