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Crypto World

Bitcoin and U.S. dollar form symbiotic bond, says BPI exec

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Crypto Breaking News

The relationship between Bitcoin and US dollar–denominated liquidity is shaping how crypto markets behave in 2026. According to Sam Lyman, head of research at the Bitcoin Policy Institute, the coexistence of BTC with dollar-backed stablecoins like USDT has become a mutually reinforcing dynamic that benefits both sides of the ecosystem. In practice, the leading BTC trading pairs are anchored in USD, a reality that helps sustain demand for dollar liquidity even as crypto markets expand globally.

More than a simple trading pattern, the dynamic sits at the intersection of market structure, regulation, and geopolitics. Lyman argues that the BTC-dollar relationship mirrors the broader role the dollar plays in commodity and macro markets — a framework that has long been embedded in the way crypto trades are priced and settled. In his view, Bitcoin’s strongest leverage point remains its liquidity expressed in dollars, which challenges the notion that BTC could undermine the dollar system. The observation is supported by data showing the dominance of dollar-based markets for Bitcoin, a trend that Kaiko highlighted in its 2024 analyses of on-chain and off-chain activity.

Key takeaways

  • Bitcoin’s liquidity core is anchored to USD trading, with BTC/USD pairs supported by stablecoins like USDT that maintain dollar-denominated rails for buyers and sellers.
  • Regulatory direction in the United States — notably GENIUS Act-aligned stablecoin policy — could shape how dollar-pegged tokens operate within crypto markets without sacrificing the dollar’s role in liquidity provision.
  • China’s stance remains a paradox: while Beijing reiterates a ban on permissionless crypto activity and push for a CBDC, Chinese mining pools still command a sizable share of global hashrate, underscoring control dynamics beyond formal prohibitions.
  • The rise of the digital yuan and capital controls continue to influence cross-border flows, illustrating how policy choices in major economies can impact crypto market structure and risk exposure for miners and validators.
  • Investor and builder attention should focus on regulatory clarity, mining geography shifts, and the evolving balance between centralized fiat rails and permissionless borderless networks.

The dollar–Bitcoin nexus in a changing regulatory and geopolitical landscape

At the heart of the current narrative is the “symbiotic” relationship between Bitcoin and dollar liquidity. Lyman notes that the largest BTC trading pair remains USD-based, a reality that makes dollar stability and regulatory certainty influential for crypto markets. Stablecoins pegged to the dollar, particularly USDT, act as a bridge for traders seeking quick exposure to BTC without stepping into traditional bank rails. This arrangement creates a feedback loop: as more capital flows into dollar-denominated BTC markets, the dollar’s role in crypto deepens, and stablecoins gain further prominence as liquidity vehicles.

The discussion around stablecoins is not purely technical; it sits squarely within a regulatory framework that currently anchors many of the market’s most important rails. Advocates of prudent regulation argue that stablecoins, if backed by robust reserves and transparent governance, can provide stable liquidity channels that bolster market depth and resilience. In this framing, policy proposals such as the GENIUS Act aim to codify oversight and guardrails for stablecoins. For observers and participants, the question is not whether stablecoins are here to stay, but how the rules of the road will shape innovation, settlement speed, and cross-border payments in the crypto economy.

On the data side, independent researchers have flagged the dollar’s dominance in BTC markets in 2024, with analyses from Kaiko illustrating the extent to which dollar-based trading pairs anchor liquidity. This backdrop matters for traders who rely on predictable settlement assets, and it informs long-term bets on infrastructure that underpins dollar-denominated trading, such as stablecoin liquidity pools, exchange markets, and on-chain custody solutions.

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Policy, control, and China’s ongoing paradox

Policy tensions also extend beyond the United States. China has repeatedly framed Bitcoin and stablecoins as threats to the country’s capital controls, a central feature of its economic management. Lyman emphasizes that Beijing’s approach reflects a broader objective: to keep financial activity within the country’s regulatory perimeter while guiding capital flows through a state-backed mechanism. In 2025, China reaffirmed its stance on stablecoins even as it advances a separate digital yuan project designed to exert tighter control over foreign exchange and capital movements.

Yet regulatory bans have not eliminated crypto activity in practice. While China maintains a blanket ban on Bitcoin mining and other permissionless crypto activities, mining pools within the country continue to represent a substantial portion of the global hashrate. Hashrate Index places Chinese pools at more than 36% of the worldwide hashrate, underscoring a disconnect between formal prohibitions and actual network participation. The outcome is a nuanced mining map: a political impulse to restrict is in tension with economic incentives and cross-border capital flows that crypto miners leverage wherever policy allows.

These dynamics intersect with the broader push toward a centralized, programmable digital currency framework. The CBDC landscape, led by China’s digital yuan, is often cited as a tool for precision control over capital movements and monetary policy transmission. Proponents argue CBDCs can offer programmable features that improve settlement efficiency and cross-border interoperability, while critics warn they could erode financial privacy and curb the openness that has driven permissionless innovation in crypto markets.

What investors and builders should watch next

As policy debates evolve in the US and abroad, the crypto market stands at a crossroads where liquidity, regulatory clarity, and governance will shape momentum more than any single price move. The dollar-centered liquidity regime is likely to persist in the near term, reinforcing the role of dollar-denominated stablecoins as the primary conduit for BTC trading. For investors, the key questions relate to how changes in stablecoin regulation could affect market depth, settlement speed, and counterparty risk in major exchanges and over-the-counter desks.

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From a construction and infrastructure perspective, the ongoing emphasis on stablecoin resilience, transparent reserve management, and compliance will influence which platforms gain network effects. Traders and institutions may prioritize products and services that align with GENIUS Act principles—namely, clarity around custody, reserve standards, and reporting—without compromising the efficiency that makes USD-based crypto liquidity compelling.

On the geopolitical front, observers should monitor how the CBDC push interacts with global capital flows and whether central banks will pursue interoperability initiatives that either complement or complicate existing crypto rails. The tension between centralized, programmable fiat and permissionless networks will continue to shape debates about financial sovereignty, market accessibility, and the future of cross-border payments.

For now, the market appears to be navigating a period of regulatory refinement and strategic repositioning. The next few quarters will test how well dollar-denominated liquidity and stablecoins can adapt to evolving rules and shifting mining geographies, while the ongoing CBDC experiments and capital-control policies will help illuminate the long-term balance between centralized control and decentralized finance.

Readers should watch for updates on GENIUS Act developments and any concrete regulatory guidance around stablecoins, as well as continued data on mining geography and hashrate distribution. These factors will shape liquidity availability, market depth, and the resilience of the BTC ecosystem as it matures within a complex regulatory and geopolitical landscape.

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Risk & affiliate notice: Crypto assets are volatile and capital is at risk. This article may contain affiliate links. Read full disclosure

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Crypto World

Crypto Market Loses $1.5 Trillion in Two Quarters: Is the Worst Still Ahead for Bitcoin?

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR:

  • Crypto markets shed over $1.5 trillion across Q4 2025 and Q1 2026, with Bitcoin driving nearly 60% of total losses.
  • Gold outperformed Bitcoin by nearly 40% in recent months, a strong signal that large capital favors safety over risk assets.
  • Bitcoin has traded flat between $65K and $69K for weeks despite rising oil prices and growing geopolitical tensions globally.
  • BTC dominance and the gold-to-Bitcoin ratio remain the two most critical metrics to watch for early signs of market recovery.

The crypto market sits at a crossroads as Bitcoin consolidates within a narrow range. Over the past two quarters, digital assets lost over $1.5 trillion in total market value.

Institutional capital has pulled back, and macro forces are weighing on risk appetite. Traders are watching carefully as the market weighs potential recovery against further downside, with conditions outside crypto likely determining the next major move.

Bitcoin’s Recent Losses Point to Broader Institutional Retreat

Bitcoin led the market lower across Q4 2025 and Q1 2026. Combined, those two quarters wiped out roughly 45% in value from the broader market. BTC accounted for nearly 60% of total losses recorded during that period.

That detail changes how analysts read the sell-off. When Bitcoin drives the drawdown, it is not retail traders dumping speculative tokens. It reflects real capital reducing exposure across the entire asset class.

As MR Black noted on X, “When BTC is leading the drawdown, it isn’t a sector rotation. It isn’t retail panic selling memecoins.” That observation carries weight, especially for investors trying to time a re-entry into the market.

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Gold’s Outperformance Sends a Clear Risk-Off Signal

The XAU/BTC ratio has shifted nearly 40% in gold’s favor over recent months. Gold offers no yield and carries no technological narrative. Its strength signals that large capital holders are choosing preservation over growth.

That ratio matters because it reflects institutional psychology, not retail sentiment. When the biggest players move into gold, it means confidence in risk assets remains low. Crypto has not yet shown the kind of recovery that would pull that capital back.

However, analysts note that this ratio could become one of the first signs of a turnaround. When it begins reversing, it may indicate that risk appetite is returning and that institutional money is ready to rotate back into Bitcoin.

Sideways Price Action Raises Questions About What Comes Next

Bitcoin has traded between roughly $65,000 and $69,000 for several weeks. That range has held despite rising geopolitical tension, higher oil prices, and growing inflation concerns. Normally, any of those factors would trigger sharp movement in crypto markets.

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The muted reaction suggests one of two things. Either the market has already absorbed much of the uncertainty, or it remains so undecided that it needs a strong external trigger to break either way. That ambiguity makes directional calls difficult right now.

BTC dominance remains a key metric to track through this period. When dominance rises, capital clusters in Bitcoin and altcoins suffer.

When it falls, capital rotates into higher-risk assets, and historically that rotation has preceded some of the strongest alt-season runs in a given cycle.

The path forward for crypto depends heavily on macro developments in the coming weeks. If oil cools and geopolitical risks ease, the current consolidation could prove to be a base for recovery.

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If conditions worsen, further downside remains possible, with altcoins likely absorbing the most pressure. Traders watching signals beyond the price chart may be better positioned for whatever move comes next.

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Attorney Says Drift Protocol May Be Liable for Damages After Attack

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Cybercrime, North Korea, Cybersecurity, Hacks, Lazarus Group

The hack of the Solana-based decentralized finance (DeFi) platform Drift Protocol could have been prevented if standard operational security procedures were followed by the Drift team, and may constitute “civil negligence,” according to attorney Ariel Givner.

“In plain terms, civil negligence means they failed their basic duty to protect the money they were managing,” Givner said in response to the post-mortem update provided by the Drift team and how it handled Wednesday’s $280 million exploit.

The Drift team failed to follow “basic” security procedures, including keeping signing keys on separate, “air-gapped” systems that are never used for developer work, and conducting due diligence on blockchain developers met through industry conferences.

Cybercrime, North Korea, Cybersecurity, Hacks, Lazarus Group
Source: Ariel Givner

“Every serious project knows this. Drift didn’t follow it,” she said, adding, “They knew crypto is full of hackers, especially North Korean state teams.” Givner continued: 

“Yet their team spent months chatting on Telegram, meeting strangers at conferences, opening sketchy code repos, and downloading fake apps on devices tied to multisignature controls.”

Advertisements for class action lawsuits against Drift Protocol are already circulating, she said. Cointelegraph reached out to the Drift Team but did not receive a response by the time of publication.

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Cybercrime, North Korea, Cybersecurity, Hacks, Lazarus Group
Source: Ariel Givner

The incident is a reminder that social engineering and project infiltration by malicious actors are major attack vectors for cryptocurrency developers that could drain user funds and permanently erode customer trust in compromised platforms.

Related: Drift explains $280M exploit as critics question Circle over USDC freeze

Drift Protocol says attack took “months” of planning

The Drift Protocol team published an update on Saturday outlining how the exploit occurred and claimed that the attackers planned the attack for six months before execution.

Threat actors first approached the Drift team at a “major” crypto industry conference in October 2025, expressing interest in protocol integrations and collaboration.

The malicious actors continued to build rapport with the Drift development team in the ensuing six months, and once enough trust was built, they began sending the Drift team malicious links and embedding malware that compromised developer machines.

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These individuals, who are suspected of working for North Korea state-affiliated hackers and physically approached the Drift developers, were not North Korean nationals, according to the Drift team.

Drift said, with “medium-high confidence,” that the exploit was carried out by the same actors behind the October 2024 Radiant Capital hack.

In December 2024, Radiant Capital said the exploit was carried out through malware sent via Telegram from a North Korea-aligned hacker posing as an ex-contractor. 

Magazine: Meet the hackers who can help get your crypto life savings back

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