The $292 million exploit of Kelp DAO and the subsequent fallout across crypto lending markets hit decentralized finance (DeFi) at a pivotal moment.

Just as Wall Street firms pushed deeper into onchain markets, the incident has exposed how fragile parts of the system remain and how much work is left before institutions can scale their exposure.

In the weeks leading up to the hack, private credit giant Apollo Global Management (APO), which oversees $900 billion, inked a strategic partnership with Morpho to support lending markets with an option to acquire governance tokens of the protocol, too. Around the same time, the world’s largest asset manager BlackRock (BK) brought its tokenized money market fund onto decentralized exchange Uniswap.

The exploit is unlikely to derail traditional finance (TradFi) pushing deeper into onchain finance, industry insiders argued, but highlighted what DeFi needs to fix before larger pools of capital can move in.

‘Speed bump, not roadblock’

“DeFi platforms are pioneering new ways for investors to utilize their capital more efficiently,” said Nick Cherney, head of innovation at Janus Henderson, an asset manager that oversees about $500 billion in assets. “Pioneers will always face risks.”

Failures like the Kelp DAO exploit can slow momentum, Cherney said, but they also force improvements. Over time, those pressure points tend to produce stronger systems, he argued.

“This is a speed bump for sure, but not a roadblock,” Cherney said.

The longer-term shift, in his view, is already taking shape. Tokenized real-world assets — such as funds, bonds and credit — are starting to anchor DeFi markets, bringing legal frameworks and risk controls that traditional finance has refined over decades.

Episodes like this one could accelerate that transition, Cherney said.

Raising the security floor

For security specialists, the lesson is more direct: the current setup is not enough.

“DeFi and onchain asset management operate in a highly adversarial environment,” said Paul Vijender, head of security at Gauntlet. “Systems are only as secure as their weakest links.”

That reality is pushing the industry toward more comprehensive defenses. Zero-trust architectures — where no part of the system is assumed safe — are becoming harder to avoid, he argued.

In practice, that means layering protections: continuous monitoring, stricter controls, built-in redundancies. Not relying on a single safeguard.

Evgeny Gokhberg, founder of digital asset manager Re7 Capital, said many of the industry’s “best practices” now need to become baseline requirements.

That includes timelocks on key governance actions, stricter multi-signature controls, tighter collateral standards and stronger safeguards around bridges — one of the most common points of failure in DeFi.

“The industry needs to treat them as baseline requirements, not best practice,” he said.

Toward institutional-grade DeFi

Bhaji Illuminati, CEO of Centrifuge Labs, sees the shift as part of a broader compression of financial evolution.

“TradFi has had decades to build up layers of protections,” she said. “DeFi is doing that too, but on a vastly accelerated timeline.”

For institutions to allocate capital at scale, she argued, a few conditions need to be met.

First is clarity: investors need to know exactly what they own, with verifiable collateral and legal structures that map to real-world risk.

Second is reliability: smart contracts, oracles and governance processes must behave in predictable, auditable ways.

Third is liquidity that holds up under pressure, allowing capital to move in and out without distorting markets.

“Being open and secure is not mutually exclusive,” Illuminati said. “The goal is to make trust explicit and verifiable.”

“Going forward, every layer of the DeFi stack needs to make security their number one priority,”she said. “This is becoming increasingly important in the age of artificial intelligence.”

Read more: AI is making crypto’s security problem even worse, Ledger CTO warns

Prediction markets are shifting from one-off bets tied to major events into platforms driven by daily user engagement, according to a new report from Bitget Wallet in partnership with Polymarket.

Trading volume on Polymarket reached $25.7 billion in March, but the report points to a deeper change in behavior. Based on activity from 1.29 million wallets in the first quarter, users are returning more often and participating across a wider range of markets, from crypto to sports to politics.

The data suggest growth is being driven by frequency rather than trade size. More than 82% of users traded less than $10,000 during the quarter, a sign the market remains dominated by retail participants. Instead of placing large, infrequent bets, users are engaging in smaller trades more regularly.

“Prediction markets are becoming less about capital and more about consistent, repeated actions,” said Alvin Kan, Bitget Wallet’s chief operating officer. “What we’re seeing is a behavioral shift: The market is scaling with more taps per day, not bigger trades.”

Crypto remains the primary entry point for new users, accounting for nearly 40% of early activity. Its continuous trading and familiar price movements make it a natural starting place. But as users become more active, participation shifts toward markets tied to real-world events.

The report frames this evolution as a structural change. Prediction markets are no longer driven solely by spikes around major occurrences like elections. Instead, they are becoming continuous systems where users return regularly to track and respond to changing probabilities.

“As prediction markets evolve into core financial infrastructure, distribution becomes as important as the underlying market itself,” said Elden Mirzoian, director of growth and partnerships at Polymarket. “We’re seeing a shift from episodic trading to more continuous engagement.”

That shift is also changing how these markets are used. Prices increasingly reflect real-time expectations around macroeconomic trends, politics and culture, and are beginning to appear alongside traditional data sources in media and financial analysis.

Growth has accelerated quickly. Monthly trading volume has climbed from about $1.2 billion in 2025 to more than $20 billion in early 2026, while active wallets have more than tripled in six months. Industry projections cited in the report estimate the market could reach $240 billion in volume this year, with a longer-term path toward $1 trillion.

As participation increases, the focus is moving toward access and usability. Wallets are emerging as key entry points, helping users discover markets and interact with them in real time.

Bitcoin regained above the $78,000 threshold as broader risk-on sentiment lifted equities to fresh highs, but bets in the options market point to a tempered near-term outlook. Derivatives data show traders pricing roughly a one-in-four chance that BTC will trade above $84,000 by the end of May, even as spot buyers and corporate treasury purchases keep demand buoyant.

In the options arena, a May 29 call with an $84,000 strike traded at about 0.0136 BTC, roughly $1,060 at the time, signaling a modest probability of an 8% month-on-month gain. Over the same horizon, put options have maintained a premium relative to calls, underscoring demand for downside protection. Meanwhile, the 2-month Bitcoin futures basis has shown weakness, suggesting limited appetite for bullish leverage as BTC also contends with a 12% decline year-to-date in 2026.

Key takeaways

• Options markets assign roughly a 25% probability of BTC trading above $84,000 by the end of May, reflecting a cautious stance on near-term upside.
• Bitcoin futures basis has weakened over the past 30 days, indicating softer demand for leveraged bets even as spot demand remains resilient.
• US-listed spot Bitcoin ETFs have drawn steady inflows, with March and April net inflows contributing to a total asset base above $100 billion.
• Notable corporate accumulation is under way, with major buyers adding thousands of BTC and collectively equating to more than five months of projected future mining supply, dampening potential sell pressure.

Derivatives signal a cautious path to a breakout

Derivatives data reveal a market that remains skeptical about an immediate upside breakout, even as the spot market has shown strength. The May 29 $84,000 call, despite its modest price, implies an 8% move target within 27 days, translating to a 25% probability of BTC clearing the level by month-end. This aligns with a broader pattern where institutions hedge against sudden pullbacks even as they remain willing to take on selective exposure.

At the same time, the delta skew—an indicator of demand for puts versus calls—has stayed above the typical neutral threshold, suggesting professionals have been willing to pay more for downside protection. This elevated skew, together with a flatter or weaker 2-month futures basis, points to a market that prefers risk management over aggressive long leverage in the near term.

Data sources tracking these dynamics underscore a nuanced picture: while options traders are cautious about a rapid rally, the futures landscape does not negate a potential move higher. The divergence between derivatives sentiment and the strength of spot demand is a hallmark of a market balancing risk and opportunity rather than pursuing a one-way rally.

Spot ETF inflows and corporate buying bolster demand resilience

Despite cautious derivatives signals, institutional demand for spot exposure continues to support Bitcoin’s price profile. So-called US-listed spot Bitcoin exchange-traded funds have amassed meaningful inflows, with March net inflows around $1.3 billion and April inflows near $2 billion. Collectively, these inflows have driven total asset levels beyond the $100 billion mark, highlighting sustained institutional interest beyond the usual retail-driven volatility.

Beyond funds, corporate treasuries have stepped in as well. In the past month, several publicly traded firms disclosed substantial BTC acquisitions to bolster reserves. Strategy (MSTR) added 56,235 BTC, Metaplanet acquired 5,075 BTC, and Strive (ASST) purchased 929 BTC. Taken together, these three entities have accumulated more BTC than about five months of projected future mining supply, a move that significantly reduces the potential for near-term selling pressure from corporate coffers.

Analysts argue that this combination—strong spot ETF inflows and deliberate corporate accumulation—helps absorb mine supply and provides a steady bid under prices, even when the options market signals caution. In this context, the risk-reward dynamic for investors appears to hinge less on frenetic leveraged bets and more on sustained demand from institutions and corporations that view Bitcoin as a strategic balance-sheet asset.

What this means for traders and the broader market

For traders, the current mix of signals suggests a potential pause or consolidation rather than an immediate sprint to new highs. The modest probability of breaking above $84,000 by month-end, coupled with a softening in futures basis, points to a scenario where upside remains possible but not assured, especially if macro risk sentiment shifts or if spot demand eases.

For miners and developers, the continued absorption of mining supply via corporate buys and ETF inflows could lessen the likelihood of sudden supply-driven sell-offs. The accumulation trend reduces the risk that a large, forced selling wave erupts from balance-sheet liquidations and could contribute to price stability amid episodic volatility in derivatives markets.

Looking ahead, investors will be watching whether ETF inflows accelerate again in the coming weeks and whether corporate allocations maintain their pace. Any uptick in spot demand that persists alongside robust ETF inflows could push the market closer to the $84,000 milestone or higher, even if options traders remain selective about the timing of that move.

Additionally, the trajectory of the broader macro backdrop—risk appetite, central-bank policy expectations, and equity market momentum—will continue to shape Bitcoin’s price path. If risk-on sentiment maintains its grip and buyers remain present at the benchmark levels, the market could still surprise on the upside despite the cautious tone reflected in derivatives data.

Looking to the next few weeks, market participants should monitor ETF flow data, large-block corporate purchases, and evolving options and futures dynamics. The interplay between these factors will help determine whether Bitcoin transitions from a cautious, risk-managed rally to a more sustained ascent or resumes a period of consolidation as external catalysts unfold.

The US Senate voted unanimously to bar all senators and their staff from placing bets on political prediction market platforms including Polymarket and Kalshi, with the resolution authored by Republican Senator Bernie Moreno, who also set the end-of-May CLARITY Act deadline.

The Senate voted unanimously to pass the Senate ban on prediction market trading by senators and staff on May 1. As crypto.news reported, the CFTC has been simultaneously locked in a legal battle with New York, Illinois, Arizona, and Connecticut over prediction market jurisdiction, making the unanimous Senate vote a significant political signal that Congress views political event trading as categorically different from the commercial prediction market activity the CFTC has been defending. Kalshi confirmed its response to the resolution by saying it already proactively blocks members of Congress, adding: “This is a great step to increase trust in markets.” Crypto Integrated reported that the resolution bars senators and their staff from betting on political events on platforms like Polymarket and Kalshi, which had become a visible flashpoint after prediction market data was shown to move in ways that correlated with legislative outcomes before their public announcement.

As crypto.news documented, the CFTC has been arguing that prediction markets on political events are legitimate financial instruments subject to its jurisdiction rather than gambling. As crypto.news tracked, the resolution emerged from a broader political conversation about whether legislators with access to non-public information have an unfair advantage on prediction platforms, a dynamic that undermines the credibility of markets designed to aggregate distributed knowledge.

Tether posted $1.04 billion in Q1 2026 net profit and a record Tether profit reserve buffer of $8.23 billion, backed primarily by $141 billion in US Treasuries, in a quarterly attestation published May 1 by accounting firm BDO, its most detailed financial disclosure to date.

Tether profit and reserve figures were published in the company’s Q1 2026 attestation on May 1. The official Tether press release confirmed that the attestation was prepared by BDO and showed a net profit of approximately $1.04 billion and an excess reserve buffer of $8.23 billion. “Our responsibility is to make sure USDT works without compromise,” said CEO Paolo Ardoino. “That means building a system that behaves the same way in any market condition, not just when things are stable.” The Q1 profit is driven by Tether’s $141 billion Treasury position, which at prevailing Treasury bill rates above 4% would generate approximately $4 billion in annualised interest income.

The timing of the disclosure is politically consequential. As crypto.news reported, US banks have been pushing hard to slow the GENIUS Act rulemaking, partly because the act would require stablecoin issuers to hold fully verified dollar reserves. Tether has long resisted full disclosure and has never produced a Big Four audit. The KPMG engagement announced in March 2026 is the clearest sign yet that the company is preparing for the formal audit standard the GENIUS Act is expected to require. As crypto.news documented, the FDIC proposed GENIUS Act rules requiring stablecoin issuers to maintain 1:1 reserves backed by cash or highly liquid instruments, a standard Tether’s reserve breakdown technically meets but which requires full audit verification rather than an attestation to satisfy regulators and institutional counterparties. As crypto.news tracked, the GENIUS Act was signed into law in July 2025 and is scheduled to take full effect no later than January 18, 2027, giving Tether a finite runway to produce verified compliance.

President Trump signed an executive order on April 30 directing the Labor Department to allow Trump retirement account access to cryptocurrency, private equity, and other alternative assets inside US 401(k) plans, targeting the roughly $12.5 trillion defined-contribution market that has been largely closed to digital assets under existing ERISA guidance.

President Trump signed the Trump retirement executive order on April 30, directing the Labor Department and other federal agencies to revise ERISA guidance to allow retirement plan fiduciaries to offer cryptocurrency and alternative assets as investment options. CNBC reported that the order follows the Labor Department’s earlier rescission of Biden-era guidance that had discouraged crypto in retirement plans, calling the prior stance one that “placed a thumb on the scale.” Trump said at a White House press conference: “Low-income Americans will be eligible to receive up to $1,000 per year in matching funds deposited directly into their accounts.” Chavez-DeRemer said in a statement that “the federal government should not be making retirement investment decisions for hardworking Americans, including decisions regarding alternative assets.”

The policy targets the $12.5 trillion sitting in defined-contribution plans. Under the order, the Labor Department must revisit how plan fiduciaries are permitted to evaluate alternative assets, the SEC must assess enabling access for 401(k) investors, and the agencies must coordinate before issuing new guidance. As crypto.news reported, Coinbase’s research head David Duong had projected in January that stablecoins and tokenised products would become central to institutional crypto adoption in 2026, with regulatory clarity from the GENIUS Act the key enabling condition. A retirement account opening for crypto products directly extends that narrative by targeting retail savers rather than institutional allocators. As crypto.news documented, the Trump administration has been systematically building its institutional position in Bitcoin throughout 2026, with the strategic reserve, classified Pentagon programs, and now the retirement account access order representing three separate policy vectors aimed at embedding Bitcoin and crypto into the mainstream US financial system. As crypto.news tracked, ERISA rules could still create implementation delays, as employers will need time to revise plan options and fiduciaries will need guidance on how to meet their duty of prudence when offering volatile alternative assets alongside traditional stock and bond funds.

Defense Secretary Pete Hegseth told the House Armed Services Committee on April 30 that the Pentagon is running classified Bitcoin programs on two operational tracks — enabling the technology and countering it — and that those efforts provide the United States leverage against China “in a lot of different scenarios.”

Pete Hegseth made the remarks at an April 30 House Armed Services Committee hearing in response to questions from Texas Republican Rep. Lance Gooden about whether the US is securing a strategic advantage in Bitcoin. Crypto Integrated confirmed the confirmation of the classified effort, with Hegseth telling lawmakers: “I am a long enthusiast of Bitcoin and crypto potential. A lot of the things we are doing, enabling it or defeating it, are classified efforts that are ongoing inside our department, which do provide us a lot of leverage in a lot of different scenarios.” Gooden said Bitcoin has “evolved from a fringe asset into a matter of national security,” pointing to Iran’s Bitcoin toll at the Strait of Hormuz, North Korean ransomware activity, and China’s accumulation strategies.

As crypto.news reported, INDOPACOM Admiral Paparo confirmed in earlier Senate testimony that US Indo-Pacific Command is running a live Bitcoin node and conducting operational protocol tests, describing Bitcoin as a computer science system built on cryptography and proof-of-work with potential to impose costs in cybersecurity environments. The joint Hegseth-Paparo picture represents the most explicit public framing of Bitcoin as a defense instrument that the US government has produced. As crypto.news documented, Trump signed an executive order establishing a US strategic Bitcoin reserve earlier in 2026, seeded with approximately 200,000 government-held coins from forfeitures. As crypto.news tracked, Iran’s decision to demand Bitcoin for Strait of Hormuz transit directly linked the cryptocurrency to the active military conflict that has been Hegseth’s primary operational theatre throughout 2026. DL News noted that Russia now accounts for approximately 16% of global Bitcoin mining hashrate, while China retains roughly 12% through offshore operations, positioning Bitcoin mining geography as a direct strategic variable in the US-China competition Hegseth described.

Pi Network confirmed its sponsorship of Consensus 2026 in Miami on May 5 to 7, with co-founders Dr. Chengdiao Fan and Nicolas Kokkalis each scheduled to speak at the Convergence Stage, marking the project’s most prominent mainstream industry appearance as its Protocol 23 smart contract launch on May 11 approaches.

Pi Network confirmed it is an official sponsor of Consensus 2026 in Miami. As crypto.news reported, both co-founders are scheduled as named speakers at the Convergence Stage, with Dr. Fan addressing the intersection of verified identity and the AI era and Dr. Kokkalis joining a panel directly on the problem of distinguishing real humans from AI-generated accounts online. The event runs May 5 to 7 and is expected to draw over 20,000 attendees including institutional investors, developers, and government representatives.

The Pi Core Team posted on April 28: “526 million human KYC validation tasks have already been completed on Pi. By over 1 million verified people. AI is advancing quickly. But the hardest part of building reliable systems is still deeply human.” Fan’s Consensus session positions that verified infrastructure as a direct answer to one of the most pressing AI governance challenges of 2026.

As crypto.news documented, Protocol 22.1 deadline passed April 27, disconnecting non-compliant nodes and laying the technical foundation for Protocol 23. The May 11 Protocol 23 date creates a concentrated sequence: the largest public stage appearance in Pi’s history on May 6 and 7, followed four days later by the upgrade that transforms Pi from a mobile mining network into a programmable blockchain. As crypto.news tracked, PI climbed more than 5% on April 29 as traders positioned ahead of the Consensus week, with the token’s pattern of conference-driven price moves followed by selloffs a recurring dynamic the Protocol 23 substance will need to break.