Bitwise CIO Matt Hougan predicts stablecoins will rise significantly

Bitwise CIO Matt Hougan expects stablecoins to grow significantly. The San Francisco Federal Reserve has published research suggesting the sector is already doing something unusual for crypto: filling a gap left by one of the largest holders of US government debt.

The Fed’s research says stablecoin issuers have offset more than 40% of the drop in Chinese holdings of US Treasuries since 2021. For an asset class long dismissed as a speculative sideshow, that is an odd new line on the résumé.

What the San Francisco Fed found

The findings come from a San Francisco Federal Reserve Economic Letter dated September 28, 2026. It describes stablecoin issuers as a substantial new buyer of US Treasury securities.

According to the letter, issuers collectively added approximately $200 billion in Treasury holdings between 2021 and mid-2026. Over that same stretch, China was reducing its own position in US government debt.

The scale of the stablecoin buying covered more than 40% of that Chinese decline.

The growth has been steep. Stablecoin issuers’ holdings expanded more than tenfold within five years, according to the research.

Since 2023, their purchases of short-term Treasury bills have also surpassed Japan’s.

The buying is concentrated in a few places. The Fed’s research notes that the two largest stablecoins account for most of the activity, and they favor short-term Treasury instruments.

A stablecoin promises to be redeemable at a fixed value, usually one dollar. Short-dated government debt is about as close to cash as an investment gets, which makes it a natural backing asset for a token that is supposed to hold steady.

The 2030 projection

The Fed projected that stablecoin issuer demand for short-term Treasuries could reach approximately $400 billion by the end of 2030.

That figure comes with a condition attached. It assumes current trends persist, and the letter frames it as a possibility rather than a certainty.

Hougan’s view from the advisor circuit

Hougan has said he spoke with more than 40 financial advisors, who he reported manage assets exceeding $175 trillion.

His takeaway was that those advisors showed more interest in stablecoins and tokenization than in Bitcoin as a speculative investment. Real-world use cases, not price charts, dominated the discussion.

According to Hougan, the stablecoin narrative is now gaining traction among institutions. He described it as reshaping how they think about capital markets and payments.

Tokenization refers to representing traditional assets like bonds or funds as tokens on a blockchain. Stablecoins and tokenization tend to travel together. A tokenized asset needs a dollar-like token to trade against, and stablecoins fill that role.

What this means for investors and markets

There are risks worth watching. The concentration in two issuers means a large share of this Treasury demand depends on a small number of companies.

The growing link also cuts both ways. If stablecoins become a significant buyer of short-term Treasuries, sudden redemptions could force issuers to sell those holdings quickly.

Stablecoin issuers have grown their Treasury holdings more than tenfold in five years, outpaced Japan in short-term bill buying since 2023, and covered more than 40% of China’s retreat.