Crypto World
House Democrats Grill Bessent Over Trump-Linked Crypto Bank Bid
Democrats in the US House of Representatives are pressing Treasury Secretary Scott Bessent over how regulators are handling World Liberty Financial’s bid for a national trust bank charter to issue a dollar-backed token.
In a letter on Thursday, 41 House Financial Services Committee Democrats led by Representative Gregory Meeks cited systemic risk, foreign ownership and potential political pressure on the bank chartering process.
They asked Bessent to explain what safeguards exist to prevent foreign government officials or politically connected investors from using the charter process to gain leverage over the US financial system.
The lawmakers pointed to reporting that a senior royal from the United Arab Emirates quietly acquired almost half of World Liberty Financial for about $500 million, including a reported $187 million flowing to Trump-affiliated entities, while the company pursued a national trust bank charter with the Office of the Comptroller of the Currency (OCC).
They argued that the combination of digital asset trust structures, untested liquidity and resolution frameworks and foreign political interests raised questions that regulators “cannot afford to sidestep.”
Related: White House floats limited stablecoin rewards in third crypto, bank meeting
Democrats also questioned whether Executive Order 14215, which they say pulled traditionally independent financial regulators into closer White House oversight, could compromise the OCC’s autonomy in deciding on World Liberty’s application.
The letter asks Bessent to detail the role of the White House, the Office of Management and Budget, and the Treasury Department in OCC charter decisions, and to respond in writing by Thursday.
World Liberty Financial’s high profile
The letter arrives as World Liberty Financial and other Trump-aligned crypto initiatives raise their profile in Washington and on Wall Street, including through a well-attended crypto event at Trump’s Mar-a-Lago club on Wednesday that drew crypto and traditional finance executives, including Coinbase CEO Brian Armstrong, Binance co-founder Changpeng Zhao and Goldman Sachs CEO David Solomon.
In the run-up to the event, the WLFI token associated with the Trump family-aligned platform recorded a 23% gain as organizers promoted the event as a venue to spotlight World Liberty’s roadmap and its role in the broader crypto market.
No bailout of “cryptocurrency billionaires”
Separately, Senate Banking Committee Democratic Senator Elizabeth Warren urged Bessent and Federal Reserve Chair Jerome Powell on Wednesday not to deploy taxpayer-backed support to stabilize crypto markets. She warned that any bailout of “cryptocurrency billionaires” would create a moral hazard and shift losses from large investors onto taxpayers.
Warren’s letter framed potential rescue measures for major crypto firms and investors as a test of whether policymakers would extend bank-style backstops to the digital asset sector, as regulators weigh new charters and oversight for crypto-linked institutions.
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A US federal judge in Tennessee granted Kalshi a temporary reprieve from state gambling enforcement, allowing the prediction-market operator to continue offering sports-related event contracts while litigation unfolds. Judge Aleta Trauger of the US District Court for the Middle District of Tennessee issued the preliminary injunction on Thursday, siding with Kalshi’s argument that Tennessee’s attempt to regulate these markets runs afoul of federal commodities law. The court classified Kalshi’s sports event contracts as swaps under the Commodity Exchange Act, a designation that confers exclusive jurisdiction to the US Commodity Futures Trading Commission. The order also requires Kalshi to post a $500,000 bond as the case advances, and targets state officials rather than the Tennessee Sports Wagering Council itself. The ruling was issued in a decision linked to CourtListener, which records the docket and order for KalshiEx LLC v. OrgEl. An earlier temporary restraining order had paused enforcement of a cease-and-desist letter, which had demanded Kalshi halt its sports contracts and reimburse deposits.
Key takeaways
- Kalshi can continue offering sports-related event contracts in Tennessee while the case proceeds, per the preliminary injunction.
- The court found Kalshi’s sports event contracts are “swaps” under the Commodity Exchange Act, implying federal preemption of Tennessee’s enforcement efforts.
- The injunction extends to named state officials; the Tennessee Sports Wagering Council was dismissed on sovereign-immunity grounds, with Kalshi posting a $500,000 bond.
- The decision reflects a broader clash over how event contracts should be regulated in the United States and underscores potential federal primacy in this space.
- The CFTC has signaled its stance, filing a friend-of-the-court brief to defend exclusive federal jurisdiction over prediction markets.
- Kalshi’s broader legal activity spans multiple states, including actions in Nevada, New Jersey, and Connecticut, where regulators have pursued similar enforcement actions.
Market context: The Tennessee ruling arrives amid a broader regulatory tug-of-war over prediction markets in the United States, with federal authorities stressing federal preemption and states pursuing licensing or enforcement actions. The CFTC’s reiteration of its exclusive jurisdiction over swaps used in prediction markets could influence how these platforms operate nationwide, particularly as parallel challenges play out in other jurisdictions.
Why it matters
The dispute sits at the intersection of commodities law and state gaming authority, highlighting how federal rules may constrain state attempts to police prediction markets. If federal preemption withstands further scrutiny, Kalshi and similar platforms could enjoy more predictable operation across multiple states, reducing the friction created by a patchwork of state bans or cease-and-desist actions. The ruling also clarifies how courts may interpret Kalshi’s products — not as conventional gambling, but as derivatives that fall under the CEA’s remit when tied to sporting events and outcomes.
The decision reinforces the Commission’s asserted primacy in this space. In a video message, CFTC Chair Michael Selig explained that the agency has filed a friend-of-the-court brief to defend the “exclusive jurisdiction” over prediction markets, signaling that federal authorities intend to push back against attempts to regulate these markets at the state level. This stance aligns with ongoing efforts to delineate the boundaries between state gaming regulation and federal financial-market oversight, a conversation that has become increasingly salient as the market for digital derivatives expands.
For Kalshi, the Tennessee result potentially broadens the strategic pathway for its litigation, while for state regulators, it underscores the risk of losing enforcement leverage where federal law governs the core mechanics of these products. The case is part of a wider pattern in which courts have issued divergent rulings as a series of Kalshi-related challenges wind through different state jurisdictions, including Nevada, New Jersey, and Connecticut, each with its own regulatory posture. Earlier coverage of Nevada’s action against Kalshi, for example, framed these tensions as a stress test for state cease-and-desist authority in the face of federal preemption arguments. See also related reporting on developments in New Jersey and Connecticut as courts weighed similar injunctions and relief.
In practical terms, traders and platform operators watch how courts navigate the boundary between gambling regulation and derivative markets. The Tennessee injunction does not settle whether prediction markets are illegal under state law; rather, it pauses enforcement while the federal question plays out. The decision may encourage other platforms to pursue federal preemption defenses, potentially slowing the momentum of state-level crackdowns that have persisted in various forms across the country.
For observers and participants, the evolving landscape underscores the need to monitor both court filings and regulator communications. The CourtListener docket in KalshiEx LLC v. OrgEl remains a primary resource for the latest procedural developments, while federal statements from the CFTC provide a potential compass for how courts may approach similar cases in the future. The interplay between state actions and federal oversight will likely shape the pace and scope of prediction-market activity in the United States over the coming months.
What to watch next
- Await the merits briefing schedule and any subsequent rulings on the core preemption question.
- Follow Kalshi’s ongoing obligation to post the $500,000 bond and any related conditions tied to the injunction.
- Monitor how other Kalshi-related actions in Nevada, New Jersey, and Connecticut proceed, including any further court rulings or settlements.
- Track CFTC activity and new briefs or statements that could affect the federal-state regulatory balance for prediction markets.
Sources & verification
- Court filing: preliminary injunction and docket for KalshiEx LLC v. OrgEl, as cataloged on CourtListener (CourtListener).
- CFTC activity: chair statements on exclusive jurisdiction over prediction markets and the agency’s brief supporting federal oversight.
- Related state actions and coverage in Nevada, New Jersey, and Connecticut assessing Kalshi’s cease-and-desist actions (as reported in contemporaneous coverage).
- Context from prior enforcement actions and injunctions regarding Kalshi’s operations in various states referenced in the docket and public filings.
Judicial ruling redefines federal preemption for prediction markets
A Tennessee federal judge has placed a temporary hold on state enforcement against Kalshi’s sports-prediction contracts, carving out a narrow lane for the platform to operate as legal under the federal framework while the case advances. The decision rests on a careful reading of the Commodity Exchange Act (CEA) and its reach over new financial products tied to sporting events. By characterizing Kalshi’s contracts as swaps, the court asserts that the CFTC—not state gaming authorities—should regulate the core mechanics of these markets. That distinction matters not only for Kalshi but for other platforms seeking a stable operating environment in a crowded regulatory landscape.
The ruling underscores a broader jurisprudential trend: federal preemption arguments are increasingly central in disputes surrounding novel financial instruments that resemble both gambling and securities. The court’s analysis hinges on whether the state can effectively regulate something the federal government has already deemed to fall under its exclusive jurisdiction. In this case, the court found a strong likelihood that Kalshi will succeed on the merits of preemption, marking a potential inflection point for how similar products are treated across multiple jurisdictions.
As Kalshi proceeds with the litigation, the decision sets up a structured interaction between state cease-and-desist actions and federal regulatory oversight. The injunction, which binds identified state officials and not the entire state agency, reflects a cautious approach aimed at preserving room for further judicial review. The $500,000 bond requirement also serves as a tangible compliance mechanism, ensuring dispute-related costs are covered as the legal process unfolds. Court documents and related briefs will be closely watched by industry participants seeking clarity on whether prediction markets can be reconciled with existing regulatory regimes or if a broader federal framework will eventually take precedence.
US financial markets and cryptocurrencies moved higher after the Supreme Court struck down former President Donald Trump’s sweeping global tariffs, removing a major source of economic uncertainty.
The court ruled that Trump exceeded his authority by using emergency powers to impose broad tariffs without approval from Congress. The decision limits the president’s ability to reshape trade policy unilaterally and restores Congress as the primary authority over tariffs.
Supreme Court Restores Congress’s Control Over Tariffs
The ruling immediately reshapes the balance of power in US economic policymaking.
The tariffs, imposed under emergency authority, had targeted imports from multiple countries and generated billions in revenue.
Businesses and trade groups challenged the measures, arguing they raised costs and disrupted supply chains. The Supreme Court’s decision now blocks similar tariffs unless Congress explicitly approves them.
Stocks and Crypto Rise as Trade Uncertainty Eases
Markets reacted quickly.
The S&P 500 rose about 0.40%, while the Nasdaq gained roughly 0.70%, signaling renewed investor confidence. Technology stocks led gains, reflecting improved expectations for economic growth and stability.
Meanwhile, the global crypto market cap climbed to about $2.38 trillion, with Bitcoin trading near $67,000 after recent volatility.
Gold briefly dipped following the decision before recovering, reflecting a shift in risk sentiment.
The market reaction reflects a key shift: reduced trade uncertainty. Tariffs often act like taxes on imports, raising prices and slowing economic activity.
Removing the threat of broad tariffs lowers inflation risks and improves liquidity expectations, both of which support risk assets.
This is particularly relevant for crypto.
Bitcoin and other digital assets are highly sensitive to global liquidity and investor confidence. When macroeconomic uncertainty declines, capital tends to flow back into riskier assets.
The recovery in crypto alongside stocks suggests investors are regaining confidence after weeks of geopolitical and economic stress.
However, the decision also highlights deeper political tensions. The ruling limits presidential authority and reinforces Congress’s constitutional control over tariffs. This could slow future trade actions but also reduce sudden policy shocks that destabilize markets.
For crypto markets, stability in global trade and economic policy is generally positive. While geopolitical risks remain, the Supreme Court’s decision removes one major macro threat.
In the near term, that shift appears to be supporting Bitcoin and the broader digital asset market.
TLDR:
- US Q4 GDP grew just 1.4%, well below expectations, signaling economic weakness for investors.
- PCE and Core PCE inflation readings exceeded forecasts, raising concerns over rising consumer costs.
- Slower growth and higher prices may pressure crypto trading liquidity and market volatility.
- Geopolitical risks with Iran add uncertainty to energy markets, indirectly affecting crypto sentiment.
The US economy recorded a sharp slowdown in Q4 GDP, hitting 1.4%, far below the expected 3% growth. Inflation measures, including the PCE Price Index and Core PCE, exceeded forecasts, signaling rising costs for consumers.
Investors are weighing the potential impact on markets, including crypto trading, amid economic uncertainty. The combination of slowing growth and rising prices presents challenges for monetary policy and market stability.
US Economic Data Raises Crypto Market Tensions
US GDP growth for the fourth quarter is among the weakest in two years, according to data reported by Crypto Rover. The slowdown coincides with inflation readings above expectations, signaling higher consumer prices across goods and services.
Rising costs may pressure disposable incomes, affecting investor liquidity available for speculative markets, including cryptocurrencies. Traders are monitoring these economic indicators closely to adjust exposure in volatile markets.
The PCE Price Index, a preferred measure of inflation, showed significant gains in January, exceeding projections. Core PCE, which strips out food and energy, also rose, pointing to persistent underlying inflation pressures.
These dynamics place pressure on the Federal Reserve to balance policy between easing and hawkish measures. Market participants are assessing potential scenarios for interest rates and liquidity conditions affecting crypto valuations.
Investor sentiment in crypto markets is increasingly tied to US economic data, as both liquidity and risk appetite respond to macroeconomic shifts. Slower growth may prompt caution, leading to reduced trading volumes and heightened price volatility.
Rising inflation could push the Fed to maintain tighter policies, which historically compresses speculative asset markets. Analysts note that cryptocurrency traders remain sensitive to macroeconomic policy moves, particularly in the US dollar context.
Trading platforms reported increased activity during the GDP announcement, reflecting rapid adjustments in portfolio allocations. Exchanges including Coinbase and Binance saw heightened volumes in BTC and ETH as investors reacted to the news.
Market participants are factoring in the dual pressure of slow growth and inflation for near-term trading strategies. Liquidity in smaller altcoins may experience higher volatility as attention focuses on macro-sensitive tokens.
Geopolitical Tensions Add Pressure to Crypto Markets
Tensions in the Middle East, particularly regarding US military planning toward Iran, are influencing global markets, including cryptocurrencies. Reports from Walter Bloomberg indicate potential US strikes targeting Iran’s leadership and nuclear facilities.
Any conflict could disrupt oil supply routes, indirectly affecting global liquidity and risk appetite in crypto markets. Investors are tracking developments closely for potential market-moving events.
The potential for limited US military action, including naval and air assets, raises uncertainty for energy markets. Tehran has warned of a decisive response if targeted, increasing the risk of regional escalation.
Crypto traders are considering these geopolitical factors alongside domestic economic data in portfolio strategies. Rising energy costs could feed into inflation expectations, further complicating monetary policy outlooks.
Regional instability coincides with macroeconomic pressures, potentially amplifying market volatility in digital assets. Traders are adjusting exposure in real time, particularly in stablecoins and BTC, seeking safe-haven positions.
Historical patterns show crypto markets react quickly to both economic and geopolitical shocks. Analysts suggest monitoring these developments closely to anticipate liquidity shifts and trading trends.
After Polymarket quietly ended a substantial penalty on liquidity-removing ‘taker’ orders, quantitative traders (quants) lamented an end to their gravy train. For highly sophisticated market makers, that 500-millisecond quote-adjustment period granted them a superpower over slower traders.
Unfortunately for them, Polymarket has ended its time incentive.
Unsurprisingly, the money spigot used to flow from Polymarket and Kalshi advertising short-term binary options on the price of bitcoin (BTC) to everyday speculators.
Read more: Maduro Polymarket bet raises insider trading concerns
The exchanges feature 5 and 15 minute betting markets on the price of bitcoin (BTC). On their respective homepages, they place those markets in their top three spots on their homepage, and those markets have earned substantial media coverage.
These so-called prediction markets resolve on pricing data from Chainlink and carry high risk for anyone but the most sophisticated traders. One of those risks buried in technical documentation was the ability for market makers to make these adjustments to their quotes, helping ensure they received the most advantageous price.
Rewarding makers to lure money from Polymarket takers
According to several market observers, Polymarket has quietly eliminated its 500-millisecond (half-second) taker price delay.
Makers use limit orders that do not immediately execute, such as a bid price below the current ask price. Takers, in contrast, use market orders or immediately executable limit orders, such as a limit buy order with a price higher than the current ask.
In a traditional ‘level 2’ or Depth of Market (DOM) quote, makers are listed above and below the last price of an asset. Makers’ limit buy and sell orders, which cannot immediately execute against other orders, remain in pending status, ranked by price.
Takers, in contrast, whose orders always execute immediately using a standing order from a maker, create each market-clearing price.
Historically, exchanges have rewarded makers with various discounts to encourage their participation. Trading venues with consistently deep or ‘liquid’ DOM quotes across their trading pairs earn more business from traders who are concerned about the ability to easily enter and exit positions with minimal slippage.
Although penalties for takers and rewards for makers vary by exchange, Polymarket has a history of penalizing takers with a 500-millisecond price delay.
Quants never needed speed bumps
However, some traders detected its sudden, quiet removal this month. “Rumor has it the speed bump on crypto markets is GONE. No announcement, no changelog, nothing,” wrote one observer.
For quants and arbitrageurs, trades in Polymarket’s 5-minute games just got 500 ms faster. Those trades can also be hedged using Kalshi’s 15-minute binary options or hundreds of other BTC proxies.
For context, there were only 600 maximum taker transactions within five-minute increments. Now, the number of possible trading combinations seems to have exploded into the thousands or millions – bounded only by speeds of connectivity and computation.
“With the speed bump gone, latency is now the only moat,” someone noted.
Latency is, of course, a double-edged sword. The most advanced, colocated arbitrageurs with the quickest refresh rate on their quotes relative to the price of BTC on Chainlink oracles or even other exchanges can now enjoy amateur order flow from slower competitors.
Many other traders agreed with the implications.
“Was basically free money before,” observed one trader about the substantial, half-second incentive for makers to leisurely update their quotes with relative ease in computer time. “They did it to invite makers. Now makers are there, they take it away, but still give fee rebate.”
He forecasted another change in the future as a sunset of all incentive programs for Polymarket quant makers. “Next thing fee rebate is gone, and we pay for maker orders as well.”
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A new fourth quarter 2025 survey from tokenization platform Brickken suggests that the majority of real-world asset (RWA) issuers are using tokenization to raise capital rather than to unlock secondary market liquidity, according to a report shared with CoinDesk.
Among respondents, 53.8% said capital formation and fundraising efficiency is their main reason for tokenizing, while 15.4% said the need for liquidity was their main incentive. Another 38.4% said liquidity was not needed, while 46.2% said they expect secondary market liquidity within six to 12 months.
“What we’re seeing is a shift away from tokenization as a buzzword and toward tokenization as a financial infrastructure layer,” Jordi Esturi, CMO at Brickken, told CoinDesk. “Issuers are using it to solve real problems: capital access, investor reach, and operational complexity.”
Brickken’s report comes as major U.S. stock exchanges announce plans to expand trading models for tokenized assets, including 24/7 markets. CME Group said they will offer around-the-clock trading for its crypto derivatives by May 29, while the New York Stock Exchange (NYSE) and Nasdaq shared their plans to offer 24/7 tokenized stock trading.
Esturi said the exchanges’ plans have more to do with business model evolution than with an issuer demand disconnect. “It’s less about getting ahead of demand and more about exchanges evolving their business model,” he said. “Exchanges increase revenue by increasing trading volume, and extending trading hours is a natural lever.”
At the same time, many issuers are still in what he described as the phase of validation, during which they prove regulatory structures, test investor appetite and digitize issuance processes. “Liquidity is not yet their primary focus because they are building foundations,” he emphasized, adding that they view tokenization as “the upstream engine that feeds trading venues.”
The Brickken CMO also said that without compliant, structured, high-quality assets entering the market, secondary trading platforms have nothing meaningful to trade. “The true value creation happens at the issuance layer,” Esturi noted.
Optional liquidity versus mandatory
While 38.4% of surveyed issuers said liquidity was not required, Esturi pointed out the difference between “optional liquidity and mandatory liquidity,” noting that many private market issuers operate on long-term horizons. “Liquidity is inevitable, but it must scale in parallel with issuance volume and institutional adoption, not ahead of it.”
Ondo, which began with tokenized U.S. Treasuries and now has more than $2 billion in assets, is focused on stocks and ETFs specifically because of their “strong price discovery, deep liquidity and clear valuation,” Chief Strategy Officer Ian de Bode said in a recent interview with CoinDesk.
“You tokenize something either to make it easier to access or to use it as collateral,” de Bode said. “Stocks fit both, and they price like assets people actually understand, unlike a building in Manhattan. If TradFi moves to 24/7, that’s a godsend,” de Bode added. “It’s our biggest bottleneck.”
The survey shows that tokenization is already operational for many participants: 69.2% of respondents reported completing the tokenization process and being live, 23.1% are in progress, and 7.7% are still in the planning phase.
Regulations are still an issue
Regulation is a major concern among those surveyed: 53.8% of respondents said regulation slowed their operations, while 30.8% reported partial or contextual regulatory friction. In total, 84.6% experienced some level of regulatory drag. By comparison, 13% cited technology or development challenges as the hardest part of tokenization.
“Compliance isn’t something issuers are dealing with after launch; it’s something they’re taking into account and configuring from day one,” said Alvaro Garrido, founding partner at Legal Node. “We see an increasing demand for legal structures tailored to the specific project needs and underlying technology.”
The report also suggests tokenization is expanding beyond real estate. Real estate accounted for 10.7% of assets tokenized or planned for tokenization, compared with 28.6% for equity/shares and 17.9% for IP and entertainment-related assets. Respondents spanned sectors including technology platforms (31.6%), entertainment (15.8%), private credit (15.8%), renewable energy (5.3%), banking (5.3%), carbon assets (5.2%), aerospace (5.3%) and hospitality (5.2%).
“The real bridge between TradFi and DeFi is not ideological,” said Patrick Hennes, head of digital asset servicing at DZ PRIVATBANK. “It is issuance infrastructure that translates regulatory requirements, investor protection and asset servicing standards into programmable systems.”
The probability of the Clarity Act being signed into law in 2026 surged to a record 82% on Polymarket earlier today.
The increase in odds comes ahead of a looming deadline to move the key crypto legislation forward.
Polymarket Signals Growing Confidence in Clarity Act as Negotiations Accelerate
Data from Polymarket shows that the probability of the Clarity Act becoming law rose sharply over the past 48 hours. Odds climbed from around 60% on February 18 to a peak of 82% earlier today.
At press time, the figure had eased to 78%, still reflecting a significant jump and signaling growing market confidence in the bill’s prospects.
The optimism is not limited to prediction market traders. Industry executives are also projecting strong momentum.
In an interview with Fox Business, Ripple CEO Brad Garlinghouse said there’s a 90% chance that the long-debated Clarity Act will pass by the end of April.
“The White House is pushing hard on this, and that is a big reason why it will get done. It needs to get done for US leadership,” he said.
The rise in retail optimism comes as the White House moves to push negotiations forward. According to Fox Business, a March 1 deadline has been set to advance the legislation ahead of the midterms.
White House Hosts Third Meeting as Clarity Act Deadline Nears
The Clarity Act is focused on establishing a regulatory framework for digital assets. At its core, the bill aims to clearly define regulatory oversight between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The legislation passed the House last July. However, the Senate’s version remains stalled. The primary point of contention between banks and crypto firms centers on stablecoin yields. Last month, Coinbase withdrew its support for the bill after the Senate’s changes.
The administration has convened several discussions involving crypto firms and banking representatives, with a third meeting held on Thursday.
According to journalist Eleanor Terrett, a representative from the crypto industry argued that banks’ concerns may be rooted more in competitive dynamics than in measurable concerns over deposit flight.
A source representing banks told Terret that, for their part, they are pushing further analysis of how stablecoins could affect traditional deposit bases.
“Bank trade groups will brief their members on today’s discussions and gauge whether there’s room to compromise on allowing crypto firms to offer stablecoin rewards. One source said an end-of-month deadline doesn’t seem unrealistic, with talks set to continue in the coming days,” Terrett said.
As discussions move forward, March 1 stands out as a critical date in the legislative timeline. Despite ongoing disagreements, market analysts still view the bill as broadly positive for the industry.
If passed, it would mark a significant step toward reducing regulatory uncertainty and establishing clearer rules for the crypto sector overall.
In a landmark 6–3 decision, the Supreme Court of the United States has ruled that President Donald Trump’s sweeping global tariffs were illegal, delivering a sharp blow to one of the White House’s core economic policies.
The decision immediately lifted risk appetite across financial markets — including crypto — though traders remain cautious about what comes next.
Selling pressure in US-listed spot Bitcoin ETFs continued Thursday, with analysts noting the cryptocurrency is on track for one of its worst yearly starts.
Spot Bitcoin (BTC) ETFs saw $165.8 million in outflows Thursday, bringing weekly losses to $403.9 million, according to SoSoValue data.
The redemptions moved the funds closer to a possible five-week outflow streak, with year-to-date (YTD) losses totaling $2.7 billion.
Trading activity continued to shrink, falling 21% over the week and reaching its lowest levels since late December, signaling weakening investor activity.
Despite $53.9 billion in cumulative net inflows, analysts, including DropsTab, noted that 2026 is shaping up to be “one of the worst yearly starts in Bitcoin’s history,” with BTC prices down about 22% year-to-date, according to TradingView data.
BlackRock’s IBIT leads losses with $368 million in outflows this week
BlackRock’s iShares Bitcoin Trust ETF (IBIT) accounted for the bulk of outflows this week, totaling $368 million, according to Farside data.
Other US-listed spot Bitcoin ETFs saw little or no activity this week, aside from about $50 million in outflows from the Fidelity Wise Origin Bitcoin Fund (FBTC) on Wednesday.
Some major financial institutions reported reducing IBIT exposure earlier this week, with Brevan Howard cutting its holding in the fund by as much as 85% in the fourth quarter of 2025.
Bitcoin set for one of its worst yearly starts
The ongoing outflows from Bitcoin ETFs coincide with weakening investor sentiment, as multiple sources point to unusually low BTC price levels compared to previous cycles.
Drops Analytics highlighted Bitcoin’s price in the context of halving — an event that reduces BTC’s block reward once every four years and is typically followed by price surges in the years that follow.
“Almost two years later, BTC trades around $66,000 — nearly the same level as during the April 2024 halving,” Drops Analytics said in a Telegram post on Thursday.
Related: Quantum fears aren’t behind Bitcoin’s 46% drop, says developer
“This has never happened before. In previous cycles, BTC was already three to 10 times above halving levels by now,” it added.
According to Checkonchain data, Bitcoin is off to its worst yearly start on record, 50 days into 2026, surpassing previous down years, including 2018.
Magazine: Did a Hong Kong fund kill Bitcoin? Bithumb’s ‘phantom’ BTC: Asia Express
CoinDesk Indices presents its daily market update, highlighting the performance of leaders and laggards in the CoinDesk 20 Index.
The CoinDesk 20 is currently trading at 1924.88, down 0.3% (-6.12) since yesterday’s close.
Nine of the 20 assets are trading higher.
Leaders: NEAR (+1.4%) and AVAX (+1.2%).
Laggards: AAVE (-3.3%) and BCH (-2.1%).
The CoinDesk 20 is a broad-based index traded on multiple platforms in several regions globally.
Ethereum continues to trade sideways as uncertainty weighs on the broader crypto market. The altcoin king has struggled to regain decisive bullish momentum.
While the current structure suggests potential bottom formation, large holders appear to be making aggressive moves.
Ethereum Whales Selling Has Not Stopped
Ethereum whales have demonstrated erratic behavior in recent sessions. Sharp accumulation phases have been followed by equally aggressive distribution. This volatility signals uncertainty among high-capital participants.
Over the past two weeks, addresses holding between 100,000 and 1 million ETH have sold approximately 1.43 million ETH. At current valuations, that equals roughly $2.7 billion. Such large-scale distribution significantly impacts liquidity conditions.
Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.
This level of selling often reflects late-cycle stress rather than early panic. Historically, heavy whale exits tend to occur near capitulation phases. Large holders sometimes reduce exposure before the broader acceptance of a market bottom. These episodes frequently precede structural reversals once selling pressure exhausts.
Ethereum Bottom Signals Strengthen
On-chain data provides additional context. The Net Unrealized Profit and Loss, or NUPL, indicator shows Ethereum in the capitulation zone. This reading indicates that average holders face substantial unrealized losses.
In prior cycles, similar NUPL conditions preceded meaningful reversals. However, Ethereum typically remains in this zone for extended periods. Capitulation does not imply immediate recovery.
Sustained time in the capitulation band often reduces speculative selling. As weaker hands exit positions, remaining holders tend to exhibit stronger conviction. Gradual stabilization in NUPL readings can signal diminishing downside momentum before recovery begins.
The Pi Cycle Top Indicator also supports a potential ETH bottoming narrative. This metric tracks the relationship between short-term and long-term moving averages. Historically, convergence signals overheating near cycle tops.
Conversely, extreme divergence between these averages often aligns with cyclical bottoms. Current readings show meaningful separation between the two curves. Similar divergence patterns previously marked recovery zones.
Historical instances demonstrate that widening gaps preceded upward reversals. Although timing remains uncertain, this structural setup aligns with late-stage correction behavior. Combined with capitulation metrics, the data suggests Ethereum may be approaching stabilization rather than early bear expansion.
ETH Price Holds Above Support
Ethereum trades at $1,960 at the time of writing. The asset has consistently held above the $1,928 support level despite whale distribution. This zone remains technically significant in maintaining short-term structure.
Although overall sentiment remains cautious, underlying demand has prevented a sharper breakdown. Buyers appear willing to accumulate near perceived value levels. Sustained support may enable Ethereum to challenge the $2,027 resistance. Clearing $2,108 would confirm a breakout from consolidation.
However, downside risks cannot be ignored. If bearish momentum intensifies, Ethereum could lose $1,928 support. A breakdown may expose $1,820 as the next potential floor. Continued weakness could extend toward $1,750, invalidating the near-term bullish thesis.
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