The Crypto Wall Comes Down.
After years of regulatory uncertainty and ad hoc enforcements, the U.S. is embracing crypto to reinforce its global leadership in FinTech innovation. So much so that the incoming government, with about 60 percent pro-crypto members, might consider bitcoin as a solution to a $35 trillion national debt crisis.
From President-elect Donald Trump promising to safeguard the national bitcoin stockpile to Cynthia Lummis pushing the BITCOIN Act, the U.S. looks set to become the first developed economy to have a strategic bitcoin reserve.
This historic move was unthinkable just a year ago. Now, it’s more plausible than ever, with Pennsylvania introducing the Bitcoin Strategic Reserve Act while the Minneapolis Federal Reserve president, Neel Kashkari, flips on his anti-crypto stance.
With the resignation of SEC Chair Gary Gensler announced for January 20th, President Trump’s inauguration day, the price of bitcoin is hovering just under it psychological $100,000 mark. Ironically, it was the SEC approval of bitcoin ETFs early in the year that started this crypto momentum.
Grassroots communities are rallying behind this bullish shift with projects like Strategic Bitcoin Reserve ($SBR). Meanwhile, TradFi hedge funds like Millennium Management, Capula Management, and Tudor Investments, among others, are lining up for bitcoin exposure, mainly through ETFs.
Antonio Juliano, founder of dYdX says, “There’s never been an explicitly pro-crypto regime in the U.S. Now that Americans have elected one, we’re entering a new era of crypto investments. Retail benefits and adoption will spike of course, but this shift is particularly conducive for TradFi players looking to offer crypto-based products and services. And thus mainstream adoption looks more viable than ever before.”
From The Sidelines To Center Stage
Options on Blackrock’s spot bitcoin ETF, the iShares Bitcoin Trust ETF (IBIT), achieved a record $1.9 billion notional value on day one, with over 354,000 contracts traded. This reflects the latent demand for a secured BTC leverage instrument and its potential to catalyze mass adoption.
As A. Rafay Gadit Co-Founder of Zignaly, notes, “The super reception of options on spot bitcoin ETFs marks a high point in crypto’s ongoing institutional adoption. Derivatives provide a seamless entry point for institutions, a strategic advantage. Given the demand, our job now is to offer diverse solutions, both traditional and crypto-native.”
There has been a steady rise in institutional crypto adoption in the U.S. over the past year. According to Chainalysis, institutions have accounted for 70 percent of all crypto activity in the region. Looking through the bitcoin 13F filings lists a who’s who of institutional investors. Research by Global Digital Finance found that 93 percent of global financial institutions surveyed are now handling Bitcoin with ETFs a major driver.
Now a crypto-friendly U.S. could welcome the small and medium sized businesses (SMBs) waiting on the sidelines concerned about legitimacy risks and regulatory backlash to take the invest alongside the biggest and the best and creating a great economic boost to often underserved market.
Avidan Abitbol, Project Director of Data Ownership Protocol (DOP), says, “While the traditional financial giants can typically thrive under any regime, regulatory clarity, friendly frameworks, and compliance are absolutely necessary for the less powerful players. Yet the American crypto industry needs them too and recent developments signal the creation for a more inclusive, democratized space for TradFi’s participation in crypto.”
A New Era In Crypto Investments
Libeara and FundBridge Capital launched a tokenized U.S. Treasury Bill (T-Bill) fund on Avalanche. BlackRock’s BUIDL, currently the largest tokenized treasury fund by AUM, went multichain. Franklin Templeton is planning to launch Benji, an Ethereum-based tokenization platform. Securitize launched the sToken Vault, enabling its “clients to access investments from Wall Street’s most experienced managers without sacrificing DeFi-native opportunities.”
Notably, these institutional developments are happening in parallel to the memecoin frenzy, driven by speculation and cultish community sentiments. This ushers the next phase in the evolution of crypto investments, essentially breaking the retail / institution binary.
Earn’M Co-Founder and CEO, Dan Novaes notes, “As institutions increasingly focus on Bitcoin, driven by ETF exposure and a crypto-friendly administration on the horizon, we’re witnessing a rising tide that lifts the entire Web3 market. While Bitcoin remains the centerpiece of institutional inflows, traditional retail investors are driving growth in meme coins and DePIN narratives, creating a dynamic and multifaceted expansion.
“This bull cycle’s holistic nature—from Bitcoin to memes—is a testament to the maturity of the space, with both retail and institutional players capitalizing on diverse opportunities across the bell curve.”
The landscape has changed dramatically, both politically and culturally in the U.S. Crypto is increasingly becoming viewed as a great equalizer and one that benefits citizens, businesses, and institutions alike.
As GOAT Network Co-Founder, Kevin Liu, highlights, “With global inflation and debt shooting through the roof, TradFi firms, especially fund managers, have started to realize that they need crypto to survive and succeed in the future. And with the US Election outcomes, the ground is now ready for them to dive in.”
TradFi fund managers now recognize crypto as a viable hedge against global economic and political turmoil. BlackRock’s crypto investment thesis, for example, rests on bitcoin’s quality as a unique diversifier and loose correlation with traditional risks like geopolitical turmoil.
With nearly half of TradFi hedge funds getting crypto exposure in some form, the future looks bright—not just for the crypto industry, but for investors and consumers of all styles, tastes, and risk appetites.
Crypto has had its Berlin Wall moment, the crypto wall is down.
