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Crypto needs a reset before the next bull run

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Finality Macro cross-asset outloook

Since Bitcoin’s all-time high of $127,000 in October 2025, the first quarter of 2026 has gotten off to a shaky start, with Bitcoin crashing to a $60,000 floor in under five months. While this whiplash may be painful, it looks worse than it really is: the market is actually doing exactly what it needs to do to build a stronger cycle ahead.

Crypto tends to bear the brunt of the selloff when macro conditions, geopolitical tensions and traditional markets turn south. Several converging factors are currently driving immense pressure on crypto markets: elevated counterparty risk, global liquidity tightening, weak technical trends, fading ETF inflows and broader stress across credit and banking markets.

But periods like this are not anomalies in digital asset markets. They are part of the larger cycle – and a sign of what’s to come for those willing to see it.

Liquidity is the dominant driver

For all the narratives around adoption, innovation and new use cases, crypto still trades primarily on global liquidity conditions. When liquidity expands, digital assets tend to rally; when it contracts, they tend to fall, often sharply.

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Several forces are currently pulling liquidity out of the system. The Federal Reserve continues to run down its balance sheet, reducing the amount of capital circulating through financial markets. Seasonal tax payments are draining liquidity from the Treasury system.

A wave of technology IPOs and equity issuance is absorbing capital that might otherwise flow into risk assets. Meanwhile, a strong U.S. dollar and tighter financial conditions globally are putting additional pressure on speculative markets.

Because crypto trades on liquidity, price moves can look disconnected from fundamentals. But those moves are often the mechanism through which markets reset and prepare for the next expansion phase.

The reset cycle map

Market cycles rarely move in a straight line, and this one is unlikely to be any different. But if the current pattern holds, 2026 could unfold as a multi-step reset rather than a clean rebound. A quarterly breakdown lays this path out clearly, The early part of the year is characterized by retesting lows and broad selling pressure as leverage and speculative positioning continue to unwind. The middle of the year may bring a temporary recovery as markets stabilize and opportunistic buyers begin stepping in. It’s a multi-step reset cycle.

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Volatility is likely to persist. Another correction later in the year would not be unusual as macro conditions continue to shift and investors reassess risk. Only after that process plays out does the market typically enter a more durable rally phase.

But this type of structure has appeared repeatedly across previous crypto cycles. And while the timing is never identical, the rhythm is familiar.

Finality Macro cross-asset outloook

Why the long-term cycle remains intact

Short-term turbulence does not necessarily mean the broader cycle is broken. Indeed, there are several reasons the long-term trend for bitcoin and the digital asset ecosystem remains intact.

First, structural demand has expanded meaningfully compared with prior cycles. Institutional participation is deeper, infrastructure is stronger, and access through regulated investment vehicles has improved market reach.

Second, macro conditions are likely to evolve. Liquidity tightening rarely lasts forever. If inflation continues to moderate, the Federal Reserve could shift toward rate cuts later in the year. Historically, monetary easing has provided a powerful tailwind for risk assets.

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Third, broader political and financial dynamics may also support markets. Election cycles tend to coincide with more accommodating economic policy, while stabilization in credit markets could reduce systemic risk across the financial system.

FLO's Multi-Cycle Bitcoin Outlook

Taken together, these factors suggest the long-term trajectory for digital assets remains constructive even if the path to get there remains volatile. Bitcoin could ultimately recover toward the $100,000 range and potentially move higher by the end of 2026 if liquidity conditions improve. Downside scenarios remain possible, particularly if macro stress intensifies, but those drawdowns have historically yielded longer-term uptrends.

FLO's 2026 Bitcoin Outlook

Positioning through the volatility

For investors, the real challenge is predicting the markets by positioning correctly across different phases of a reset cycle.

The early phase, when liquidity tightens and markets search for a bottom, typically rewards caution. That may mean running underweight crypto exposure in the early part of the year while volatility remains elevated and macro pressures persist.

But the opportunity usually emerges before the broader market recognizes it. As the year progresses and conditions begin to stabilize, investors may gradually increase exposure. By the cycle’s later stages, particularly if liquidity begins to ease, allocations may shift more aggressively, with portfolios moving overweight digital assets into a potential fourth-quarter rally.

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Between those phases, market dislocations can prove fertile ground for selective investments. Distressed assets, special situations, and mispriced securities across digital assets, blockchain equities and digital corporate credit often appear during mid-cycle stress. These environments favor active strategies that can move across asset classes rather than passive exposure to a single market segment.

The key is timing exposure to liquidity conditions rather than chasing momentum after markets have already turned. Stay defensive now, get aggressive later.

A transition year, but not a record year

If this framework holds, 2026 won’t be remembered as either a classic bull year or a prolonged bear market, but as a transition year.

Markets often shake out weak hands first, forcing excess leverage and speculative positioning out of the system. That process can be uncomfortable in real time, but it plays an important role in preparing markets for the next expansion. Volatility is not just noise in financial markets – and often, it’s the very mechanism through which opportunity is created.

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It’s also a year for resetting. Markets will likely stay volatile in the near term as liquidity tightens, but the investors who win will be the ones positioning before the turn, not chasing it after.

Crypto markets have never moved in straight lines. The same forces that create painful corrections often lay the groundwork for powerful recoveries. The reset underway today may ultimately be what allows the next cycle to begin.

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Crypto World

Aave launches on OKX’s X Layer to expand on-chain lending access

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Aave launches on OKX’s X Layer to expand on-chain lending access

Decentralized lending protocol Aave has officially launched on Ethereum layer 2 X Layer.

Summary

  • Aave has launched on X Layer, enabling OKX Wallet users to lend, borrow, and earn yield directly on the network without bridging assets.
  • X Layer, developed by OKX, has seen limited growth so far, with about $25 million in total value locked.

According to the official announcement, the launch will allow OKX Wallet users and DeFi participants to directly supply assets, borrow against collateral, and earn yield on the network without having to use a separate wallet or bridge assets across chains.

X Layer was developed by OKX and launched in 2024, but network growth has been relatively slow so far, with the chain holding only about $25 million in total value locked as of press time.

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Onboarding Aave could significantly strengthen liquidity and expand the network’s DeFi capabilities.

“With a multi-year track record across more than a dozen blockchain networks and a 60% market share of DeFi lending, Aave is the largest and most trusted onchain lending network, with over $46 billion in supply & borrow. Its arrival on X Layer brings that same battle-tested infrastructure to OKX’s L2 ecosystem, permissionless, non-custodial, and accessible directly from OKX Wallet,” OKX said.

As part of the expansion, users can supply assets including USDT0, USDG, GHO, xBTC, xETH, xSOL, xBETH, and xOKSOL to earn yield that compounds automatically while retaining custody of their tokens.

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Further, users will be able to borrow assets such as USDT0, USDG, GHO, xBTC, xETH, and xSOL against their collateral without any credit check or intermediary.

To access the service, OKX Wallet users just need to open the wallet, navigate to Aave through the DApps section, and connect to the X Layer network.

The latest expansion follows the launch of Orbit, a social trading platform that the crypto exchange introduced earlier this month.

As previously covered, Orbit is designed to combine social media-style interaction with trading tools, allowing users to share strategies, discuss market developments, and follow experienced traders in real time.

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Around the same time, OKX disclosed a strategic investment from Intercontinental Exchange, with the deal set to give ICE a seat on the company’s board.

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Ripple Researchers Propose Privacy-Preserving Transfers for XRPL Multi-Purpose Tokens

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The Ripple research team has published a paper on adding transaction privacy to the XRP Ledger (XRPL). 

The paper introduces Confidential Transfers for Multi-Purpose Tokens (Confidential MPTs). The goal is to enable institutional and regulated use cases, with issuer controls such as freezing and clawbacks.

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The paper is authored by Murat Cenk, Aanchal Malhotra, and Joseph Ayo Akinyele. The Confidential MPTs would be a cryptographic extension of the XLS-33 token standard, which went live on the XRPL mainnet in October 2025

The protocol replaces plaintext per-account balances with EC-ElGamal ciphertexts. Furthermore, it uses non-interactive zero-knowledge proofs to enforce transfer correctness and balance sufficiency without requiring decryption by validators. 

Meanwhile, sender and receiver identities remain visible, preserving XRPL’s account-based model

“To accommodate regulatory and institutional requirements, Confidential MPTs provide cryptographic auditability through an on-chain selective-disclosure model based on multi-ciphertext balance representations and equality proofs, while remaining compatible with simpler issuer-mediated audit models,” the abstract reads.

The timing aligns with shifting regulatory attitudes toward on-chain privacy. In a recent report submitted to Congress in early March, the US Treasury Department acknowledged that lawful users of digital assets may rely on mixers when transacting on public blockchains.

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The privacy paper arrives as Ripple simultaneously strengthens the network’s security foundation. The firm recently outlined an AI-driven security strategy for XRPL.

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The post Ripple Researchers Propose Privacy-Preserving Transfers for XRPL Multi-Purpose Tokens appeared first on BeInCrypto.

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DeFi Tokens Face Pressure as CLARITY Act Targets Stablecoin Yields

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

Key Takeaways

  • Proposed legislation would prohibit stablecoins from generating yields, limiting them to payment functions exclusively
  • The change would redirect yield opportunities toward traditional banking and money market instruments
  • Popular DeFi platforms including Uniswap, Aave, and Compound may encounter stricter regulations on value distribution
  • Trading volumes, liquidity depth, and token demand across DeFi could decline significantly
  • Regulated stablecoin issuers like Circle stand to gain from tighter integration with payment systems

The most recent iteration of the CLARITY Act has sparked significant discussion around its stablecoin provisions. Industry experts warn that decentralized finance tokens may bear the brunt of the legislation’s consequences.

Under the proposed framework, stablecoins would be prohibited from providing yields or any similar incentive structures, including balance-based rewards. This restriction would fundamentally transform stablecoins into payment instruments rather than blockchain-based savings vehicles.

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Markus Thielen, who established 10x Research, indicated that the legislation would effectively channel yield opportunities back into conventional financial systems. Traditional banks, money market vehicles, and compliant financial products would capture these benefits, while cryptocurrency-native services would lose competitive advantage in offering returns.

Initial speculation suggested that DeFi platforms might actually attract more users if centralized crypto services were prevented from distributing yields. The theory presumed capital would migrate toward onchain alternatives.

However, Thielen challenged this assumption. He explained that the CLARITY regulatory structure would probably apply to user-facing platforms and token economics, especially when fee structures or governance mechanisms begin resembling equity instruments.

Potential Impact on DeFi Platforms

This regulatory approach places numerous DeFi initiatives under scrutiny. Decentralized trading venues and lending services may encounter fresh restrictions governing their operations and value distribution mechanisms.

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Platforms such as Uniswap, Sushi, and dYdX face potential consequences, alongside lending services like Aave and Compound. Enhanced regulatory oversight might trigger diminished trading activity, thinner liquidity pools, and decreased token valuations, the 10x Research analysis suggests.

The fundamental question centers on whether these platforms can maintain fee distribution or incentive programs for token holders without triggering new stablecoin-focused regulations.

Thielen observed that distinguishing between governance tokens and regulated financial instruments grows increasingly complex within this regulatory framework.

Circle Positioned for Potential Gains

The legislation wouldn’t create obstacles for every cryptocurrency entity. Circle, which issues the USDC stablecoin, might emerge as a beneficiary under the proposed rules.

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Thielen characterized the regulation as fundamentally favorable for infrastructure providers like Circle. Should stablecoins become embedded within payment networks, issuers maintaining robust regulatory compliance would secure advantageous positions.

The CLARITY Act continues advancing through the legislative pipeline. Congress has not yet enacted a final version.

While stablecoin provisions dominate policy discussions in Washington, industry analysts emphasize that the ripple effects across DeFi ecosystems deserve equal attention.

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White House App Sparks Privacy Fears Over Tracking and Data Collection

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Business, Technology, Privacy, Adoption, White House, Applications

A new app from the US government has sparked concerns among users and researchers over potential location-tracking features, security vulnerabilities and data collection.

The White House launched the app on Friday as a way for users to get a “direct line to the White House,” including receiving breaking news alerts on major government announcements, watching livestreams and keeping up to date on “policy breakthroughs.”

However, users on X have raised concerns about the permissions required to use the app, including access to the device’s location, shared storage and network activity, though these claims have not been independently verified.

While many apps often request location permissions and can log user data, an app launched by the federal government requesting this information can invite additional concerns. 

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However, both listings on the Google Play Store and Apple’s App Store currently do not display these warnings.

A White House app privacy policy said it automatically stores information about the originating Internet Protocol (IP) address and other basic information, while it can retain names and email addresses of subscribers, though these are not required to use the app.

Business, Technology, Privacy, Adoption, White House, Applications
Source: Tyler Oakley

Cointelegraph has contacted the White House for comment.

Security engineer says GPS tracking is part of the app

On the app’s Google Play Store page, it states that personal data, including phone numbers and email addresses, may be collected through download and use. Apple’s App Store, meanwhile, directs users to the White House’s privacy policy.

A software developer using the X handle Thereallo, along with Adam, a security engineer and infrastructure architect, say they have identified code suggesting the app could access a device’s GPS for tracking.

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While the feature is common across a number of apps, Adam said it is unusual for location-tracking services to be in software that does not appear to need them.

“There is no map, no local news, no geofencing, no events near you, no weather. Nothing in the app that requires location,” he added.

Concerns of GPS tracking every 4.5 minutes

Thereallo made a similar claim that the app includes code that could enable tracking a device every 4.5 minutes in the foreground and 9.5 minutes in the background, though this has not been independently verified.

Business, Technology, Privacy, Adoption, White House, Applications
Source: Thereallo

They found that it still requires permission but warned that it is only “one call away from activating,” and that the tracking “infrastructure is there, ready to go.”

Related: Trump advisory council draws Coinbase co-founder, tech leaders

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At the same time, Thereallo said the app is collecting other data such as notification interactions, in-app message clicks and phone number.

Security could be broken, researcher says

Adam said the app’s security may also be weak enough for a technically skilled person to intercept its data or alter its functionality

“Anyone on the same Wi-Fi network, say, at a coffee shop, an airport, or a congressional hearing room, can intercept API traffic with a proxy. Anyone with a jailbroken device can hook and modify the app’s behavior at runtime,” he said.

“No servers were probed. No network traffic was intercepted. No DRM was bypassed. No tools were used that require jailbreaking. Everything described here is observable by anyone who downloads the app from the App Store and has a terminal.”

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