Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Ravi Tanuku on how the GENIUS Act repriced bitcoin’s monetary premium
- Jesper Johansen on looped ETH staking without lending market exposure
- Top headlines institutions should pay attention to by Francisco Rodrigues
- “NEAR Intents fee run-rate holds as price recovers off $1 lows” in Chart of the Week
Thanks for joining us!
-Alexandra Levis
Expert Insights
The GENIUS Act Repriced Bitcoin’s Monetary Premium
– By Ravi Tanuku, managing member & general partner at Natural Capital & Director at Krakacquisition Corp.
Gold has outperformed Bitcoin by nearly 100% since July 18, 2025. Same macro environment. Opposite outcomes.
The usual explanations don’t survive the simplest question: if this is just a cycle top, why is gold still working?
Bitcoin didn’t break because of cycles, sentiment or quantum risk. It broke because the U.S. government built a better version of what Bitcoin provided to millions around the world, and signed it into law on that date. The GENIUS Act regulated stablecoins with 100% reserves in U.S. dollars or Treasuries. In doing so, it created a government-sanctioned alternative to Bitcoin, in effect shifting “digital dollar” demand from Bitcoin to stablecoins.
Chart: Normalized performance of bitcoin (XBTUSD) vs Gold (XAU), in BGN. Source: Bloomberg.
What bitcoin was actually used for
The standard framing is that bitcoin has three use cases: dollar access, digital gold and speculation. Most of the discourse focuses on the latter two. The adoption data points somewhere else.
According to Chainalysis, the top crypto-adopting countries are Nigeria, Vietnam, Turkey, Argentina and Ethiopia. The common thread isn’t speculation or sound money ideology. It’s capital controls and currency depreciation against the dollar.
That pattern suggests bitcoin’s dominant real-world function was as an alternative dollar access point for consumers and businesses whose governments restricted it. Speculative flows and institutional vehicles like ETFs can be larger in dollar terms at any given moment. But dollar access was the most consistent secular demand. It was the structural bid that gave bitcoin its floor and its long-running relationship with global M2 money supply.
Chart: Bitcoin vs global M2 money supply. Source: Bloomberg.
The risk-adjusted data make this concrete. Since the November 2021 cycle peak, a buyer in Nigeria, Turkey, Ethiopia or Vietnam who held bitcoin spent 26 of the next 52 months underwater relative to someone who simply held U.S. dollars. Both delivered strong absolute returns in local currency terms: bitcoin returned 275%, dollars returned 172%. But bitcoin’s annualized volatility was 68% versus 18% for dollars, producing a Sharpe ratio of roughly 0.5 compared to 1.5 for just holding USD. Bitcoin’s maximum drawdown was 66%. The dollar holder’s was 6%.
Chart: Bitcoin vs dollars in emerging markets, indexed from Nov 2021 cycle peak. Source: Bloomberg.
These buyers weren’t making a speculative bet on digital gold. They were trying to hold dollars. bitcoin was the best available wrapper, but the returns accrued to the dollar exposure, not to bitcoin specifically. A regulated stablecoin captures the same currency depreciation tailwind without the drawdowns.
The migration was already underway before the GENIUS Act. According to Artemis, B2B stablecoin payments surged 30x to over $3 billion monthly by early 2025, with cross-border settlement as the primary driver. The Act accelerated a shift that was already visible.
What happened after
Stablecoin market cap went from ~$211 billion in January 2025 to over $306 billion by October, up 45%. Monthly issuance doubled from ~$6.6 billion pre-GENIUS to over $13 billion in the three months after the Act. Bitcoin fell 43%. Capital didn’t leave crypto. It just stopped needing bitcoin to get where it was going.
Chart: Gold vs bitcoin (scaled) vs stablecoin supply (market cap), with GENIUS Act passage marked. Source: author chart data from Bloomberg.
Then the macro gave us a clean test of the digital gold thesis. In late 2025, cyclical reacceleration built across the real economy. Commodities rallied. Gold, silver and copper made new highs through January 2026. Bitcoin sold off alongside SAAS stocks and unprofitable tech. By fourth quarter 2025, its quarterly correlation with IGV hit +0.64, the tightest since the 2022 bear market.
In this cycle, the market did not treat bitcoin as a monetary hedge.
The test ahead
The CLARITY Act aims to regulate bitcoin as a commodity. That classification could matter. Right now Bitcoin sits in regulatory limbo that makes it hard for institutional allocators to slot it into commodity portfolios alongside gold and silver. Formal commodity status changes the compliance conversation, creates index inclusion logic and gives pension funds and endowments a framework to allocate.
The GENIUS Act may have impaired the dollar access use case permanently. CLARITY could revive the digital gold thesis under a new regulatory identity.
The test isn’t whether bitcoin rallies post-CLARITY. Any oversold asset can bounce on a catalyst. The test is the correlation regime. Within one to two quarters of CLARITY’s passage, does Bitcoin begin recoupling with gold? Or does it continue trading with long-duration growth?
There’s an irony here. The crypto industry spent years lobbying for regulatory clarity. The first major regulation formalized a competitor that made bitcoin’s core function obsolete. Whether the second major regulation gives it a new structural identity or confirms the old one is gone is the open question.
Watch what bitcoin trades with, not where it trades. The correlation regime will be the signal.
Principled Perspectives
Looped ETH Staking Without Lending Market Exposure
– By Jesper Johansen, CEO & founder, Northstake
Most leveraged staking strategies on Ethereum follow the same playbook: deposit ETH, receive a liquid staking token, borrow against it on a lending protocol and repeat. It works — until it doesn’t. Liquidation risk, variable borrow rates and smart contract exposure across multiple protocols make the approach fragile at institutional scale.
There is a simpler path. One that captures a comparable yield without ever touching a lending protocol.
The rates and the spread
Native Ethereum validator staking currently yields approximately 2.9% APY. Lido’s stETH — the largest liquid staking token — yields approximately 2.4%. The gap exists because Lido socialises rewards across all stETH holders, including ETH that is sitting idle in entry and exit queues earning nothing. The more queue activity there is, the wider the spread.
That rate differential varies but recently hit 50 basis points. The rate differential is the foundation of this strategy.
How it works
Strategy execution leverages Lido V3 staking vaults and Northstake’s Staking Vault Manager to capture the rate differential and loop it. A vault operator stakes ETH natively on Ethereum validators, earning the full ~2.9% APY. You then mint stETH against that staked position – not by borrowing, but through Lido’s native minting mechanism within the stVault. The minted stETH is exchanged for staked ETH, which can be consolidated back into the vault’s validators via EIP-7251 consolidation. Each loop adds exposure. Minted stETH can also be exchanged for liquid ETH and staked in the stVault, however, this makes it subject to the entry queue.
At ten loops, the strategy delivers approximately 6.6% APY — roughly double the base staking rate. A 6.94% liquidity buffer is maintained as a reserve. The full position can be unwound as fast as the validator exit queue, currently sitting at around eight days, or immediately by depositing stETH back into the vault to bring down vault liability, while ETH is unstaking.
Crucially, no lending protocol is involved. The leverage is structural, created entirely by leveraging the rate differential of stETH within Lido’s vault architecture. There are no liquidation thresholds, no variable borrow costs, and no counterparty dependency on a lending market.
Example: Uses wstETH (non-rebasing version of stETH) and assumes secondary market as opposed to consolidation.
The risks are real but known
Duration risk is the primary consideration. Initial seed capital must pass through the validator entry queue, currently around 56 days. Subsequent scaling uses validator consolidation rather than the queue, but full deployment still takes 60–76 days depending on consolidation cycles.
Validator underperformance or slashing events can erode the spread. If the rate differential compresses, additional loops can be added; if it widens uncomfortably, the position can be reduced by partially unstaking.
Crucially, you can always redeem 1 stETH for 1 ETH with Lido. A depegging of stETH does not create a negative carry, due to the mechanics of how Lido’s stVaults manages vault liability. In the worst case, should the stVault liability become unhealthy, Lido executes a forced rebalance of the stVault where ETH is unstaked bringing down the liability.
Adding downside protection using CESR
One emerging development worth noting: staking risk insurance products now exist that can guarantee a minimum yield benchmarked to the Composite Ether Staking Rate (CESR), representing the average annualised validator yield. Under these policies, if a validator underperforms relative to CESR due to slashing, technical failure or operational error, the insurer covers the shortfall. For institutional allocators who need yield predictability, this converts the strategy’s variable return profile into something closer to a fixed-income instrument — leveraged staking yield with a guaranteed floor.
Who is this for?
Institutional capital is moving into staking structurally, not speculatively. They are looking for strategies that can deliver enhanced yield without introducing lending-market exposure or adding complexity. For asset managers, this strategy can also help reinforce the liquidity management of staked ETH ETFs.
The spread is there. The infrastructure and tooling to capture it exists.
Headlines of the week
– By Francisco Rodrigues
Institutional crypto kept filling in around the edges this past week as the SEC moved toward tokenized stocks on DeFi and cleared cash-settled bitcoin options for Nasdaq, Prometheum staked out broker-dealer distribution for onchain securities, and prediction markets faced a House Oversight insider-trading probe just as Hyperliquid pushed deeper into the same product line.
- SEC to propose tokenized stock framework as Wall Street efforts deepen: The planned innovation exemption would let third parties issue tokenized public equities for DeFi trading without issuer approval. The move extends the March approval of Nasdaq’s tokenized securities framework.
- Bitcoin options are coming to Nasdaq. Here’s what it means for you: The SEC conditionally approved Nasdaq PHLX to list cash-settled, European-style bitcoin index options under QBTC, tracking the CME CF Bitcoin Real Time Index.
- Hyperliquid is emerging as a challenger to traditional exchanges and prediction markets, says FalconX: HIP-3 markets are pulling pre-IPO bets on Cerebras, Anthropic and SpaceX onto the platform, with HIP-4 outcome contracts targeting Polymarket and Kalshi and HYPE up 94% in three months.
- Congress hits Polymarket and Kalshi with a massive insider trading probe: House Oversight Chair James Comer sent letters to Shayne Coplan and Tarek Mansour demanding records by June 5 on identity verification, geo-restrictions and unusual-trade detection, after Bubblemaps flagged 80 Polymarket bets with a 98% win rate tied to US military operations.
- Prometheum bets Wall Street distribution is the missing link for tokenized securities: The SEC-registered firm launched infrastructure to let broker-dealers and RIAs offer tokenized securities and crypto assets through traditional brokerage accounts, covering issuance, trading, custody, clearing and settlement.
Chart of the Week
NEAR Intents fee run-rate holds ~$36 million annualized as price recovers off $1 lows
Weekly fees on NEAR Intents annualized to $36 million as of week ending May 24, holding within a $32–58 million band since late February after peaking at $124 million in mid-November — even as NEAR round-tripped from $3.16 in late September down to a $1.06 low in late February, before recovering to $2.7 at the start of this week
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Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.