分类： Bitcoin

Strategy bought 8,178 BTC for $835.6 million as Bitcoin (BTC) tumbled through $90,000, locking in a $102,171 average that now sits underwater.

Harvard Management Co. reported 6.8 million IBIT shares worth $442.9 million in its September 30 13F filing, triple its prior quarter and the endowment’s largest reported US listed equity holding by value.

Both moves landed as funding rates dipped into negative territory, open interest unwound, and short-term holders dumped at realized losses. This profile typically marks redistribution from weak hands to balance sheets with staying power.

The question is whether that redistribution represents accumulation or just institutional knife-catching into a deeper drawdown. Strategy’s aggregate cost basis sits around $74,433, meaning the company’s overall position remains profitable despite the latest tranche going red.

Harvard’s disclosure captures only US-listed public equities and certain ETFs, not the full endowment. Still, the 13F line signals that a $50 billion institutional allocator increased Bitcoin exposure as the price fell.

Those are bets on mean reversion and structural demand, not panic exits.

Who sold the dip

Short-term holders, wallets that acquired coins in the past 155 days, realized losses in the selloff, a pattern Glassnode flagged as on-chain capitulation.

Retail cohorts tend to dominate this segment, as they buy rallies, lever up near tops, and liquidate when volatility spikes and margin calls arrive.

Funding rates on perpetual swaps turned negative at points during the drop, consistent with long liquidations and deleveraging rather than fresh short bets. Open interest across major venues declined, suggesting position closures rather than aggressive directional trades.

US spot Bitcoin ETFs hemorrhaged $2.57 billion in November through the 17th, the worst monthly drawdown since launch.

Outflows concentrate redemption pressure during US market hours, forcing authorized participants to sell spot or unwind hedges, which mechanically weighs on price.

The timing overlapped with Bitcoin’s break below $90,000, tying institutional rotation out of ETF vehicles to the same window when retail wallets realized losses.

That dual-source selling created the conditions for buyers with longer time horizons to step in at lower clearing prices.

Accumulation thesis

Glassnode’s data showed that wallets holding over 1,000 BTC added coins as smaller cohorts exited. The interpretation has limits, as wallet heuristics rely on clustering algorithms and labeled addresses rather than KYC identities, and positions shift quickly.

However, the net flow from short-term holders to long-term holder cohorts aligns with early-cycle redistribution patterns observed in prior drawdowns.

Onchain Lens and Lookonchain flagged wallets linked to the LIBRA saga buying Solana on dips, and a labeled “Anti-CZ whale” flipping long on Ethereum while holding large XRP exposure.

These are traceable moves, but the labels themselves rest on blockchain forensics and exchange-tag associations rather than verified counterparty disclosures.

They offer directional signals, consisting of smart money wallets adding altcoin exposure during volatility, but the thesis can reverse with the next funding print or liquidation cascade.

CryptoQuant’s CEO, Ki Young Ju, argued that whales exited Bitcoin futures. At the same time, retail held the bulk of open interest, a claim supported by venue-level data showing a trend of deleveraging.

Open interest fell and funding turned negative, consistent with long unwinds rather than whale exits per se. Attributing the move to specific cohorts requires extrapolating from aggregated position data that lacks real-time granularity.

The broader point holds: derivatives markets deleveraged as spot buyers absorbed supply, a dynamic that can precede either a reversal or a continuation of the downtrend, depending on whether spot demand persists.

Bull-trap counterargument

Spot Bitcoin ETF outflows removed structural demand that had absorbed miner issuance, tightening circulating supply through most of 2024 and early 2025.

Retirement accounts, RIAs, and wirehouse platforms funnel fiat-native capital into Bitcoin via ETFs. When those flows reverse, they pull a steady bid out of the market precisely as price weakens.

Strategy’s $835 million purchase and Harvard’s IBIT allocation represent meaningful size, but they don’t offset $2.57 billion in ETF redemptions if that trend continues into December.

Short-term holder capitulation and whale accumulation describe what happened during the drop, not what happens next. If ETF outflows persist and macro risk escalates, the clearing price can fall further even as sovereigns, corporates, and endowments add exposure.

Early-cycle accumulation and a bull trap can look identical in real time. The difference emerges over weeks as either durable demand stabilizes the price or another leg down proves the buyers wrong.

Strategy’s latest tranche is underwater, averaging $102,171, and estimates suggest roughly 40% of the company’s total holdings trade below cost. However, that figure isn’t documented in the filing and should be treated as attributed commentary rather than a disclosed fact.

The company’s aggregate profitability depends on Bitcoin recovering above $74,433 and holding there. If it doesn’t, the accumulation thesis becomes a case study in timing risk.

What decides the outcome

The 13F snapshots and on-chain wallet labels have scope limits. Harvard’s filing captures only US public equities and certain ETFs, not private positions, offshore allocations, or the complete endowment strategy.

Whale wallet clusters rely on address grouping and exchange tags that can misattribute activity or miss custodial flows. But the directional read that sovereigns, corporates, and endowments absorbed float while short-term holders realized losses fits redistribution if spot demand continues and ETF outflows stabilize.

If ETF redemptions extend into year-end and macro conditions deteriorate, the buyers who stepped in at $90,000 will test their conviction lower.

Strategy can average down indefinitely given its capital-raising playbook, and Harvard operates on decade-long time horizons that make quarterly drawdowns irrelevant.

Retail cohorts and levered traders lack that luxury, which means the next move depends on whether institutional spot demand offsets ETF outflows and whether derivatives funding stabilizes or tips back into negative territory.

The crash to $90,000 clarified who holds through volatility and who exits at the first sign of trouble. Whether that redistribution marks a bottom or just a pause depends on flows over the next month, not wallet snapshots from the last week.

For years, quantum computing has served as cryptocurrency’s favorite doomsday scenario, a distant but existential threat that periodically resurfaces whenever a lab announces a qubit milestone.

The narrative follows a predictable arc where researchers achieve some incremental breakthrough, social media erupts with “Bitcoin is dead” predictions, and the news cycle moves on.

But Adam Back’s November 15 remarks on X cut through that noise with something the discourse desperately lacks: a timeline grounded in physics rather than panic.

Back, the Blockstream CEO, whose Hashcash proof-of-work system predates Bitcoin itself, responded to a question about accelerating quantum research with a blunt assessment.

Bitcoin faces “probably not” any vulnerability to a cryptographically relevant quantum computer for roughly 20 to 40 years.

More importantly, he stressed that Bitcoin doesn’t have to wait passively for that day.

NIST has already standardized quantum-secure signature schemes, such as SLH-DSA, and Bitcoin can adopt these tools through soft-fork upgrades long before any quantum machine poses a genuine threat.

His comment reframes quantum risk from an unsolvable catastrophe into a solvable engineering problem with a multi-decade runway.

That distinction matters because Bitcoin’s actual vulnerability isn’t where most people think, as the threat doesn’t come from SHA-256, the hash function that secures the mining process. It comes from ECDSA and Schnorr signatures on the secp256k1 elliptic curve, the cryptography that proves ownership.

A quantum computer running Shor’s algorithm could solve the discrete logarithm problem on secp256k1, deriving a private key from a public key and invalidating the entire ownership model.

In pure mathematics, Shor’s algorithm renders elliptic curve cryptography obsolete.

The engineering gap between theory and reality

But mathematics and engineering exist in different universes. Breaking a 256-bit elliptic curve requires somewhere between 1,600 and 2,500 logical, error-corrected qubits.

Each logical qubit demands thousands of physical qubits to maintain coherence and correct errors.

One analysis, based on the work of Martin Roetteler and three other researchers, calculates that breaking a 256-bit EC key within the narrow time window relevant to a Bitcoin transaction would require approximately 317 million physical qubits under realistic error rates.

It is essential to consider where quantum hardware actually stands. Caltech’s neutral-atom system operates around 6,100 physical qubits, but these are noisy and lack error correction.

More mature gate-based systems from Quantinuum and IBM operate in the tens to low hundreds of logical-quality qubits.

The gap between current capability and cryptographic relevance spans several orders of magnitude, not a small incremental step, but a chasm that requires fundamental breakthroughs in qubit quality, error correction, and scalability.

NIST’s own post-quantum cryptography explainer states this plainly: no cryptographically relevant quantum computer exists today, and expert estimates for its arrival vary so widely that some specialists think “less than 10 years” remains a possibility. In contrast, others place it firmly past 2040.

The median view clusters around the mid-to-late 2030s, making Back’s 20-to-40-year window conservative rather than reckless.

The migration roadmap already exists

Back’s “Bitcoin can add over time” comment points toward concrete proposals already circulating among developers.

BIP-360, titled “Pay to Quantum Resistant Hash,” defines new output types where spending conditions include both classical signatures and post-quantum signatures.

A single UTXO becomes spendable under either scheme, allowing for a gradual migration rather than a hard cutoff.

Jameson Lopp and other developers have built on BIP-360 with a multi-year migration plan. First, add PQ-capable address types via soft fork. Then gradually encourage or subsidize moving coins from vulnerable outputs into PQ-protected ones, reserving some block space each block specifically for these “rescue” moves.

Academic work dating back to 2017 has already recommended similar transitions. A 2025 preprint from Robert Campbell proposes hybrid post-quantum signatures, where transactions carry both ECDSA and PQ signatures during an extended transition period.

The user-side picture reveals why this matters. Roughly 25% of all Bitcoin, between four and six million BTC, sits in address types where public keys are already exposed on-chain.

Early pay-to-public-key outputs from Bitcoin’s first years, reused P2PKH addresses, and some Taproot outputs all fall into this category. These coins become immediate targets once Shor on secp256k1 becomes practical.

Modern best practice already provides substantial protection. Users who employ fresh P2PKH, SegWit, or Taproot addresses without reusing them benefit from a critical timing advantage.

For these outputs, the public key remains hidden behind a hash until the first spend, compressing the attacker’s window to run Shor within the mempool confirmation period, measured in minutes rather than years.

The migration job isn’t starting from scratch, it’s building upon existing good practices and transitioning legacy coins into safer structures.

The post-quantum toolbox is ready

Back’s mention of SLH-DSA wasn’t casual name-dropping. In August 2024, NIST finalized the first wave of post-quantum standards: FIPS 203 ML-KEM for key encapsulation, FIPS 204 ML-DSA for lattice-based digital signatures, and FIPS 205 SLH-DSA for stateless hash-based digital signatures.

NIST also standardized XMSS and LMS as stateful hash-based schemes, with the lattice-based Falcon scheme in the pipeline.

Bitcoin developers now have a menu of NIST-approved algorithms, along with reference implementations and libraries.

Bitcoin-focused implementations already support BIP-360, indicating that the post-quantum toolbox exists and continues to mature.

The protocol doesn’t need to invent brand-new mathematics, it can adopt established standards that have undergone years of cryptanalysis.

That doesn’t mean implementation comes without challenges. A 2025 paper examining SLH-DSA found susceptibility to Rowhammer-style fault attacks, emphasizing that while security rests on ordinary hash functions, implementations still require hardening.

Post-quantum signatures also consume more resources than their classical counterparts, raising questions about transaction sizes and the economics of fees.

But these represent engineering problems with known parameters, not unsolved mathematical mysteries.

Why 2025 isn’t about quantum

BlackRock’s iShares Bitcoin Trust (IBIT) amended its prospectus in May 2025 to include extensive disclosures about quantum computing risk, warning that a sufficiently advanced quantum computer could compromise Bitcoin’s cryptography.

Analysts immediately recognized this as standard risk-factor disclosure, boilerplate language alongside generic technology and regulatory risks, rather than a signal that BlackRock expects imminent quantum attacks.

The near-term threat is investor sentiment, rather than the technology of quantum computing itself.

A 2025 SSRN study found that news related to quantum computing triggers some rotation into explicitly quantum-resistant coins. Still, conventional cryptocurrencies exhibit only modest negative returns and volume spikes around such news, rather than structural repricing.

When examining what actually drove Bitcoin’s movement throughout 2024 and 2025, going through ETF flows, macroeconomic data, regulation, and liquidity cycles, quantum computing rarely appears as a proximate cause.

CPI prints, ETF outflow days, and regulatory shocks drive price action, while quantum computing generates headlines.

Even articles sounding the loudest alarms about “25% of Bitcoin at risk” frame the threat as years away while emphasizing the need to start upgrading now.

The framing consistently lands on “governance and engineering problem” rather than “sell immediately.”

Stakes are about defaults, not deadlines

Bitcoin’s quantum story isn’t really about whether a cryptographically relevant quantum computer arrives in 2035 or 2045. It’s about whether the protocol’s governance can coordinate upgrades before that date becomes relevant.

Every serious analysis converges on the same conclusion that the time to prepare is now, precisely because migration takes a decade, not because the threat is imminent.

The question that will determine Bitcoin’s quantum resilience is whether developers can build consensus around BIP-360 or similar proposals, whether the community can incentivize migration of legacy coins without fracturing, and whether communication can stay grounded enough to prevent panic from outrunning physics.

In 2025, quantum computing poses a governance challenge that necessitates a 10- to 20-year roadmap, rather than a catalyst that will dictate this cycle’s price action.

Physics advances slowly, and a roadmap is visible.

Bitcoin’s role is to adopt PQ-ready tools well before the hardware arrives, and to do so without the governance gridlock that can turn a solvable problem into a self-inflicted crisis.

Bitwise’s Solana Staking ETF (BSOL) pulled in $56 million in volume on its launch day, while Canary Capital’s spot XRP ETF (XRPC) posted $58 million, the highest two volumes for any ETF launched in 2025.

Yet, SOL traded near $205 one day before the ETF launch and slumped to $165 within a week, a 20% drop during what K33’s Vetle Lunde called “a clear success” in terms of flows. As of press time, SOL traded around $140.

XRP slipped 7% within 48 hours surrounding its ETF debut, dropping from the region between $2.40 and $2.50 toward the low $2.20. Both coins are now at multi-month lows, while their ETF wrappers continue to log positive net creations.

The paradox isn’t actually paradoxical. These ETFs were launched exactly as designed into a particularly challenging part of the cycle, which consisted of heavy profit-taking, macro risk-off sentiment, and capital reshuffling within the crypto space, rather than fresh money arriving from outside.

Record ETF prints and red spot charts can coexist because they measure different things.

Volume doesn’t equal net buying

The “record volume” headlines for BSOL and XRPC describe the number of ETF shares that changed hands, not the amount of new capital that entered the underlying coins.

Those numbers capture secondary trading between early buyers, fast money, and market-makers. They include rebalancing out of other crypto exposures into the new wrapper.

They contain short-term arbitrage where traders buy the ETF and hedge by selling futures or spot SOL/XRP, which can actually pressure prices downward.

Net inflows, which involve the creation of new ETF shares that require actual coin purchases, were strong but relatively small compared to the market size.

CoinShares data indicate that Solana products generated approximately $421 million in one week, with further inflows exceeding $100 million in subsequent weeks.

Despite registering $245 million in inflows on its debut day, the Canary fund was part of the XRP funds group, which saw $15.5 million in outflows last week, suggesting a U-turn in inflows.

The bottom line is: against tokens with market caps in the tens of billions and heavy existing derivatives open interest, those flows don’t move the needle immediately.

The ETF plumbing explains the lag. Canary’s S-1 makes clear that the trust holds XRP directly and creates or redeems shares in 10,000-share “baskets.”

Authorized participants can deliver cash or XRP to create baskets, with the trust sourcing coins via approved venues.

Most launch-day excitement remains in the secondary market, as ETF shares can change hands throughout the day without triggering any creation or redemption at the trust level.

Where creations do occur, they’re often hedged. APs and market-makers routinely buy ETF shares and sell futures or spot to manage risk.

In a risk-off environment, that hedge leg contributes to downward pressure on the underlying coin even as the ETF itself grows.

Launching into a drawdown

These ETFs didn’t arrive in a vacuum. Since mid-October, Bitcoin has given back most of its 2025 gains, falling about 22% from its early-October peak near $126,000 to below $93,000.

Spot Bitcoin ETFs simultaneously flipped from record inflows to heavy redemptions.

Solana and XRP funds are the bright spots in that dataset. Solana especially has “bucked the trend” with back-to-back weeks of inflows, before registering $8.3 million in outflows last week.

These altcoin ETFs are swimming upstream against broad de-risking in everything from BTC ETFs to tech stocks.

Record launches in a structurally hostile macro window produce exactly this outcome: strong relative performance for the new products, weak absolute performance for the underlying assets.

The flows data reveal something else: capital going into altcoin ETFs is rotating from elsewhere in the crypto stack rather than arriving as fresh fiat.

Following the Oct. 10 liquidation event, digital asset ETPs experienced $513 million in total outflows. However, Solana and XRP funds still attracted $156 million and $73.9 million, respectively.

Altcoin ETFs are gaining market share within crypto ETPs, while the overall ETP market is shrinking. For spot prices, that redistributes existing risk across tickers rather than injecting new demand.
The expectations tax

Both SOL and XRP experienced significant run-ups in the lead-up to their ETF listings. Trading data shows SOL climbing from local lows around $177 to approximately $203-205 in the week leading up to the Oct. 28 ETF debut, fueled by aggressive bullish positioning and headlines targeting upside scenarios of over $ 400.

Once BSOL actually launched, that pre-positioning flipped. Profit-taking, stretched valuations, and weakening risk appetite drove SOL’s 20% drop from $205 to $165 despite the ETF’s second-strongest-ever inflow week.

XRP showed the same pattern compressed into a tighter timeframe. The SEC’s generic listing rule in September flagged Solana and XRP as likely first beneficiaries.

XRP rallied on each incremental step toward listing, from Nasdaq’s certification to the final 8-A filing. By the time XRPC opened, Binance News described the intraday move as a “classic sell-the-news” reaction.

The ETF is structurally bullish, but much of that bullishness is already priced in ahead of time. Launch day is when early longs finally have a big, liquid venue to sell into. The product succeeds by its own metrics while the trade that anticipated it gets unwound.

Wrapper innovation doesn’t repeal the cycle

The day-one paradox resolves into a few clean threads. These are real products with real demand. BSOL and XRPC genuinely set 2025 records on first-day metrics and generated hundreds of millions in creations, even as the broader ETP universe bled capital.

They arrived late in the cycle, not early. The launches followed a year of aggressive price appreciation and optimism for ETFs.

By the time tickers went live, SOL and XRP were already crowded trades, with investors using the ETF window to de-risk and lock in gains.

The macro tide is flowing out. Bitcoin’s drawdown from $126,000 to sub-$100,000, the $2.3 billion outflows in ETFs, and rising rate-cut uncertainty mean even good micro stories can’t overpower the higher-beta nature of altcoins.

Mechanics mute the short-term effect. Day-one ETF “volume” is a noisy mix of seeding, intraday churn, and hedged arbitrage.

Net creations have been strong but too small, and too offset by selling elsewhere in crypto, to dictate price in the first few weeks.

The forward-looking question is whether this paradox resolves if ETF inflows continue to compound while Bitcoin and Ethereum stabilize.

Does sustained institutional wrapper demand eventually pull spot prices higher? Or does the market treat these as new vehicles for existing capital to rotate through?

The answer depends on whether fresh fiat arrives or whether crypto remains stuck in internal reshuffling mode.

The day-one paradox isn’t a failure of the ETF trade, but rather a reminder that wrapper innovation doesn’t repeal the cycle. It just gives the cycle a new set of tickers to express itself through.

For more than a decade, the DeFi sector has operated on a fractured promise. The theoretical pitch of a fairer, more accessible global financial system has consistently crashed against the rocks of practical reality.

In practice, DeFi has delivered a user experience defined by hostility of confusing interfaces, punitive gas fees, risky workflows, and the terrified clutching of seed phrases. It created a system where only the technically literate or those willing to take risks dared to tread, leaving the vast majority of the world’s savers on the sidelines.

But the launch of Aave’s new mobile savings application marks a distinct departure from this exclusionary history.

By radically re-engineering the user journey to mimic the seamlessness of modern fintech, Aave is making a strategic wager that the path to onboarding a billion users isn’t about teaching them to navigate the blockchain, but about making the blockchain entirely invisible.

The end of the “Tech Tax”

The most formidable barrier to DeFi adoption has never been the lack of yield; it has been the abundance of friction.

The “tech tax” of the ecosystem, requiring users to manage browser extensions like MetaMask, navigate complex signing pop-ups, and calculate gas fees in Ethereum, effectively capped the market size at power users.

The Aave App represents a fundamental break with this pattern. Leveraging advanced account abstraction, the application removes the vestiges of crypto’s technical burden.

There are no ledger devices to connect, no hexadecimal wallet addresses to copy and paste, and no manual bridging of assets between disparate chains. The interface simply asks the user to save.

This way, users can deposit euros, dollars, or connect debit cards, and the protocol handles the backend complexity of converting fiat into yield-bearing stablecoins.

By stripping away the “crypto” aesthetics and presenting itself as a clean, neo-banking interface, Aave is targeting the demographic that Revolut and Chime captured: digital natives who want utility without technical overhead.

A bank-like experience

The structural ambition of the app is to function as a bank in the front and a decentralized liquidity engine in the back.

This is not a trivial pivot. Aave currently manages over $50 billion in assets through smart contracts. If structured as a traditional financial institution, its balance sheet would rank it among the top 50 banks in the United States.

However, unlike traditional banks, where liquidity is often opaque, Aave’s ledger is transparent and auditable 24/7.

To operationalize this for the mass market, Aave Labs’ subsidiary recently secured authorization as a Virtual Asset Service Provider (VASP) under Europe’s comprehensive MiCA (Markets in Crypto-Assets) framework.

This regulatory milestone is the linchpin of the strategy. It provides the app with a legally recognized gateway into the traditional SEPA banking system, enabling compliant and regulated fiat on-and-off ramps.

This moves Aave out of the “shadow banking” categorization and into a recognized tier of financial service providers, granting it the legitimacy required to court mainstream depositors who would otherwise never touch a DeFi protocol.

The $1 Million protection

If complexity is the first barrier to entry, trust is the second.

Numerous exploits, bridge hacks, and governance failures mark the history of DeFi. For the average saver, the fear of total loss outweighs the allure of high returns. No amount of yield is worth the risk of a drained wallet.

Aave is attempting to shatter this ceiling by introducing a balance protection mechanism of up to $1 million per user. This figure quadruples the standard $250,000 insurance limit for FDIC-insured accounts in the US.

While this protection is protocol-native rather than government-backed, the psychological impact is profound. It signals a shift in responsibility from the retail user to the protocol. In doing so, Aave is repositioning DeFi from a “buyer beware” frontier experiment into a product with institutional-grade safety rails.

For a middle-class saver in Europe or Asia, this reframes the proposition from “speculating on crypto” to “saving with better insurance than my local bank.”

The yield advantage

While protection solves the trust deficit, yield solves the incentive problem.

The macroeconomic timing of Aave’s rollout is fortuitous. As central banks globally, including the Federal Reserve and the ECB, begin to cut rates, traditional savings yields are projected to compress back toward the low single digits.

Aave’s yield engine, however, operates on a different fundamental driver.

According to analytics from SeaLaunch, Aave’s stablecoin APY (denominated in USD and EUR) has consistently outperformed risk-free instruments, such as US Treasury bills. This is because the yield is derived from on-chain borrowing demand rather than central bank policy.

This creates a persistent premium. As traditional rates fall, the spread between a bank savings account (offering perhaps 3%) and Aave (offering 5–9%) widens.

For global users, particularly in developing economies with unstable banking sectors or high inflation, this access to dollar-denominated, high-yield savings is a necessary financial lifeline and not just a luxury.

The distribution engine

Ultimately, the most understated component of Aave’s strategy is distribution.

By launching on the Apple iOS App Store, Aave is attaching its decentralized rails to the world’s largest fintech distribution engine. In 2024, the App Store received 813 million weekly visitors across 175 markets, according to Apple.

Considering this, Sebastian Pulido, Aave’s Director of Institutional & DeFi Business, captured it perfectly by describing the new application as “DeFi’s iPhone moment” because the platform will “abstract away all complexity and friction around getting access to defi yields.”

Essentially, just as the browser made the internet accessible to non-coders, the App Store makes DeFi accessible to non-traders.

Aave is tapping into the same infrastructure that scaled PayPal, Cash App, and Nubank to global dominance.

So, for the first time, a user in Lagos, Mumbai, or Berlin can onboard into DeFi with the same simplicity as downloading a game. There are no barriers, no distinct “crypto” learning curve, and no friction.

Essentially, if DeFi is ever to reach a billion users, it will not happen through browser extensions or technical whitepapers. It will happen through an app that looks like a bank, protects like an insurer, and pays like a hedge fund.

Bitcoin crossed a watershed moment in its monetary history on Nov. 17, surpassing 19.95 million mined coins and pushing the network past 95% of its immutable 21 million supply cap. This leaves the network with less than 1.05 million BTC to mine over the next 115 years.

On the surface, the milestone appears to be a victory lap for the digital asset as it represents a validation of the scarcity narrative that has driven its adoption by Wall Street giants and sovereign balance sheets alike.

Yet, for the industrial operators responsible for securing the blockchain, the celebration is muted.

In reality, the crossing of the 95% threshold marks the beginning of Bitcoin’s most capital-intensive and operationally unforgiving phase: the “5% Era.”

Bitcoin’s mathematics of the long tail

Bitcoin’s issuance schedule is not a linear progression but a geometric decay, governed by the “halving” event. This is a hard-coded event that reduces block rewards by 50% every 210,000 blocks, or approximately every four years.

When the network launched in 2009, miners could extract 50 BTC every ten minutes. Today, following the April 2024 halving, that reward stands at just 3.125 BTC. This decay function means that while the network is nearing its supply ceiling in terms of quantity, it is only at the midpoint in terms of time.

The final 5% of supply will be stretched across a century-long timeline, with the very last partial bitcoin not expected to be mined until the year 2140.

For macro investors, this trajectory is the core investment thesis. Bitcoin is transitioning from a youthful, high-inflation asset into a mature commodity with an inflation rate destined to drop below that of gold and, eventually, near zero.

This programmatic scarcity is precisely what fueled the approval of spot ETFs and the entry of institutional capital.

However, for miners whose business models were built during an era of abundant subsidies, this transition represents a looming revenue cliff. The era of “easy money” mining is mathematically over.

The miner’s paradox

The economic strain of this transition is not a theoretical future problem; it is visible in today’s on-chain data. The “5% Era” is beginning under arguably the most difficult market conditions in the network’s history.

Hashprice, which is the industry standard metric for tracking miner revenue per unit of hashrate, plummeted to $38.82 per petahash per second (PH/s) per day last week.

This represents a 12-month low and a severe contraction from the $80-$100 levels seen during previous bull market cycles.

The collapse in revenue is driven by a “Miner’s Paradox”:

• Price Weakness: With Bitcoin trading below $90,000, the fiat value of the 3.125 BTC block reward is insufficient to cover the operational expenditure (OpEx) of older fleets.
• Record Difficulty: Despite falling revenue, the network hashrate has not capitulated. It remains elevated near 1.1 zettahash per second (ZH/s).

Typically, when revenue drops, inefficient miners unplug, difficulty adjusts downward, and margins recover for the survivors.

That mechanism appears broken in the short term. Miners, flush with capital raised during previous quarters or locked into long-term hosting contracts, are keeping machines running at a loss or breakeven.

On-chain data reveals the damage: the industry recently earned a weekly average of just over $37 million per day, a sharp decline from the $40 million-plus daily averages seen months prior.

As a result, the sector is currently caught in a vice where revenues are falling while the difficulty of extraction rises, a dynamic that invariably leads to consolidation.

The pivot to AI

Facing this structural margin compression, the mining industry is fracturing into two distinct camps: the “Pure Plays” who are doubling down on Bitcoin efficiency, and the “Hybrid Operators” who are fleeing the sector entirely for a more lucrative market in Artificial Intelligence.

The logic is strictly improved unit economics. The same power capacity and cooling infrastructure used to mine Bitcoin can, with hardware adjustments, be used to power High-Performance Computing (HPC) and AI model training.

Currently, the arbitrage is massive because AI compute can yield exponentially higher revenue per megawatt-hour than Bitcoin mining.

In 2024, VanEck analysts quantified this opportunity, projecting that Bitcoin miners could unlock up to $38 billion in incremental annual revenue by diverting just 20% of their power capacity toward AI and HPC workloads.

The market is already witnessing this capital flight. Bitfarms, a name once synonymous with aggressive Bitcoin hashrate expansion, signaled a distinct shift with its recent announcement to wind down specific crypto operations in favor of AI compute.

Meanwhile, other operators across Texas and the Nordics, including Coreweave and Hive Digital, are also retrofitting facilities to capitalize on the AI boom.

This shift signals a broader transformation. The Bitcoin miners of the future may not be “miners” at all, but massive, hybrid energy-compute conglomerates where Bitcoin mining is merely a secondary revenue stream used to monetize excess power when AI demand dips.

This diversification may save the companies, but it raises questions about the long-term distribution of hashrate dedicated solely to securing the Bitcoin ledger.

The fee market

If the block subsidy is destined to vanish and miners are pivoting to AI, what will secure the Bitcoin network in 2030, 2040, or 2100?

Satoshi Nakamoto’s design posits that as the subsidy disappears, it will be replaced by transaction fees (the “service charge”). In this theory, demand for blockspace, driven by high-value settlements and financial applications, will become robust enough to compensate miners for maintaining the network.

However, the “5% Era” will test this thesis.

Currently, the fee market is volatile and unreliable. While the introduction of “Inscriptions” and “Runes” (protocols that allow data to be inscribed on satoshis) created brief spikes in fee revenue, the baseline demand for blockspace often remains too low to sustain the current hashrate without subsidies.

So, if Bitcoin’s price does not double every four years to offset the halving, transaction fees must rise to fill the void.

However, if they do not, Ethereum researcher Justin Drake has argued that the network’s security budget, which is the total amount of money allocated to protect the chain from attacks, will shrink.

In that scenario, Drake said this could have a “systemic effect” on the emerging industry and “the fallout could take the entire crypto ecosystem with it.”

Miners face “Bitcoin’s most difficult phase”

Considering the above, the 95% supply milestone is less a finish line and more of a starting gun for Bitcoin’s most challenging phase.

The “free ride” of high inflation is over. For the first 16 years, miners were subsidized by the protocol to build out infrastructure.

Now, that subsidy is evaporating. The market structure is shifting from a gold rush, where anyone with a pickaxe could profit, to a brutal commodity market defined by economies of scale, energy arbitrage, and balance sheet efficiency.

Still, Bitcoin’s long-term vision remains intact. Its design ensures that scarcity compounds while monetary inflation trends toward zero.

However, the burden of enforcing that scarcity now falls heavily on the miners.

So, as the rewards for securing the network dwindle toward zero over the next 115 years, the mining industry will likely experience a washout of unprecedented scale.

Essentially, the operators who survive the “5% Era” will not only be miners, but also energy merchants and computing giants. Their struggle to extract the final million coins will shape not only the price of the asset but also the geopolitical reality of the network itself.

Stablecoins originated as crypto plumbing, tokens pegged to fiat currencies that enable traders to move in and out of volatile assets without relying on traditional banking systems.

That narrow use case now sits on a market capitalization of more than $303 billion, up roughly 75% year-over-year, with Tether commanding about 56% of the market and Circle’s USDC holding approximately 25%.

Nearly 98% of all stablecoins are pegged to the US dollar, while the euro’s share amounts to less than €1 billion.

For the European Central Bank (ECB), those numbers transform what was once a crypto-native curiosity into a new channel for importing American financial stress.

Stablecoins no longer live solely on-chain. They’ve woven themselves into custody arrangements with banks, derivatives markets, and tokenised settlement systems.

That entanglement creates pathways for contagion that didn’t exist five years ago, and European monetary authorities are now explicitly building crisis scenarios around them.

From niche to systemic risk

The Bank of Italy’s Fabio Panetta, who sits on the ECB’s Governing Council, has directly highlighted the scale problem: stablecoins have reached a size where their collapse could have significant implications beyond the crypto sector.

The ECB’s Jürgen Schaaf made the case even more bluntly in a blog post titled “From hype to hazard.” Schaaf argues that stablecoins have moved from their crypto niche into tighter links with banks and non-bank financial institutions.

A disorderly collapse “could reverberate across the financial system,” particularly if fire sales of the safe assets backing these tokens spill into bond markets.

The Bank for International Settlements provides the global framing. The BIS Annual Economic Report 2025 warned that if stablecoins continue to scale, they could undermine monetary sovereignty, trigger capital flight from weaker currencies, and lead to the sale of safe assets when pegs break.

Schaaf cites projections that global stablecoin supply could jump from around $230 billion in 2025 to approximately $2 trillion by the end of 2028.

The mechanism runs through reserve composition. The largest dollar-pegged stablecoins back their tokens primarily with US Treasuries, and at $300 billion, those holdings represent a significant portion of Treasury demand.

At $2 trillion, they would rival some of the world’s largest sovereign wealth funds. A confidence shock triggering mass redemptions would force issuers to liquidate Treasuries quickly, injecting volatility into the global benchmark for risk-free rates.

When a stablecoin run becomes an ECB problem

Olaf Sleijpen, Governor of De Nederlandsche Bank and an ECB policymaker, has outlined the transmission mechanism in interviews with the Financial Times.

His warning carries weight because he’s describing something the ECB would actually have to respond to.

Sleijpen’s scenario unfolds in two stages. First, a classic run: holders lose confidence and rush to redeem tokens for dollars. The issuer must dump Treasury holdings to meet redemptions.

Second, the spillover: forced liquidation pushes up global yields and sours risk sentiment. Euro-area inflation expectations and financial conditions suddenly move in ways the ECB’s models didn’t anticipate.

That second stage forces the ECB’s hand. If Treasury yields spike and risk spreads widen globally, European borrowing costs rise regardless of what the ECB intended.

Sleijpen has said publicly that the ECB might need to “rethink” its monetary policy stance, not because the euro area has done anything wrong, but because dollar-stablecoin instability has rewired global financial conditions.

He frames this as stealth dollarization. Heavy reliance on dollar-denominated tokens makes Europe look like an emerging market that must live with the Federal Reserve’s choices.

An old-school emerging-market problem, imported dollar shocks, re-enters Europe through an on-chain back door.

Europe’s run scenarios

European authorities haven’t waited for a crisis to start modeling what one would look like.

The European Systemic Risk Board, chaired by Christine Lagarde, recently highlighted multi-issuer stablecoins as a specific vulnerability.

These arrangements involve a single operator issuing tokens across multiple jurisdictions while managing reserves as a single global pool.

The ESRB’s latest crypto report warns that non-compliant stablecoins, such as USDT, continue to trade heavily among EU investors and “may pose risks to financial stability” through liquidity mismatches and regulatory arbitrage.

In a stress event, holders might rush to redeem preferentially in the EU, where MiCA provides stronger protections, draining local reserves fastest.

A VoxEU/CEPR piece by European central bank economists describes multi-issuer stablecoins as a macroprudential issue.

Their scenario models focus on jurisdictions with more favorable rules, which accelerate outflows and spread stress to banks that hold reserves.

The Dutch markets regulator, AFM, has published scenario studies that incorporate stablecoin instability as a standard tail risk.

One “plausible future” combines loss of trust in the dollar, cyberattacks, and stablecoin instability to show how quickly systemic stress could propagate.

This isn’t speculative fiction, but rather the work supervisors do when they consider a risk plausible enough to warrant contingency plans.

Europe’s counter-strategy

The alarmist framing has a regulatory counterweight. The European Banking Authority has recently pushed back on calls to rewrite crypto rules, arguing that MiCA already includes safeguards against stablecoin runs, including full-reserve backing, governance standards, and caps on large tokens.

Simultaneously, a consortium of nine major European banks, including ING and UniCredit, announced plans to launch a euro-denominated stablecoin under EU rules.

The launch comes even as the ECB voices scepticism over stablecoins, with Lagarde warning that privately issued tokens pose risks to monetary policy and financial stability.

Schaaf’s blog outlines the broader strategy: to encourage euro-denominated, tightly regulated stablecoins while advancing the digital euro as an alternative to central bank digital currencies.

The goal is to reduce reliance on offshore dollar-denominated tokens and maintain the ECB’s control over the monetary rails.

If Europeans use on-chain money, it should be money the ECB can supervise, denominated in euros, and backed by assets that don’t require liquidating Treasuries in a crisis.

Crisis talk versus market reality

The dramatic language consisting of “global financial crisis” and “shock scenarios” contrasts with present conditions.

Stablecoins at $300 billion remain small compared to global bank balance sheets. There hasn’t been a truly systemic stablecoin run, even when Tether faced skepticism or when Terra’s collapse occurred.

But the ECB isn’t warning about 2025. It’s a warning about 2028, when projections place the stablecoin market cap at $2 trillion and entanglement with traditional finance is expected to be far deeper.

The real story is that European monetary authorities now treat stablecoins as a live channel for importing US shocks and losing monetary-policy autonomy.

That perception means more stress tests, including stablecoin-run scenarios, more regulatory fights over MiCA’s scope, and faster pushes to get European money on-chain through domestic alternatives.

The $300 billion market, which began as crypto plumbing, has evolved into a front in the contest over who controls the future of money, and whether Europe can insulate itself from dollar shocks that arrive through blockchain transactions rather than bank wires.

A Cloudflare outage today disrupted access to services across the internet, exposing the significant amount of traffic that runs through Cloudflare.

Cloudflare’s status page described the event as an “internal service degradation” that began at 11:48 UTC, saying some services were “intermittently impacted” while teams worked to restore traffic flows.

Earlier, at 11:34 UTC, CryptoSlate noticed services were reachable at the origin, but Cloudflare’s London edge returned an error page, with similar behavior observed through Frankfurt and Chicago via VPN. That pattern suggests trouble in the edge and application layers rather than at the customer origin servers.

Cloudflare confirmed the problem publicly at 11:48 GMT, reporting widespread HTTP 500 errors and problems with its own dashboard and API.

NetBlocks, a network watchdog, reported disruptions to a range of online services in multiple countries and attributed the event to Cloudflare technical issues, while stressing that this was not related to state-level blocking or shutdowns.

Cloudflare acknowledged a global disruption at approximately 13:03 CET, followed by a first recovery update at around 13:21 CET.

Its own log of status updates shows how the incident evolved from internal degradation to a broad outage that touched user-facing tools, remote access products, and application services.

Time (UTC)	Status page update
11:48	Cloudflare reports internal service degradation and intermittent impact
12:03–12:53	Company continues investigation while error rates remain elevated
13:04	WARP access in London disabled during remediation attempts
13:09	Issue marked as identified and fix in progress
13:13	Access and WARP services recover, WARP re-enabled in London
13:35–13:58	Work continues to restore application services for customers
14:34	Dashboard services restored, remediation ongoing for application impact

While the exact technical root cause has not yet been publicly detailed, the observable symptoms were consistent across many services that sit behind Cloudflare.

Users encountered 500 internal server errors from the Cloudflare edge, front-end dashboards failed for customers, and API access used to manage configurations also broke. In practice, both users and administrators lost access at the same time.

The downstream impact was broad.

Users of X, the social platform formerly known as Twitter, reported login failures with messages such as “Oops, something went wrong. Please try again later.”

Access problems were also seen across ChatGPT, Slack, Coinbase, DownDetector, Perplexity, and other high-traffic sites, with many pages either timing out or returning error codes.

Some services appeared to degrade rather than go completely offline, with partial loading or regional pockets of normal behavior depending on routing. The incident did not shut down the entire internet, but it removed a sizable portion of what many users interact with each day.

The outage also made itself felt in a more subtle layer: visibility. At the same time that users tried to reach X or ChatGPT, many turned to outage-tracking sites to see if the problem sat with their own connection or with the platforms.

Monitoring portals that track incidents, such as DownDetector, Downforeveryoneorjustme, and isitdownrightnow, also experienced problems during the Cloudflare event. OutageStats reported that its own data showed Cloudflare “working fine” while acknowledging that isolated failures were possible, which contrasted with user experience on Cloudflare-backed sites.

Some status trackers relied on Cloudflare themselves, which reduced the quality of the real-time signal about the event.

For crypto and Web3, this episode is less about one vendor’s bad day and more about a structural bottleneck. Cloudflare’s network sits in front of a large fraction of the public web, handling DNS, TLS termination, caching, web application firewall functions, and access controls.

Cloudflare provides services for around 19% of all websites.

A failure in that shared layer turns into simultaneous trouble for exchanges, DeFi front ends, NFT marketplaces, portfolio trackers, and media sites that made the same choice of provider.

In practice, the event drew a line between platforms with their own backbone-scale infrastructure and those that rely heavily on Cloudflare. Services from Google, Amazon, and other tech giants with in-house CDNs appeared less affected.

Smaller or mid-sized sites that outsource edge delivery saw more visible impact. For crypto, this maps directly onto the long-running tension between decentralized protocols and centralized access layers.

A protocol may run across thousands of nodes, yet a single outage in a CDN or DNS provider can block user access to the interface that most people actually use.

Cloudflare’s history shows that this is not an isolated anomaly. A control plane and analytics outage in November 2023 affected multiple services for nearly two days, starting at 11:43 UTC on November 2 and resolving on November 4 after changes to internal systems.

Status aggregation by StatusGator lists multiple Cloudflare incidents in recent years across DNS, application services, and management consoles.

Each time, the impact reaches beyond Cloudflare’s direct customer list into the dependent ecosystem that assumes that layer will stay up.

Today’s incident also underlined how control planes can become a hidden point of failure.

That meant customers could not easily change DNS records, switch traffic to backup origins, or relax edge security settings to route around the trouble. Even where origin infrastructure was healthy, some operators were effectively locked out of the steering wheel while their sites returned errors.

From a risk perspective, the outage exposed three distinct layers of dependence.

First, user traffic was concentrated through one edge provider. Second, observability relied on tools that in many cases used the same provider, which muted or distorted insight during the event.

Third, operational control for customers was centralized in a dashboard and API that shared the same failure domain.

Crypto teams have long discussed multi-region redundancy for validator nodes and backup RPC providers. This event adds weight to a parallel conversation about multi-CDN, diverse DNS, and self-hosted entry points for key services.

Projects that pair on-chain decentralization with single-vendor front ends not only face censorship and regulatory risk, but they also inherit the operational outages of that vendor.

Still, cost and complexity shape real infrastructure decisions. Multi-CDN setups, alternative DNS networks, or decentralized storage for front ends can reduce single points of failure, yet they demand more engineering and operational work than pointing a domain at one popular provider.

For many teams, especially during bull cycles when traffic spikes, outsourcing edge delivery to Cloudflare or a similar platform is the most straightforward way to survive volume.

The Cloudflare event on November 18 gives a concrete data point in that tradeoff.

Widespread 500 errors, failures in both public-facing sites and internal dashboards, blind spots in monitoring, and regionally varied recovery together showed how a private network can act as a chokepoint for much of the public internet.

For now, the outage has been contained to a matter of hours, but it leaves crypto and broader web infrastructure operators with a clear record of how a single provider can interrupt day-to-day access to core online services.

As of press time, services appear stable, and Cloudflare has implemented a fix stating,

Monitoring – A fix has been implemented and we believe the incident is now resolved. We are continuing to monitor for errors to ensure all services are back to normal.
Nov 18, 2025 – 14:42 UTC

Update – We’ve deployed a change which has restored dashboard services. We are still working to remediate broad application services impact.

SEC exam staff will not treat crypto as a standalone risk in its fiscal 2026 priorities, marking a clear departure from the agency’s approach in 2024 and 2025.

The Division of Examinations’ 17-page “2026 Examination Priorities” lays out focus areas for investment advisers, funds, broker-dealers, and market utilities, and reiterates cross-cutting work on information security, operational resiliency, identity theft, the amended Regulation S-P, and anti-money laundering.

In the section on emerging financial technology, the document centers on automated advice, algorithms, and AI, including whether tools produce compliant recommendations.

According to the SEC’s report, there is no mention of crypto, crypto assets, digital assets, virtual currency, or blockchain across any section, including areas where the topic previously appeared, such as fintech and AML.

The omission is notable because the 2024 and 2025 priorities explicitly labeled crypto as a focus. According to the SEC’s 2024 priorities, “Crypto Assets and Emerging Financial Technology” had a named section stating examinations would prioritize firms active in crypto assets and related products.

The 2025 priorities again referenced crypto assets alongside AI, cybersecurity and AML as critical risk areas, with law firm summaries emphasizing sustained attention to firms offering crypto-related services. The 2026 document drops those references entirely, even as other technology topics expand.

A simple before-and-after view of the written priorities captures the shift.

Priorities year	Crypto named as distinct risk	“Crypto” or equivalent terms in text
2024	Yes, dedicated section	Multiple, including a section title
2025	Yes, listed among key risks	Multiple, with explicit headings
2026	No	Zero

The policy and personnel backdrop helps explain the timing.

The White House pivoted in early 2025 with directives to support the responsible growth and use of digital assets, to limit federal work on central bank digital currency, and to stand up a President’s Working Group on digital asset markets, according to Pillsbury Law’s summary of the January order.

A March fact sheet focused on the establishment of a Strategic Bitcoin Reserve and a U.S. digital asset stockpile, framing crypto as a strategic asset rather than a speculative corner of markets, according to the White House.

At the SEC, Paul S. Atkins was sworn in as chair in April 2025 and has been associated with a lighter regulatory approach and an emphasis on capital formation, according to the SEC and legal commentary from Armstrong Teasdale. In September, Meg Ryan was appointed enforcement director, a move read by some as a signal of a shift in enforcement posture, according to the Financial Times.

Enforcement was already moving away from the peak pace of the Gensler era. Cornerstone Research counted 46 crypto-related enforcement actions in 2023, the most on record, and 33 in 2024, down roughly 30% year over year.

Across the agency, fiscal 2024 closed with 583 total enforcement actions, down from the prior year, while financial remedies hit a record $8.2 billion, heavily influenced by the Terraform Labs settlement, according to the SEC’s fiscal 2024 enforcement results. The mix has leaned toward fewer cases with large headline penalties tied to earlier conduct, rather than frequent new filings.

Under the new chair, several legacy matters have been narrowed or resolved.

The SEC ended its long-running Ripple case with a $125 million penalty and an injunction limited to institutional sales.

It also closed its investigation into Robinhood’s crypto business without charges. Investopedia reported that the SEC moved to dismiss its lawsuit against Coinbase, which had alleged unregistered exchange activity and staking products.

Placed alongside the 2026 priorities, these outcomes point to a reset where examinations and enforcement converge on a narrower posture, focused on fraud, custody, marketing, AML and operational risk through technology-neutral rules, rather than treating tokens as a separate supervisory lane.

The global crypto market capitalization surpassed $4 trillion in July 2025. Meanwhile, U.S. spot Bitcoin ETFs attracted roughly $35.7 billion in net inflows in 2024, with continued flows for most of 2025.

The investor base for crypto-linked products now spans large asset managers, broker-dealers, and retirement channels that fall directly within the SEC’s examination perimeter. Yet the new priorities guide exam staff toward AI risk, data security, and privacy governance, Regulation S-P incident response, and identity theft controls, not crypto-specific reviews.

Market conditions underline the tension.

Bitcoin has dipped below $90,000, down nearly 30% from its October peak above $126,000, and Ethereum is trading under $3,000.

The broader crypto market shed roughly $1 trillion in six weeks. This is the kind of volatility that can test custody arrangements, liquidity management, and marketing suitability in regulated channels. The exam program is addressing those risks through topic-agnostic lenses, such as complex product oversight, cyber resiliency, and AML, rather than through a crypto label.

Outside the United States, regulators are moving toward sector-specific rulebooks. The EU’s Markets in Crypto-Assets framework is now fully in effect, with stablecoin rules live since June 30, 2024, and the broader regime for crypto-asset service providers applying since December 30, 2024, according to ESMA.

Non-compliant stablecoins faced delistings by March 31, 2025, and analysts project a large euro-area stablecoin market by year’s end, according to Stablecoin Insider. The UK has published a draft statutory instrument to create new regulated activities for crypto assets and opened consultations on trading platforms, intermediation, staking, and DeFi, while considering tighter consumer risk controls.

Hong Kong continues to refine its licensing regime for virtual asset trading platforms and announced a 12-initiative “A-S-P-I-Re” roadmap in 2025, including steps to allow licensed platforms to share global order books with affiliates to boost liquidity. Singapore’s MAS finalized a stablecoin framework in 2023, which took effect in 2024, for single-currency stablecoins pegged to the SGD or G10 currencies.

That divergence sets up three plausible paths for 2026 to 2027.

A baseline outcome is benign neglect, where the SEC keeps crypto out of the exam priorities and processes crypto exposure through custody, AML, cyber and marketing rules, while enforcement activity drifts toward single-digit case counts centered on fraud, consistent with the direction in Cornerstone Research’s tallies.

A realignment outcome would require congressional action on market structure that pushes most spot tokens toward the CFTC and reserves the SEC for tokenized securities and fund shares, after which the exam program could reintroduce a narrow crypto scope limited to securities products.

A snap-back outcome would arise from a high-impact failure, such as a stablecoin breakdown, an exchange incident, or a product-level shock in an ETF complex, which could trigger hearings and a re-insertion of crypto into 2027 or 2028 priorities with new specialist resources.

For centralized exchanges and broker-dealer hybrids, the near-term exam exposure is tilted toward AML, custody, and complex product suitability, as well as the CFTC for derivatives.

For DeFi, the SEC’s omission reinforces that on-chain supervision is not on its near-term exam agenda, while EU, UK, and Hong Kong processes may become the first sources of binding standards.

For stablecoin issuers, MiCA and MAS frameworks are fast becoming reference points for design and compliance, even for U.S. market participants that operate globally. For ETF sponsors and asset managers, the exam program’s attention to complex wrappers, disclosure, best interest obligations, and operational resilience remains in place regardless of the underlying index.

In the end, the SEC’s silence may speak louder than its past crusades, as the shift emphasizes the pivot from reflexive hostility to deliberate restraint.

After years when silence often preceded a subpoena, the new posture suggests something simpler: crypto is no longer the SEC’s special project.

Whether that proves to be overdue normalization or a temporary pause, the center of gravity in U.S. oversight is moving, and this time, not because of what the SEC withholds, but because it’s finally stepping out of the spotlight.

The Crypto Fear & Greed Index has just printed 10 out of 100, which is not typically seen during a bad week or a rough month, but only at huge stress moments, such as the March 2020 COVID crash, the post-FTX washout in late 2022, or the crash in February this year.

At these levels, the question stops being “how scared are people?” and becomes “does extreme fear actually predict anything?”

The index, created initially by Alternative.me based on CNN’s stock market index, compresses six market inputs into a single daily number. Volatility contributes 25% of the score, comparing current drawdowns against 30- to 90-day baselines.

There are now several versions of the index provided by other data companies, including CoinMarketCap, CoinStats, and CoinGlass. All of which still show ‘Extreme Fear’ as the current state of play at press time.

Market momentum and volume add another 25%, capturing whether buyers are aggressive or exhausted. Social media activity, Google Trends, Bitcoin dominance, and investor surveys provide a comprehensive picture.

A score of 10 sits near the absolute floor of the scale, in the “Extreme Fear” band that runs from 0 to 24.

Alternative.me pitches it as a contrarian tool: extreme fear may mean investors are overreacting and could mark an opportunity, while extreme greed often precedes corrections. They stop short of claiming hard predictive power.

The designers frame it as a sentiment barometer, not trading advice. That caveat matters because history shows these readings cluster around major stress points and medium-term value zones, but they don’t time bottoms with precision.

Historical analogues

In March 2020, Bitcoin fell roughly 50% in two days during the COVID panic, briefly touching $4,000 on Mar. 13. The next day, the Fear Index printed 8, the lowest reading in over four years.

Kraken’s research desk highlighted that number as capitulation-level fear. From those lows, BTC eventually climbed to $60,000 by early 2021. The sub-10 print landed within days of a major cycle bottom, but that bottom only held because the Federal Reserve cut rates to zero and launched unlimited quantitative easing.

The sentiment signal aligned with the liquidity intervention, but it didn’t cause the recovery.
November 2022 delivered another extreme reading. The FTX collapse drove Bitcoin under $17,000, with lows near $15,500. The Fear Index fell into the low teens, with some data providers citing readings around 12.

AlphaPoint’s post-mortem noted that the index languished in “extreme fear” for weeks while BTC chopped sideways near cycle lows.

The sentiment bottom and the price bottom were not on the same day or even the same week. From there, BTC eventually surpassed $73,000 by March 2024 and broke $100,000 in December 2024.

This year has produced just one extreme fear spike. In late February, the index reached 10 as Bitcoin fell below $86,000, marking the lowest sentiment reading since the 2022 bear market.

However, in mid-October, a surprise US tariff triggered the largest crypto liquidation event on record, with more than $19 billion in leveraged positions liquidated in 24 hours, roughly 19 times larger than the liquidation volumes of the 2020 and 2022 crashes did not invoke an ‘Extreme Fear’ reading. It held just above around 25 out of 100. 

Now, as Bitcoin tumbled back to the $93,000 price level, the index reached 10 again as Bitcoin fell below $93,000, erasing year-to-date gains and triggering more than $1.1 billion in forced liquidations.

Volatility clusters and forced selling

The Fear Index doesn’t react to a single bad day. It tends to bottom during volatility clusters, which are periods where big moves bunch together rather than arriving in isolation.

Academic work on Bitcoin confirms the classic volatility clustering phenomenon: past volatility predicts future volatility, and extreme sentiment readings correlate strongly with spikes in trading activity and realized volatility across major cryptocurrencies.

The recent sell-offs fit that pattern. October’s tariff shock led to $19 billion in liquidations over 24 hours. November’s drop below $93,000 brought $1.1 billion in forced unwinds, with the RSI moving into oversold territory for the first time since FTX.

When the Fear Index prints 10, it captures the psychological expression of these volatility clusters: forced unwinds, thin order books, and macro shocks that feed into the same sentiment reading.

This distinction matters for understanding what comes next. Liquidity-driven bottoms form when flows and balance sheets force the issue: liquidations exhaust sellers, central banks intervene, ETF flows flip positive, or funding rates normalize.

Sentiment bottoms mark where psychology peaks, where measured fear maxes out.

March 2020 marked a significant low in liquidity. The crash started as a broad “everything must go” liquidation across all risk assets. The Fear Index sank to 8, but the lasting bottom was only established after the Fed flooded markets with liquidity through rate cuts and bond purchases.
Sentiment aligned with the bottom but didn’t cause it.

The 2022 FTX episode blended both dynamics. The collapse triggered a classic liquidity shock as one of the crypto industry’s largest exchanges failed. BTC fell to the mid-$15,000s, and the Fear Index dropped to around 12.

However, no central bank backstop arrived. Instead, the liquidity bottom came from time: insolvent leverage was flushed out over months, surviving venues rebuilt, and a new structural demand source emerged through the approval of spot Bitcoin ETFs in early 2024.

The sentiment index spent a long time in fear while the market was quiet.

In 2025, the picture is strongly driven by flow. BTC’s market depth has decreased from approximately $766 million in early October to around $535 million, making prices more susceptible to large orders.

US spot Bitcoin ETFs experienced $866 million in net outflows on Nov. 13, marking the second-largest daily redemption since their launch in January 2024. Over the past three weeks, cumulative outflows have totaled more than $2.3 billion.

The fear reading at 10 indicates traders are scared. The liquidation and ETF data suggest whether forced selling has actually run its course. Historically, durable cycle lows have required both sentiment capitulation and liquidity stabilization.

Near-term Catalysts

Two forces dominate the near-term outlook: Federal Reserve policy and ETF flows.

The Fed cut rates by 25 basis points at its October meeting, resuming the easing cycle that started in September. Economists widely expect another quarter-point reduction at the December 9-10 FOMC meeting, with further cuts likely in 2026 if inflation continues to cooperate.

Lower policy rates typically support duration-sensitive assets, such as Bitcoin, but the current fear reading suggests that markets worry growth is deteriorating faster than cuts can help.

ETF flows provide the cleaner real-time signal. Binance’s research arm noted that ETF inflows and large corporate buys from entities like Strategy were the dominant demand engines for BTC in 2025, and both have softened recently.

Weekly redemptions ran around $1.1 billion between November 10 and 14, driven by a broader tech-led risk-asset selloff, falling on-exchange liquidity, and jitters over large corporate holders.

That sets up a simple tension. If ETF outflows stabilize or reverse to net buying around the December FOMC meeting, history suggests that extreme fear can mark a medium-term opportunity window.

If outflows and liquidity erosion persist even after additional rate cuts, then the current fear reading is the midpoint of a longer deleveraging phase rather than its end.

Does extreme fear predict anything?

The empirical answer reveals a great deal about stress, but less about the exact timing.

Academic work is mixed. A 2024 Finance Research Letters paper finds a U-shaped relationship between the Fear Index and price synchronicity: both extreme fear and extreme greed lead to highly correlated, herd-driven moves.

Other studies find that including the index improves volatility forecasts, while at least one 2023 paper reports little consistent predictive power for future returns.

What is robust: extreme fear readings cluster near the worst of volatility and forced selling and have, in 2020 and 2022, coincided with broad zones where long-term investors who bought and held were well rewarded.

However, the path from those zones to a new uptrend can involve months of chop, false breaks, and more pain.

At 10 out of 100, the Fear Index is screaming capitulation. History says that’s when long-horizon buyers start paying attention, not when short-term traders suddenly gain clairvoyance.

With just six weeks left in 2025, Bitcoin and Ethereum are both in the red for the year, as the two largest cryptos lead a broader downward trend.

If this pattern holds, crypto could end up among the worst-performing asset classes of 2025, trailing even traditional markets and money market funds.​

As CryptoSlate reported yesterday, at $96,000, nearly 99% of Bitcoin investors who bought in the past 155 days are now holding at a loss. This is a stark reminder that even after a year of record highs and institutional adoption, the majority of recent buyers are underwater.

The relentless selling pressure has been driven by existing holders exiting their positions, rather than by options or manipulation, as some have speculated.​

ETF inflows and unrealized profit

According to macro analyst Jim Bianco, despite the downturn, the original 10 Bitcoin spot ETFs have seen a cumulative inflow of $59 billion since their launch in January 2024.

However, the average purchase price for these ETFs is now $90,146, meaning the unrealized profit has shrunk to just $2.94 billion, or 4.7% of the total inflow.

Had this capital remained in cash or a money market fund, the unrealized gain would have been higher (despite sticky inflation and the narrative of Bitcoin as hedge against persistent money printing).​

Worst-performing asset classes: Altcoins in deep capitulation

The pain is not limited to Bitcoin. Altcoins across the board are showing investors how it feels to be holding one of the worst-performing asset classes in 2025.

According to Glassnode, only 5% of altcoins are currently in profit, highlighting a deep capitulation phase for the broader crypto market.

This divergence between Bitcoin and altcoins is unprecedented, with institutional focus and regulatory differences driving a split in market dynamics. The decoupling raises important questions about portfolio diversification and risk assessment for investors navigating this volatile landscape.​

The bigger picture

While Bitcoin and Ethereum have outperformed many other asset classes over the past five years, their year-to-date performance in 2025 is a sobering reminder of the risks inherent in crypto investing.

The combination of institutional inflows, retail pain, and altcoin capitulation paints a complex picture of a market in transition. As the year draws to a close, investors are left to ponder whether this is a temporary correction or the start of a longer-term bear market.​

Despite promises of the liquidity floodgates set to open, the historic performance of ‘Uptober’ and ‘Moonvember’, unless crypto sees a renewed catalyst, it will be among the worst-performing asset classes of 2025. Not something on many crypto investors’ bingo card (or Christmas list) this year.