First Digital USD

Casey Wagner

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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The Senate Banking Committee’s Digital Asset Subcommittee held its first <a href="https://www.banking.senate.gov/hearings/exploring-bipartisan-legislative-frameworks-for-digital-assets">hearing</a> yesterday and, unsurprisingly, stablecoins took center stage.&nbsp;



Cynthia Lummis, who chairs the <a href="https://blockworks.co/news/cynthia-lummis-gets-promoted">newly minted subcommittee</a>, said that stablecoin legislation is its top priority. A market structure bill, which we started to see movement on last session, will follow.&nbsp;



“We’re on the precipice of finally creating a bipartisan legislative framework for both stablecoins and <a href="https://blockworks.co/news/blockchain-association-consensus-position-on-market-structure-policy">market structure</a>,” she said.&nbsp;



Former CFTC Chair Timothy Massad, a witness during the hearing, advised lawmakers to zero in on stablecoins. Market structure legislation should be punted until fundamental questions are answered.&nbsp;



“Market structure regulation requires resolving some complex regulatory boundaries, including when is a digital asset a security, a commodity, both or neither?” he said. “There is a risk that we will significantly undermine the securities law framework that has served this country so well and has made our securities markets the envy of the world.”&nbsp;



The comments come as the industry continues to speculate on what a stablecoin bill <a href="https://blockworks.co/news/stablecoin-legislation-update">might look like</a>. Lummis’ GENIUS Act, introduced alongside Democratic Senator Kirsten Gillibrand, stipulates that “payment stablecoins” must come from registered issuers and have 1:1 backing from fiat currency “or other secure reserves.”&nbsp;



Generally speaking, the industry and both parties agree on these general terms, but the details are a bit trickier to iron out. Democrat Mark Warner yesterday said he’s seen “a whole bunch of bad stuff” and is advocating for more robust KYC requirements.&nbsp;



Should the GENIUS bill progress, we are likely to see another hearing with the full Senate Banking Committee.&nbsp;



But the timeline on if and when this may happen remains unknown.



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Stablecoin legislation is subcommittee’s first priority, says Lummis

Ben Strack

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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You may have seen one of the biggest crypto asset managers just <a href="https://x.com/BitwiseInvest/status/1894389259752341811">raise $70 million</a> as part of a push to broaden its offerings.



That would be Bitwise, which seeks expansion as more institutions enter the space and the SEC signals increased <a href="https://blockworks.co/news/key-sec-regulatory-expectations">open-mindedness</a>.



I caught up with CEO Hunter Horsley, who said the company expects to boost headcount from about 100 to roughly 130 this year. On the product front, it looks to not only bring more ETFs, but a slate of custom solutions.



Bitwise essentially has three investment buckets that it hopes to grow, Horsley explained. Its “beta” offerings are those most people know about (i.e. its crypto index fund, as well as the bitcoin and ether ETFs).



As part of its onchain solutions bucket, the firm offers non-custodial institutional staking via its acquisition of Attestant in November. And finally, there are Bitwise’s so-called alpha strategies.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



The latter category involves custom SMAs for large institutional clients, for example.&nbsp; “There’s a growing interest amongst owners of bitcoin to explore if there are ways to make their holdings productive and generate income or yield with that bitcoin,” Horsley explained.&nbsp;



Bitwise and other fund groups have proposals in front of the SEC to launch ETFs that hold assets beyond BTC and ETH. Feel free to refresh yourself <a href="https://blockworks.co/news/litecoin-etf-approval-odds-2025">here</a> and <a href="https://blockworks.co/news/crypto-etf-plans-abound">here</a>.



Horsley said Bitwise successfully <a href="https://bitwiseinvestments.com/newsroom/nyse-arca-files-form-19b-4-to-uplist-bitw-as-an-etf">uplisting</a> its Bitwise 10 Crypto Index Fund (if cleared to do so) would mark one of the biggest developments of the year. That ~$1.2 billion trust became the world’s first crypto index fund in 2017.&nbsp;



“A lot of investors are not going to build a portfolio of seven different single-coin ETFs,” he told me. “I think many, as they continue to explore beyond bitcoin, are interested in an index solution.”



Conversations Bitwise has had with the SEC after Trump’s inauguration are “more constructive,” Horsley said, calling the shift “a night-and-day change.”&nbsp;



He declined to speculate on the agency’s possible timeline in approving crypto ETFs beyond those holding BTC and ETH, but noted the SEC’s clear “openness to a broader set of things.”



Finally, I asked about how client conversations might have shifted since <a href="https://blockworks.co/news/market-rebound-analysis">bitcoin’s latest plummet</a>.&nbsp;



Horsley noted the vibes from some individuals/traders are “somewhat bearish and maybe a little bit fearful” — particularly those with exposure to small- and mid-cap cryptos.



As for mainstream investment pros, he said: “I think there is more interest, including this week, than ever before.” After all, Horsley added: “Bitcoin <a href="https://blockworks.co/news/is-btc-bull-run-over">having volatility</a> is not a new phenomenon.”



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Fundraise, ‘open-minded’ SEC to fuel Bitwise growth

Felix Jauvin

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This week I had the pleasure of speaking with Andy Constan, CEO of Damped Spring.&nbsp;



Andy has had a storied career at the likes of Bridgewater and Brevan Howard. He possesses a deep understanding of monetary plumbing and how it translates into a tangible impact on the economy and markets.&nbsp;



As mentioned in my <a href="https://blockworks.co/news/federal-reserve-quantitative-tightening">piece last week</a>, the FOMC meeting minutes shed light on the future of the Fed’s balance sheet composition and what it wants to see happen next. There’s a ton of complex nuance involved, so I pulled Andy in to break it all down.&nbsp;



Here are a few takeaways from our discussion:



<h2 class="wp-block-heading">1. QT 2.0</h2>



The Fed is trying to plan out what its balance sheet looks like once QT is done. It appears to be rallying around the idea of trying to match the weighted average maturity (WAM) of the Fed’s balance sheet to the WAM of the Treasury’s debt outstanding.&nbsp;



As it stands, the Fed’s balance sheet sits at approximately eight years in duration, whereas the Treasury is at five. Setting aside the complex math that Andy provided, the key takeaway is that QT, in its spirit, is not as done as it may seem on the surface and the market needs to absorb further duration.&nbsp;



I asked Andy why this was important to do, and he mentioned the following:



“Well, let&#8217;s just say there was a crisis. In a crisis, bonds rally a lot on the front. Then, say [the Fed] decides to begin QE and let&#8217;s assume interest rates are zero as it has said pretty clearly they&#8217;re not going to do more QE until interest rates are zero. We&#8217;re back in a position where the Fed is buying one and a half percent coupons which — unless the crisis never resolves, it’s going to be underwater on those things and so it would be better, if you&#8217;re going to be underwater in those things, you&#8217;d rather not have a lot of them going into it.”



<h2 class="wp-block-heading">2. Debt ceiling dynamics</h2>



As the debt ceiling continues on, this has a substantial impact on funding markets due to the associated TGA drawdown that comes with it. The FOMC minutes hinted at the idea of pausing QT to avoid any volatility associated with the debt ceiling drama.&nbsp;



Andy’s explanation: “QT has two aspects: forcing the private sector to take on riskier assets and draining reserves from the financial system. The first didn’t happen as the Fed used runoff and Treasury muted it with bills. The second — reserve drainage — has been the primary driver of QT’s impact.



Pre-QT, the reverse repo (RRP) grew to over $2 trillion, acting similarly to bank reserves. While RRPs provide liquidity, money market funds don’t lend like banks do. Historically, removing reserves tightened lending due to fractional reserve requirements. But today, reserves aren’t necessary for lending.



QT has drained RRPs without yet affecting bank reserves. The key question is whether reserves remain adequate. Treasury spending during a debt ceiling standoff injects reserves, but once resolved, rapid TGA replenishment could drain reserves too fast, risking financial stress.



This volatility is why some suggest pausing QT, though it’s not a consensus view. If debt ceiling issues resolve, QT may continue unchanged. The Fed sees reserves as still abundant, and I estimate it could withdraw another $250-$500 billion, potentially extending QT into 2026. However, my view remains that it’ll stop at ~$3 trillion in reserves.”



<h2 class="wp-block-heading">3. Bessent’s Treasury issuance</h2>



A few weeks ago, I wrote about how <a href="https://blockworks.co/news/bessent-quarterly-refunding-announcement">the first QRA meeting</a> from the Treasury gave us a line of sight into how Scott Bessent is thinking about Treasury issuance in contrast to his predecessor, Janet Yellen.&nbsp;



Many expected him to attempt to walk back the bills-heavy issuance strategy that Yellen had implemented, but in reality he kept things as-is. This shocked many observers. However, when I asked Andy about this hypocrisy, he explained how the actual proportion of bill issuance could shift due to a change in the size of the fiscal deficit:



“If they keep coupons the same and the deficit rises…well, they have to make it up with bills and so there&#8217;s more bills and the same amount of coupons that&#8217;s oversupplying the bills market and undersupplying the coupon market. And so if you&#8217;re going to keep it constant, the deficit will determine whether you&#8217;re going to be extending the debt. Meaning, if the deficit falls and you keep it constant, you extend the duration you&#8217;re terming out the debt. If the deficit rises and you keep coupons constant, you’re relying more on bills.” Overall, this was one of my favorite interviews of the year. Go check out <a href="https://www.youtube.com/watch?v=t9YayzOGfvU">the full interview</a> and don’t forget your notepad — this one’s a Macro 301 interview.



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Lessons in monetary plumbing with Andy Constan

Kate Irwin

This is a segment from The Drop newsletter. To read full editions, <a href="https://blockworks.co/newsletter/thedrop">subscribe</a>.



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The Avalanche Foundation has unveiled a payment card called the <a href="https://www.avalanchecard.com/">Avalanche Card</a>, which lets you spend your crypto at fiat-only merchants.&nbsp;



Crypto: It’s not just magic internet money anymore!



I chatted with Eric Kang, Ava Labs’ head of DeFi and business development, to get a clear understanding of how exactly this card works. You aren’t paying merchants directly with crypto, so the card can be used anywhere that accepts Visa. But the crypto is ultimately sold using Avalanche’s C-Chain to pay for transactions that have already occurred with fiat.



“It took us a while to get this out,” Kang tells me. He sees it as an easy way for people to sell or use their crypto without having to go through a crypto exchange or DeFi platform.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXem1d2ML1zCkIfWpvoht9-9KDRZ74zejcNsAwyQsgFEH0VlgAyx-0IsDdN3K8fQU21EppdU03fshAXJtbhxS78NVzE3PmjCi6284x1PG65r7e3oKJRZYTQquv6DJbNjVuRzPmQm?key=HETaDUr2BuqaGKnpcmxq-EWB" alt="" style="width:455px;height:auto"/><figcaption class="wp-element-caption">Source: Avalanche Foundation</figcaption></figure></div>


It’s a bit like a mix between a prepaid card and a traditional credit card. You load it up with crypto — USDC, USDT, and AVAX are accepted, with plans to accept bridged bitcoin and potentially other tokens in the future.&nbsp;



Half the US dollar value of those cryptocurrencies is then considered to be your limit, to ensure padding for crypto price fluctuations. You can then use the card at any Visa-friendly merchant, and those charges are logged like a credit card.



Your crypto isn’t immediately sold when you make a purchase, though. Instead, the crypto is actually sold once a day at the same time (around 9 am ET) based on the past day’s charges before becoming transactions onchain.&nbsp;



Because it’s a credit card, you’ll need to hand over some personal information including your real name, address and social security number or other government ID number to get the card.


<div class="wp-block-image">
<figure class="alignright is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8PrY_gUl6F-y8j4BATuFTOzpEjlkiOxjQh_HWcF665lkJBUWxEDo5K9IIjVUz2lke0gAhYGMW0JV_m8ciifEeEPOGWe47CeE6q2LY-HdW6syEb0q47-BbS2nzISdtfDYd_EA6?key=HETaDUr2BuqaGKnpcmxq-EWB" alt="" style="width:533px;height:auto"/><figcaption class="wp-element-caption">Source: Avalanche Foundation</figcaption></figure></div>


You can also freeze the card, change your card’s PIN, dispute suspicious transactions and set up spending alerts. But because it’s crypto, your credit balance will fluctuate depending on crypto market prices.&nbsp;



Sorting out your taxes with this card could be a challenge if you’re making a lot of purchases. As of right now, selling crypto (even to make a purchase, except for stablecoins and USDC) is considered a taxable event. That could be a headache for some prospective users looking to spend their tokens like cash.&nbsp;&nbsp;



“We recommend that you speak with a tax professional regarding circumstances with the Avalanche Card,” the card’s site reads. “Spending against other crypto assets may involve selling your assets. Selling crypto assets can be a taxable event.”



If you’ve got a great crypto-savvy accountant, though, maybe that’s not the end of the world.&nbsp;



Tech firm Rain Liquidity is facilitating the card. When you load it up with tokens, your card will effectively be a new hot wallet, with addresses for each asset.



The card is being launched in 35 US states, with the remaining 15 off the list due to regulatory reasons. The card is also available in Latin America and the Caribbean.&nbsp;



If you’re a resident or citizen of any US-sanctioned country, however, you won’t be able to get the card — because it’s powered by Visa.



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Avalanche Foundation launches Visa credit card for IRL payments

Macauley Peterson

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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The Bybit $1.4 billion exploit triggered a predictable response: an influx of security and infrastructure firms each claiming that their technology could have prevented the attack. The FBI has <a href="https://www.ic3.gov/PSA/2025/PSA250226">confirmed</a> the hack was the work of North Korea’s Lazarus Group, which targeted Bybit’s Safe{Wallet} setup. A key detail <a href="https://x.com/benbybit/status/1894768736084885929">disclosed</a> yesterday is that it was <a href="https://x.com/safe/status/1894768522720350673?s=46">a Safe developer’s machine</a> — and not Bybit’s infrastructure — that was compromised, allowing attackers to inject malicious code into the transaction signing interface.



The deception resulted in Bybit’s signers blindly approving a fraudulent transaction, draining its largest Ethereum wallet.



Security researcher Taylor Monahan emphasized that this attack was entirely predictable given the crypto industry&#8217;s long-standing blind-signing problem. As she <a href="https://x.com/tayvano_/status/1894811510494699843">noted</a>: &#8220;There is NO org in this space that is taking security seriously enough to protect against a dedicated, persistent, motivated adversary like Lazarus.”



Key findings include:



Safe{Wallet}’s UI was compromised — Bybit’s interface showed an expected transaction, but signers unknowingly approved a completely different transaction.



Blind signing on Ledger devices was the final failure — Bybit’s final signer, Ben Zhou, admitted he didn’t verify the transaction fully on his Ledger hardware wallet before approving it.



The attack targeted human oversight — Lazarus didn&#8217;t need to exploit smart contracts or break cryptographic security; it simply took advantage of trust in the UI.



Former Binance CEO CZ <a href="https://blockworks.co/news/bybit-hack-raises-security-questions">criticized Safe’s response</a>, raising critical questions like why did a single developer’s machine have access to Bybit’s transaction process? How did Ledger’s signing process fail to prevent this? And <a href="https://blockworks.co/news/bybit-attack-institutional-grade-security">what security lessons</a> should the industry take away?



These are all <a href="https://x.com/koeppelmann/status/1894792743303479340">good questions</a> which will take some time to fully address.



<h2 class="wp-block-heading">A wave of companies rushes in</h2>



With every high-profile hack, companies flood the space claiming their product would have stopped it. Some address the specific issue — secure transaction verification — while others hijack the narrative for marketing.



<ul class="wp-block-list">
<li>OISY (Dfinity-backed onchain wallet)</li>
</ul>



Claim: Browser extensions and private key management are the weak links. OISY eliminates them by running fully onchain.



Reality: The attack had nothing to do with browser extensions or private key exposure — it was blind signing. OISY’s architecture might be novel, but it doesn’t solve the problem that caused this hack.



<ul class="wp-block-list">
<li>Impossible Cloud Network (decentralized cloud storage)</li>
</ul>



Claim: Centralized cloud services (like AWS) were the root cause of the exploit.



Reality: While decentralized cloud storage can reduce attack surfaces, Bybit wasn’t hacked through AWS. The issue was Safe’s UI manipulation and blind signing — not the particular choice of cloud hosting provider.



<ul class="wp-block-list">
<li>Cubist (hardware-backed signing security)</li>
</ul>



Claim: Enforcing strict signing policies, such as pre-approved addresses, governance delays and multi-factor authentication would have blocked this exploit.



Reality: This is actually relevant. If Bybit had enforced signing restrictions, Lazarus wouldn’t have been able to trick it into blind-signing a malicious transaction.



<ul class="wp-block-list">
<li>Fireblocks (MPC-based security and transaction policy enforcement)</li>
</ul>



Claim: Bybit’s security model was fundamentally flawed — Ledger’s blind-signing requirement combined with Safe’s UI vulnerability left it open to attack. Fireblocks argues that its MPC-based infrastructure, policy engines and real-time transaction verification would have mitigated this risk.



Reality: This claim is one of the more valid responses. Fireblocks’ policy enforcement would have prevented arbitrary approvals, requiring predefined transaction rules that block unexpected transactions — even if signers get tricked.



However, there’s also a risk, as Taylor Monahan <a href="https://x.com/tayvano_/status/1894806140921557445">put it</a> in her characteristically sassy style. “Fancy multisig, semi-custodial, MPC, blah blah blah product…make your attack surface LARGER, not smaller.”&nbsp;



The real lesson is UI trust is the biggest security hole. Bybit’s attack wasn&#8217;t about smart contracts, decentralization or private key security — it was about <a href="https://x.com/tw_tter/status/1894770278267297906?s=46&amp;t=yjAdM2ddX0KgGQimu7jcDQ">blind trust</a> in a compromised UI.



In crypto, don’t trust, verify. Otherwise, you defeat the purpose of using hardware wallets in the first place. Every solution that ignores this reality is missing the point.



For all the noise about decentralized cloud storage, onchain wallets and browserless interfaces, when billions of dollars are at stake, none of this matters if you don’t have:



<ul class="wp-block-list">
<li>Strict transaction signing policies</li>



<li>Mandatory transaction verification on hardware wallets</li>



<li>Governance delays and multi-layer approvals</li>
</ul>



As Lazarus continues evolving, the crypto industry must stop chasing trendy fixes and focus instead on hardening transaction security — because apparently the next $1.4 billion hack is just one blind signature away.



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Profiting from disaster: Firms look to capitalize on Bybit hack

David Canellis

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Whether you’re a believer in a V-shaped recovery from here, or you think we’re headed lower before an even bigger bounce back, you’d be forgiven for yearning for change on the other side.



Well, we’re getting a decent glimpse at how green the grass might be.



In the past five days, about $400 billion has been wiped from crypto’s total market cap, sending it from over $3.3 trillion to $2.9 trillion. That’s officially below the November 2021 peak.&nbsp;



Sounds exciting! Could crypto have purged itself of all things toxic about this cycle by sending vapid memes, vaporware ChatGPT wrappers and low-float VC coins on their way to zero?



Too early to say. But for all the noise, we can still see hints at what the market expects to pop during the next potential phase of the bull market.



Of the 77 cryptocurrencies in the top-100 by market cap which aren’t stablecoins, liquid staking tokens or otherwise wrapped assets, all but seven coins have lost value since Sunday following the Bitget hack two days earlier.



Those losses range from nearly 20% in the case of TKX, TRUMP and Bitget’s BGB, to barely negative returns for OP and APT.



Among the worst hit are coins tied to protocols that boast some of the highest levels of economic activity in the space right now, including AAVE, LDO, SOL and ETH. Like Keynes said, “markets can remain irrational longer than you can remain solvent.”&nbsp;



More telling is the small set of coins to go in the opposite direction: BERA and SKY (formerly MKR) are up 10% and 9.5% apiece while TIA is ahead by 3%.&nbsp;



Perhaps there’s not much to read into BERA, considering its mainnet launched only three weeks ago. But this could be a sign that corners of the market are looking for a fresh ecosystem narrative.&nbsp;



As for SKY, it could be benefitting from the increasingly tense air of strict stablecoin regulation in the US — with decentralized offerings set to take up greater mindshare moving forward.



And then there’s the extreme overperformance of IP, which is up 40% over the past five days and by far the strongest top-100 coin.&nbsp;



IP is the native token for a16z-backed PIP Labs’ Story Protocol, which it positions as a chain for tokenizing intellectual property. Its mainnet went live alongside the token less than two weeks ago and its price has only gone up since.&nbsp;



In any case, if I had to bet on the next big narratives for the rest of the cycle, mine would be twofold: fundamentals for sure, and really, really good market makers.



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<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
</ul>

What the bounce tells us about the next big crypto narratives

Jeff Albus

This is a segment from the Lightspeed newsletter. To read full editions, <a href="https://blockworks.co/newsletter/lightspeed">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



I don&#8217;t know, folks. Solana looks pretty cooked. The price has fallen below the 50 day and 200 day moving average, and is currently hovering around $130. It&#8217;s dropped about 35% since Valentine&#8217;s Day and is certainly not alone, with the whole market bleeding red over the same interim.



As such, we now have a lot of people asking: Is the bull run over? And if so, is the recent Bybit hack (or some other news, like <a href="https://blockworks.co/news/libra-will-not-deter-memecoins">the LIBRA memecoin fustercluck</a> or the <a href="https://blockworks.co/news/sol-investors-shrug-off-unlocks">upcoming FTX unlocks</a>) to blame? Conventional wisdom suggests that every cycle, a major hack or scandal shutters the market&#8217;s seemingly unstoppable momentum. But are these events really the cause, or just convenient scapegoats for something inevitable?



Bull runs seem to follow a fairly predictable rhythm, actually. Historically, BTC has peaked a little less than a year after reclaiming the previous cycle&#8217;s all-time high, often in December or January. It then moves briefly sideways, then downwards, and everything else follows the leader. This pattern held true in 2013, 2017 and 2021. In our current cycle, bitcoin reclaimed $69K in March 2024, and may have peaked 10 months later at $108K in January 2025.



Unsurprisingly though, people seem keen to frame <a href="https://blockworks.co/news/bybit-attack-institutional-grade-security">the recent Bybit hack</a> as the cause of a presumptive bearish spiral, rather than accepting that a pullback was simply due. Solana, which rode bitcoin’s momentum to nearly $300, has been caught in the same unwarranted blame game.&nbsp;



We’ve seen this before. Everyone knows that <a href="https://bitcointalk.org/index.php?topic=497289.0">Mt. Gox and its admission of insolvency</a> killed the 2013 bull run. <a href="https://www.cnbc.com/2017/09/11/bitcoin-price-falls-on-reports-that-china-is-closing-local-exchanges.html">China banning Bitcoin</a> halted the truly magnificent ICO run of 2017. <a href="https://ia.acs.org.au/article/2022/death-of-a-cryptocurrency.html">Scandals from Luna</a> and <a href="https://jfin-swufe.springeropen.com/articles/10.1186/s40854-024-00690-8">FTX</a> were, of course, to blame for jettisoning the 2021 moonshot. Except no, actually. None of that is true.



Bitcoin topped above $1,000 in December 2013, roughly 9 months after reclaiming its previous $31 ATH. The Mt. Gox scandal didn&#8217;t break the dam until months later in February 2014. Likewise, China’s Bitcoin ban didn’t end the 2017 bull run. The ban happened when bitcoin was around $4K. The price dipped briefly before rocketing to $18K. When the market finally crashed in January 2018 (10 months after passing the previous cycle&#8217;s all-time high), people went on to say that it was due to <a href="https://www.forbes.com/sites/sarahsu/2018/01/15/chinas-shutdown-of-bitcoin-miners-isnt-just-about-electricity/">China cracking down on bitcoin mining</a> in the wake of the ban.



As for Luna and FTX, both devastated investor confidence, but neither caused the bear market. Crypto prices at large had already been in decline since December 2021, or about a year after surpassing the previous cycle&#8217;s all-time high. The terraUSD collapse happened in May 2022. FTX didn’t implode until November. Solana, which was admittedly affected due to its close association with the latter, was already deep into its downtrend before that event unfolded.



And that&#8217;s to say nothing of all the major hacks that did not conveniently align with market peaks. In 2016, the DAO hack and Bitfinex hack were both massive. If hacks were real bear catalysts, why did the market shrug them off?



Because hacks and scandals do not end bull runs. Markets crash due to overheating, leverage, and exhausted demand — all of which align with natural cycle peaks and troughs. Bad news certainly does increase the likelihood of local dips, but if the market isn&#8217;t in the right position relative to the current cycle, it isn&#8217;t going to crash on a macro scale. The Bybit hack certainly gave traders an excuse to panic. But if it hadn’t been Bybit, it would’ve been something else.



So what now? Well, no one’s yelled out “JENGA!” yet. Maybe another leg up. Whales seem to be <a href="https://x.com/cryptoquant_com/status/1894351621393461479">accumulating</a>, which remains bullish. But given the timing, it&#8217;s also possible that the clock was up in January and this was the top. If that&#8217;s true, it would mark blockchain’s weakest ever market cycle. Either way, history is clear: Hacks don’t end bull runs. Bull runs end, and traders look for something to blame.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
</ul>

The market isn’t crashing because of scandals and bad news

Katherine Ross

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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At this point, it feels like the SEC is checking its list and dismissing investigations into crypto companies daily.&nbsp;



In some regards, it feels like the industry is finally free but the catch is that there’s yet nothing concrete for founders and projects to fall back on when it comes to rules and regulations.&nbsp;



Though, as Avalon’s Sean Pinnock told me in an X Spaces Wednesday, founders and devs based in the US can still breathe a sigh of relief.



Speaking of that Spaces: Yesterday, The Drop’s Kate Irwin and I hosted our first collaborative chat focused on, well, gaming. If you’re curious about it and weren’t able to join, you can <a href="https://x.com/i/spaces/1jMJgkVQzBjJL/peek">listen to a recap here</a>.&nbsp;



Anyway, Real Agency HQ’s Jonah Blake had some thoughts not only about where we stand but where we go from here. Unfortunately for those who equated friendlier regulation with their bags being pumped, that might not be the case. Something which shouldn’t come as too much of a surprise given how the market’s been acting lately.&nbsp;



What Blake means specifically is that having a regulator who’s not willing to file lawsuits left and right isn’t automatically going to mean that everyone jumps right back into some of the big narratives from last cycle, like gaming.&nbsp;



Abstract’s Phin Totten said that his team noticed a rotation of Solana traders playing Onchain Heroes, an idle RPG, but they didn’t enter past that game. For Totten, that’s a sign that we’re still early and the “time investment to return isn’t there” yet.&nbsp;



Blake compared crypto to a sin economy, like gambling or porn. Before you balk — as I admittedly did — it’s not necessarily a bad thing given the revenue that those types of economies churn out, it’s more about the mindset of those interacting with said economy, and how devs build.&nbsp;



Now, I want to clarify here that I don’t think all of crypto falls into this category. Especially not these days.&nbsp;



So let’s center Blake’s point on memecoins, with its gambling mentality, and how that impacts subsectors like gaming.&nbsp;



“We’ve curated an industry that’s very built around this speed of wealth accrual,” Totten said. “It’s about the path of least resistance to money.”&nbsp;



This is directly impacting the way that games are being developed right now, given the frustrations around the amount of time it took a lot of Web3 games to launch. For now, it’s likely that we’ll see a lot of those types of games being built around the speed mentality for the sake of optimizing for the audience, Totten continued.



Will this always be the case? The optimist — and avid gamer — in me hopes not. But there’s just no point in trying to trot out a game that might not have an audience… yet.&nbsp;



And perhaps that’s going to be the key difference this cycle: Folks are building for the audience.



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



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How Web3 gaming is changing this cycle

Jason Yanowitz

I’m excited to announce that Blockworks and Pete Rizzo, the Bitcoin Historian, have launched Supply Shock, a new Bitcoin-focused brand.&nbsp;



Bitcoin remains the most important crypto asset. Today’s historical levels of mainstream BTC adoption are driven by both retail and institutional interest from individuals to banks to nation states. Beyond those important developments, we also have a new wave of companies seeking to build on and extend the Bitcoin network in ways that are disrupting the crypto asset ecosystem.&nbsp;



We believe there is no one better equipped to lead this discussion than Pete Rizzo. He is an exceptional talent, and one of the most tenured and respected voices in Bitcoin.&nbsp;



<a href="https://podcasts.apple.com/us/podcast/on-the-margin/id1558223079">Supply Shock</a> will cover all things Bitcoin. Hosted by Rizzo and featuring interviews with the industry’s best builders and investors, the brand offers a unique, historical lens on Bitcoin’s current events and narratives.&nbsp;



&#8220;With Bitcoin continuing to dominate the cryptoasset markets, I&#8217;m excited to bring a more focused conversation to one of the most exciting fintech media brands,&#8221; Rizzo said. &#8220;With nation states and builders embracing Bitcoin, it&#8217;s a historic moment for the asset class. I&#8217;m excited to educate a new audience about what&#8217;s come before – and what&#8217;s in store.&#8221;



In addition to the podcast partnership, Rizzo will also helm an upcoming Supply Shock newsletter and join our events talent roster. He will appear at the upcoming <a href="https://blockworks.co/event/digital-asset-summit-2025-new-york">Digital Asset Summit</a> in New York City and future Blockworks events. The launch also marks a premium partnership with Core DAO, which will power Supply Shock as the presenting title sponsor for the show’s first year.&nbsp;



With the launch of Supply Shock, Blockworks will sunset its legacy macro/crypto show, On The Margin, and launch the new show in the former On The Margin feeds.



On a personal note, bringing Rizzo to Blockworks is a full-circle moment. 



In 2021, <a href="https://x.com/JasonYanowitz/status/1349007075842682880">Rizzo and I went on a hike</a> and talked about how Blockworks could grow into the editorial leader it is today. Not long after, Blockworks Editorial launched, in no small part thanks to Rizzo’s input. Now, I look forward to building the future of Blockworks together.&nbsp;



This deal also represents the continuation of Blockworks’ House of Brands strategy, launched as a way to accelerate the growth and success of our many podcast and newsletter brands.&nbsp;



Under this model, each brand cultivates its own unique audience of podcast listeners and newsletter readers, with the cumulative goal of building a highly engaged and sustainable audience. In a historically difficult media environment, this approach allows Blockworks to build a crypto media business capable of covering one of the fastest growing industries in the world.



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<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
</ul>

Blockworks and Pete Rizzo launch Supply Shock — a new Bitcoin brand

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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For years I’ve heard that stablecoins are going to be one of the first facets of crypto to become regulated.&nbsp;



We’ve seen a few stablecoin bills <a href="https://blockworks.co/news/congress-crypto-regulation-updates">get introduced</a> and marked up, but so far nothing has been passed. With Trump 2.0 and a <a href="https://blockworks.co/news/congress-in-final-weeks-of-session">Republican majority</a> on the Hill, this may be the year we start to see some movement.&nbsp;



But when it comes to specifics, the industry isn’t on the same page.&nbsp;



Some <a href="https://x.com/pythianism/status/1894109284197437869">claim</a> the latest drafts of stablecoin legislation prohibit non-US issuers from purchasing Treasurys. I wasn’t able to confirm this, and no draft I’ve seen has this language, but that doesn&#8217;t mean there aren’t lobbyists pushing this approach on Capitol Hill.&nbsp;



It’s no surprise that <a href="https://www.bloomberg.com/news/articles/2025-02-25/circle-s-allaire-says-stablecoin-issuers-should-be-us-registered">Circle</a> (and Coinbase, according to people familiar) are pushing for a more US-forward approach to stablecoin legislation. USDC is the world’s second-largest stablecoin, so giving foreign issuers like Tether more hoops to jump through would be advantageous for Circle.&nbsp;



Republican Senators Tim Scott, Bill Hagerty and Cynthia Lummis earlier this month partnered with Democrat Kirsten Gillibrand on the <a href="https://www.hagerty.senate.gov/wp-content/uploads/2025/02/GENIUS-Act.pdf">GENIUS Act</a>. It’s a stablecoin bill that, among other things, establishes reserve and liquidity requirements for payment stablecoin issuers.&nbsp;



Over in the House, Republicans French Hill and Bryan Steil released a discussion draft for the <a href="https://files.constantcontact.com/9f2b5e3d701/6c1f8aa0-095c-4a22-9982-2f4380d0b531.pdf">STABLE Act</a>, which also stipulates that issuers must maintain 1:1 reserves and high liquidity.&nbsp;



No markups have been scheduled so far this session, but I’ve been told we could start to see movement as soon as next month. We’ll be curious to see which witnesses are called to testify.



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<ul class="wp-block-list">
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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Stablecoin legislation may be on shaky ground 

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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President Trump yesterday threw markets another tariff-related curveball.



Trump ordered a probe into placing levies on copper imports, a move he hopes will help rebuild domestic metal production.&nbsp;



Copper is a key material for electric vehicles, military infrastructure and consumer electronics, Trump said in his Tuesday executive order.&nbsp;



Foreign dominance of copper exports “coupled with global overcapacity and a single producer&#8217;s control of world supply chains, poses a direct threat to United States national security and economic stability,” the order read.&nbsp;



The move once again pushed investors into a risk-off mindset, helping to stabilize gold prices and increase interest in other safe haven assets. Copper futures were also on the rise, with those traded on the Comex gaining as much as 5% today.&nbsp;



Trump issued the order using Section 232 of the Trade Expansion Act, the same law he used back in 2017 to slap 25% tariffs on aluminum and steel imports.&nbsp;



To further complicate things, Trump this afternoon apparently gave two different dates for when <a href="https://blockworks.co/news/trump-gradual-tariff-policy">tariffs against</a> Canada and Mexico will begin, first saying March 4 and later saying April 2, according to a <a href="https://www.bloomberg.com/news/articles/2025-02-26/trump-deepens-murkiness-around-global-tariffs-timing-scope?srnd=phx-politics">report</a> from Bloomberg.&nbsp;



As I’ve said before, this market is just waiting for the other tariff shoe to drop —&nbsp;and the changing timeline isn’t helping calm the waters in the meantime.&nbsp;



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<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



<li><a href="https://blockworks.co/newsletter/research">0xResearch</a>: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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Copper tariffs, changing timeline position markets for more volatility

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance">subscribe</a>.



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Bitcoin sits more than 20% off the all-time high it hit last month. And yes, US bitcoin ETFs saw a record outflow day yesterday.&nbsp;



There’s been plenty of red elsewhere too, as <a href="https://blockworks.co/news/nvidia-earnings-could-boost-stocks">Casey pointed out</a> in recent stock market coverage.



But that doesn’t mean a rebound isn’t coming, right? Though BTC had <a href="https://blockworks.co/news/is-btc-bull-run-over">dropped further</a> Wednesday ($84,200 at 2 pm ET), the S&amp;P 500 and Nasdaq Composite indexes were each basically flat.&nbsp;



“Bull markets peak amid excessive leverage, retail euphoria and falling BTC dominance — not compressed funding rates,” 21Shares crypto research strategist Matt Mena said in a report.&nbsp;



“Liquidations reset overleveraged positions, creating healthier uptrends as traders re-enter post-shakeout,” he added.



The memecoin token frenzy (i.e. <a href="https://blockworks.co/news/trump-more-than-a-memecoin">$TRUMP</a>) suggests mid-cycle speculation, aligning with 2020-2021 patterns, Mena noted. Blockworks’ Katherine Ross <a href="https://blockworks.co/news/cme-traders-remain-defensive">wrote</a> this morning that recent token launches have indeed “contributed to the larger exhaustion.”



Bitwise research head Ryan Rasmussen countered with this:



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">So <a href="https://twitter.com/Matt_Hougan?ref_src=twsrc%5Etfw">@Matt_Hougan</a> &amp; I just presented the case for bitcoin to 350 wealth managers (JPMorgan, Wells Fargo, etc.). 53% plan to allocate to crypto in client accounts (including 33% in the next six months). Memecoin nonsense can’t stop this train.&mdash; Ryan Rasmussen (@RasterlyRock) <a href="https://twitter.com/RasterlyRock/status/1894478056481591327?ref_src=twsrc%5Etfw">February 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The M2 money supply has been growing since mid-January and <a href="https://blockworks.co/news/federal-reserve-quantitative-tightening">quantitative tightening</a> could soon reach “a natural end,” Mena wrote in his report.



One more thing the 21Shares exec points out: The Pi Cycle Top Indicator — tracking bitcoin&#8217;s 111-day simple moving average against a 2x multiple of the 350-day SMA — hasn&#8217;t yet signaled a market peak.



LMAX Group’s Joel Kruger called out traditional markets, where risk appetite has cooled off given global trade tension and a more hawkish outlook from the Fed. “We believe correlations between bitcoin and traditional risk assets can be misleading, with bitcoin easily capable of generating sizable demand as an attractive portfolio diversification asset given properties that align more with that of a store of value,” he argued.&nbsp;



There’s “formidable support” for BTC in the $70,000-$75,000 zone. That, Kruger believes, “should serve as an attractive higher low ahead of the next major upside extension and bullish continuation to a fresh record high beyond $110,000.”



Beyond price, YouHodler markets chief Ruslan Lienkha spoke to how <a href="https://blockworks.co/news/bybit-hack-raises-security-questions">last week’s Bybit hack</a> could affect institutional confidence in centralized exchanges.&nbsp;&nbsp;



It won’t have a major impact, he thinks, as security breaches more significantly affect retail traders who rely heavily on CEXs for trading and asset storage.



“Institutions typically adhere to strict treasury management rules and allocate only the necessary liquidity to CEXs for routine transactions,” he said in an email. “Large-scale institutional trades are often conducted through OTC markets, while long-term holdings are kept in secure, self-custodied solutions.”



And in case you missed it, the <a href="https://blockworks.co/news/sec-closes-uniswap-investigation">SEC closed</a> its multi-year investigation into Uniswap Labs. It won’t pursue any enforcement action, the company <a href="https://blog.uniswap.org/a-win-for-defi">said</a>.



That follows the securities regulator telling Coinbase last week it would <a href="https://blockworks.co/news/regulatory-outlook-post-coinbase-dismissal/">drop its case</a> against the crypto exchange <a href="https://x.com/caseywagnerr/status/1894390409981280546">(still to be finalized)</a>. <a href="https://blockworks.co/news/sec-robinhood-investigation-update">Robinhood</a> and OpenSea also revealed this week the SEC was ending probes into the companies.



So not all things are on the up and up. But there are places to hang your hat.



We’ll see what we’re saying after today’s Nvidia earnings, tomorrow’s initial jobless claims and the Friday PCE data drop.



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<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Start your day with top crypto insights from David Canellis and Katherine Ross.</li>



<li><a href="https://blockworks.co/newsletter/onthemargin">Forward Guidance</a>: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.</li>



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<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.</li>
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A glass-half-full look at the market

This is a segment from the 0xResearch newsletter. To read full editions, <a href="https://blockworks.co/newsletter/research">subscribe</a>.



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I’ve had a horizontal line on my main BTC chart since the Nov. 26 test of the $91k level: “1D close below here = end of bull market.”&nbsp;



With bitcoin ETFs experiencing over $2.4 billion in net outflows throughout February and broader <a href="https://blockworks.co/news/tariff-trade-overshadows-earnings-season">macroeconomic pressures</a> weighing on risk assets, the question arises: Is this just a correction, or are we witnessing the start of a <a href="https://blockworks.co/news/btc-price-at-critical-juncture">prolonged downturn</a>?



Sorry to say, I’m now in the latter camp. After posting intraday lows around $86k — a nearly -20% retracement from its peak — the market may well be due for a bounce, but the support breakdown level is likely to provide firm resistance and it will take some serious force to get back into the range. It’s frankly hard to see a near-term catalyst for that.



<h2 class="wp-block-heading">Bybit hack the last straw</h2>



The recent <a href="https://blockworks.co/news/bybit-attack-institutional-grade-security">Bybit hack</a> — now <a href="https://x.com/benbybit/status/1894768736084885929">attributed</a> to a compromised Safe wallet developer — has shaken some investors’ confidence, perpetuating fear-driven selling.&nbsp;



Bybit says it has replenished its ETH supplies and seems to have had no trouble servicing withdrawals, but the damage to market liquidity is evident.



The hack’s fallout could also step up regulatory oversight, with Komodo Platform CTO Kadan Stadlemann suggesting that lawmakers may push to tighten consumer protections further.



“This could include mandatory insurance for user funds, stricter licensing requirements for exchanges and the establishment of dedicated regulatory bodies to oversee cryptocurrency operations,” Stadlemann told Blockworks.



<h2 class="wp-block-heading">Outflows, liquidations and rate uncertainty</h2>



Aside from the Bybit hack, MEXC COO Tracy Jin attributes bitcoin’s decline to a combination of ETF outflows and macroeconomic uncertainty.



“Bitcoin has broken through the $90,000 level, triggering liquidations worth over $1 billion,” Jin noted. “ETF outflows have persisted for six consecutive days, surpassing $2.4 billion in February alone.”



For the moment, we still have no reason to doubt the Federal Reserve’s hawkish stance in delaying expected rate cuts until the second half of 2025. Higher-for-longer interest rates dampen demand for speculative assets like bitcoin, while new US tariffs stoke inflation concerns. (Not everyone is on board with this view, as noted in Truflation’s read above).&nbsp;



<h2 class="wp-block-heading">Bright spots: Uniswap’s SEC win and Saylor’s Strategy</h2>



Despite the bearish sentiment, there was a major win for DeFi yesterday: The SEC has <a href="https://blockworks.co/news/sec-closes-uniswap-investigation">dropped its investigation</a> into Uniswap. Kevin Rusher, founder of RAAC, sees this as a pivotal moment.



“The SEC dropping its investigation into Uniswap isn’t enough to drag the market out of its current hole, but it’s a massive win for crypto,” Rusher said. “This decision paves the way for a shift from memecoins to projects with real utility.”



In the long run, <a href="https://blockworks.co/news/michael-saylor-crypto-framework">more legal clarity</a> should provide long-term support for DeFi’s growth.



Michael Saylor, of course, remains bullish. The newly <a href="https://blockworks.co/news/strategy-rebrand-and-2025-targets">renamed Strategy</a> (still $MSTR) spent nearly $2 billion acquiring 20,356 BTC over the past week. Saylor’s continued accumulation comes as the premium on MSTR shares, relative to its NAV, dropped to its <a href="https://x.com/RunnerXBT/status/1894660894728069474">lowest</a> point in a year.



So, buy the dip or expect a deeper correction? Given BTC breaking key support, short-term downside risk remains. Long-term fundamentals — institutional adoption and regulatory clarity — still favor crypto. The coming days will be revealing. If BTC fails to reclaim $90,000–$96,000, one would expect a deeper correction into the $70s. But if ETF outflows stabilize and risk appetite returns, bitcoin’s bull market may still have legs.



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Bitcoin slips to $86K — Is the bull run over?

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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Crypto moves at breakneck speed.&nbsp;



One day, you could recite the top coins by heart, maybe even in order. By the next, there’s a handful that you don’t even recognize.



Some might be entirely new, like HYPE, TRUMP or USDE. These days, there’s an increasing chance that they could be old coins rebranded.



Putting aside any technical reasons for projects to switch tickers — perhaps alongside with the launch of a new chain — token rebrands serve three key functions:



<ul class="wp-block-list">
<li>Offers a way out from stale market positioning when the meta changes.</li>



<li>Provides a clear focal point for promotional efforts to create buzz.</li>



<li>Resets the price chart, wiping away everything that happened in previous years.</li>
</ul>



There have been at least five examples of high-profile token rebrands in recent memory: merit circle (MC) became BEAM; bitdao (BIT) became MANTLE (MNT); matic became POL; makerdao (MKR) became sky (SKY) and fantom (FTM) became sonic (S).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdHiw5CxKu-XNEPGDW_EHcOSoCB8A1H4M9rQ3zjQLI2O_1QtBfoXI-azjQ9QDnu7zugNyWJ6IbuuN5DZ1bamxS74sza48WGq31FtzdOTrOIfn2Tl0fqqhYu8J_LTMZA2SNxxnkC?key=-a44cubK1dPiRoPCz5js1qHn" alt=""/></figure>



Many of these and other token migrations are still ongoing — meaning the old chart lives on under the previous ticker, separate from the new one.



And whether or not resetting the chart was a primary intention for the projects that have rebranded, it’s still possible to stitch together the old chart with the new one, just for fun.



Take the MC/BEAM chart above. Anyone who’d only checked the post-rebrand BEAM chart would see that BEAM is still up more than 70% on its initial price from October 2023.&nbsp;



When in actuality, the coin’s down over 70% across its entire trade history.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe1JrnUAiekpHRipNOtIf8CWD9jgREkWyFl_pO7-h595DqqYAkYiZ9mnMahh_5VzVhjF1tKBdRzO3a4cpCtyouINFXhcsnE3BT3VwQsqaIvOgyXAuwJOcEwdV8xhb59cTuZfCxr?key=-a44cubK1dPiRoPCz5js1qHn" alt=""/></figure>



MNT is another such case. It’s technically up 56% since the Bybit-launched investment DAO converted itself into an Ethereum layer-2 in 2023, but it lost 50% of its value since BIT was first launched two years earlier.



The opposite is true of MATIC/POL — POL has shed 56% of its value since it started its token migration in late 2023 but its combined total lifetime returns are nearly 5,000%.



That’s similar to what FTM/S has posted over its entire lifespan. The Fantom team is now dedicated to a newly launched chain called Sonic, with FTM tokens upgradeable to S as of January.



Meanwhile, MKR/SKY is still positive by around half over its entire combined history, while only ahead by 4% since the rebrand.



Whether prices have gone up, down or sideways after rebrands, we could probably all learn a little something from each of these cases: when in doubt, why not just reinvent yourself and keep it moving.&nbsp;



The kicker is that it might only work once.



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New chart, who dis? Token rebrands might work only once

This is a segment from the Empire newsletter. To read full editions, <a href="https://blockworks.co/newsletter/empire">subscribe</a>.



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I know I’m not alone in thinking that this is one of the weirdest market environments I’ve encountered.



The selling on the equities side makes sense, and there are a few reasons for that, from a disappointing US consumer confidence reading to the tariff overhang. The crypto side of things is a whole different can of worms.&nbsp;



So we can agree that memecoins are a big part of the negative shift. I hesitate to label all of the most recent token launches — i.e. MELANIA, TRUMP and LIBRA — memecoins, but I do think they all contributed to the larger exhaustion. While they were meant to be a fun, smaller part of crypto, their dominance in the narrative has clearly led to burnout.&nbsp;



We’re seeing that in the data, with CME traders pulling back and acting wary. Perp traders, on the other hand, have been slightly more active, adding some BTC longs though, notably, longs are getting punished right now.



“CME traders remain defensive. Open interest remains flat while premiums have stayed in deep single digit territory and the February contract currently trades below spot. Annualized March futures premiums are subdued at 5.7%, with the daily next month premium declining to lows not seen since the early July Mt. Gox driven market downturn,” K33 wrote.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeVOpiaZxqjBqx2Ii1_ekIx__fHB9YgxqAK9vrT5uUGorC3s4Al-OAib6MDfuXG-jeY5P3bT3Jr3jKDVQKXNYqNK7tmTo5wqfpKx3HlfbnzzlO37pzwaR3bTfTnR9BGJGgy3wPfmQ?key=-a44cubK1dPiRoPCz5js1qHn" alt=""/><figcaption class="wp-element-caption">K33’s look into CME exposure</figcaption></figure>



For perp traders, buying the dip didn’t quite pay off.&nbsp;



“Perps have traded at discounts to spot for several weeks, but this discount narrowed amidst the open interest spike [since Monday]. Further, funding rates on Binance reached neutral terrain as leverage climbed, pointing toward traders entering longs with leverage. This behavior was quickly punished in the market, with long liquidations amplifying the move lower.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXey5U6we2_nAyXZDL_MAKLRfLh_oHr-G8mbZQ29a5B1pKlmv4eDuBJy9XjIHU6ffjRx2oxzp6jriEEMxJgBGnlfk7Zt3tsVbDAnLvFWAGvGDtBOouF8wDNdsqFXIVWg6xpfxdTn2w?key=-a44cubK1dPiRoPCz5js1qHn" alt=""/><figcaption class="wp-element-caption">From K33’s report</figcaption></figure>



But it really isn’t all doom and gloom, as Bitwise’s Matt Hougan noted.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">What crypto is digesting right now is the end of the memecoin boom. The combination of Melania, Libra, and the Lazarus Group using memecoins to launder stolen ETH will kill it dead. Maybe not today, but within 6 months. The good news is there are already things ready to replace…&mdash; Matt Hougan (@Matt_Hougan) <a href="https://twitter.com/Matt_Hougan/status/1894385383942885431?ref_src=twsrc%5Etfw">February 25, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The institutional adoption notably hasn’t stopped, and everyone I’ve spoken to is still rather bullish on the overall environment noting how favorable it is once we get away from crime szn.&nbsp;



That’s not to say we shouldn’t tread carefully, but there are some potential winners out there to keep a close eye on. K33 noted, in a separate report this morning, that Aave is an example to watch, given its growth.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfT1ajDAeK65_GOx5t9I8eEtpRnN-6gaQrBg8kjy5FBRSYMH0B8jjAywPBcSBPpO2W9mzrXhZSf4ZRcr6uCjeGlMv0i4lV8bFB3-jbNN8rwW2VFgR2kRIs3YYqEHFh3G_jD0-wi3Q?key=-a44cubK1dPiRoPCz5js1qHn" alt=""/><figcaption class="wp-element-caption">Source: K33</figcaption></figure>



“A constructive regulatory regime gives DeFi a new lease on life. Leading platforms such as Aave are now free to pursue innovative avenues that may have previously carried more questionable risk, such as revenue-sharing tokenomics,” K33 analysts wrote.&nbsp;



To add to that, the idea is that DeFi could also gain from actual regulatory clarity (which we still haven’t seen). Institutional players, for example, could integrate various DeFi products into portfolios — especially if spot ETH ETFs add staking.&nbsp;



I rarely opine, but I do think that this painful shift away from the memecoin narrative is a necessary one. There are pockets of opportunities within the current market if̶ ̶y̶o̶u̶ ̶f̶o̶l̶l̶o̶w̶ ̶y̶o̶u̶r̶ ̶h̶e̶a̶r̶t̶.&nbsp;



No, but really, the take that there’s still demand for projects that properly show crypto’s use cases is one I personally believe. And that’s not just reserved for stablecoins and RWAs.



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CME traders remain ‘defensive:’ K33

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The SEC has been killing investigations left and right in the past week, freeing Robinhood, OpenSea and Coinbase from its regulatory probes. 



The agency has now closed its investigation into Uniswap Labs, according to posts from the company published Tuesday.



“This is a huge win for DeFi and reaffirms what we’ve always known — that the technology we build is on the right side of the law, and our work is on the right side of history,” Uniswap Labs <a href="https://x.com/Uniswap/status/1894452298698358989">wrote</a> on X.&nbsp;



In a blog <a href="https://blog.uniswap.org/a-win-for-defi">post</a>, the company called the closure a “welcome relief” and praised the SEC’s new leadership — which no longer includes known crypto critic and former Chair Gary Gensler — for seeing a “more effective path to protecting American consumers.”



Uniswap inventor and Uniswap Labs CEO Hayden Adams shared this stance as well in a lengthy <a href="https://x.com/haydenzadams/status/1894452459113738591">post</a> responding to the news. He argues that Uniswap isn’t a broker and doesn’t fit into existing financial regulatory frameworks. Square peg, round hole.



That’s been an argument used by many crypto executives, believing that digital assets don’t fit neatly into existing classifications like securities or commodities.&nbsp;



Seeing execs at OpenSea, Coinbase and Uniswap applaud the SEC now is such a marked change. Just a few months ago, crypto execs decried the federal agency because of a perceived lack of transparency and clarity — and because they could have been forced to pay tens of millions in fines.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdm08mChmArMXCc88OnDPxbo4sXQkEtv4KXV4xXZFbYDXJXBPOa4Yw4VMDN0ZBEhgKoj-UkOYhsNqUOHLtWUNLI0tRpYUYORYzCGnIsnPI1rIwXU-dAVAYbBPICCAQDWK_LkadQ?key=qjM74Mbemo3WOy6B9W5zZFb2" alt=""/><figcaption class="wp-element-caption">Source: Uniswap TVL over time</figcaption></figure>



Uniswap Labs, however, already spent “tens of millions” fighting the SEC, Uniswap Labs COO Mary-Catherine Lader <a href="https://x.com/Mclader/status/1894463386542362982">shared</a>.



“Massive W for builders,” OpenSea CEO Devin Finzer <a href="https://x.com/dfinzer/status/1894466962337464532">said</a> in response to the closed case.



Most responses from crypto fans were overwhelmingly positive — it’s obviously a win for DeFi, and a win for crypto.&nbsp;



Token prices were up slightly across the board in the hours since the news dropped. But most are still down in the past day and week, suggesting sentiment is still a bit bearish at the moment despite the shuttered SEC probes at OpenSea, Robinhood, Coinbase and now Uniswap. 



Gaming tokens are following that downward trend, too, as they usually do, with most down anywhere from 2% to 15% in the past week.&nbsp;



UNI’s price climbed a little bit as the news dropped, going from $7.87 to $8.28 within roughly 10 minutes. UNI has a market cap of over $4.9 billion.



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