4th gen crypto needs collaborative tokenomics against tech giants — Hoskinson
The next generation of cryptocurrency projects must embrace a more collaborative approach to compete with major centralized tech companies entering the Web3 space, according to Cardano founder Charles Hoskinson.Speaking at Paris Blockchain Week 2025, Hoskinson said one of the main criticisms of the crypto and decentralized finance (DeFi) space is its “circular economy,” which often means that the rally of a specific cryptocurrency is bolstered by funds exiting another token, limiting the growth of the industry.Hoskinsin said that to have a chance against the centralized technology giants joining the Web3 industry, cryptocurrency projects need more collaborative tokenomics and market structure.Charles Hoskinson. Source: Cointelegraph“The problem right now, with the way we’ve done things in the cryptocurrency space, is the tokenomics and the market structure are intrinsically adversarial. It’s sum 0,” said Hoskinson. “Instead of picking a fight, what you have to do is you have to find tokenomics and market structure that allows you to be in a cooperative equilibrium.”He argued that the current environment often sees one crypto project’s growth come at the expense of another rather than contributing to the sector’s overall health. He added that this is not sustainable in the face of trillion-dollar firms like Apple, Google, and Microsoft, which may soon join the Web3 race amid clearer US regulations.“You can’t build a global ecosystem this way, and you can’t win this way,” he said. “Because here’s the thing. The incumbents are much larger.”Related: Bitcoin ETFs lose $326M amid ‘evolving’ dynamic with TradFi marketsHoskinson’s comments came as the industry awaits progress on US stablecoin legislation, which may come in the next two months.A secondary bill, the GENIUS Act — an acronym for Guiding and Establishing National Innovation for US Stablecoins — would establish collateralization guidelines for stablecoin issuers while requiring full compliance with Anti-Money Laundering laws.Related: Cardano’s Plomin hard fork sets stage for full decentralized governanceCrypto faces Big Tech’s regulatory tailwindMore participation from tech giants is likely after the stablecoin bill is passed. The markets structure bill may pass by September, Hoskinson said, adding:“These are the barriers that, once removed, mean that Facebook, Microsoft, Amazon, Google, Apple and others enter the cryptocurrency space and tell me who owns their platforms. They do. That’s three billion users.”“So if those barriers are removed, how do we, as an industry, compete against the wallet that Apple built in bundles with the iPhone,” he said, adding that crypto also needs to build infrastructure that the incoming tech giants can leverage.Aiming to align blockchain network incentives, Cardano has been working on “Minotaur,” a multi-resource consensus protocol that combines multiple consensus mechanisms and networks to pay a unified block reward to multiple networks at the same time.“You pay in the currency you want, and multiple networks are involved in securing the system and have a financial incentive to keep the system around,” Hoskinson said.Magazine: Charles Hoskinson, Cardano and Ethereum – for the record
Trump tariff negotiations are ‘all about’ China deal — Raoul Pal
Global trade tensions triggered by US President Donald Trump’s sweeping tariff measures may come to an end with a potential deal with China as investors remain concerned about escalation from both sides.Trump’s April 2 announcement of reciprocal import tariffs sent shockwaves through global equity and crypto markets. The measures include a 10% baseline tariff on all imported goods, effective April 5, with higher levies — such as a 34% tariff on Chinese imports — set to begin on April 9.However, the tariff negotiations may only be “posturing” for the US to reach an agreement with China, according to Raoul Pal, founder and CEO of Global Macro Investor.“In the end, almost all the other tariff negotiations and rhetoric are all about getting China to agree a deal,” Pal wrote in an April 8 X post, adding:“That is the big prize and both China and the US understand it and need it. Everything else is negotiation posturing. China needs a weaker $ and the US needs tariffs.”Source: Raoul Pal“Also, the US is trying to shut down China tariff arbitrage using other channels such as Mexico or Vietnam,” Pal said.Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur HayesChina retaliates with new tariffsConsidering China’s latest retaliatory measures, a resolution remains unlikely in the short term.In response to US tariffs, China imposed a 34% tariff on all US imports effective April 10, media outlet Xinhua News reported on April 4. China’s foreign ministry also vowed to “fight till the end” against Trump’s tariffs, which it called “bullying” by the world’s largest economy.China overtakes the US in global trade. Source: EconovisChina overtook the US in 2012 to become the world’s largest trading nation by the total value of exports and imports, surpassing $4 trillion in goods trade that year, according to The Guardian.Crypto markets watch trade outcome closelyAs the trade dispute continues to evolve, analysts say a potential agreement between the two global superpowers could serve as a key catalyst for recovery in digital asset markets.Crypto markets have a 70% chance to bottom by June 2025 before recovering, Nansen analysts predicted.Related: Crypto market bottom likely by June despite tariff fears: Finance RedefinedInvestor appetite for risk assets such as Bitcoin will depend on the global tariff responses from other countries, according to Nicolai Sondergaard, a research analyst at Nansen.“We have reached somewhat of a local bottom in regard to tariffs and the impact on prices,” the analyst said during Cointelegraph’s Chainreaction live show on X, adding:“Trump came out guns blazing, and we’ve mostly seen the worst from the US side, so we’ll see if other countries are willing to drop some of the tariffs because it’s very likely the US will do the same.”Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29
Bitcoin on verge of largest ‘price drawdown’ of the bull market — Analyst
Bitcoin’s (BTC) 26.62% decline from its $109,500 all-time high is en route to becoming the deepest drawdown of the current bull market cycle, according to CryptoQuant head of research, Julio Moreno. Bitcoin price drawdown analysis. Source: XBitcoin has experienced significant drawdowns in past cycles, with a notable 83% drop from its peak in 2018 and a 73% correction from all-time highs (ATH) in 2022. In comparison, the current decline of 26.62%, while substantial, remains less severe than previous bear markets. This suggests that even though the current downturn is impactful, it has not yet reached the intensity of previous cycles. However, crypto and macro resource ‘ecoinometrics’ said that Bitcoin might struggle to stage an immediate turnaround. The analysts explained, “Historically, when the NASDAQ 100 falls below its long-term year-on-year average return, Bitcoin tends to grow more slowly. It also faces a higher risk of entering a severe correction.”Bitcoin and Nasdaq correlation. Source: X / EcoinometricsWith the Nasdaq 100 currently flat year-on-year, Bitcoin’s price recovery might be difficult, even if the correction halts.The recent Bitcoin (BTC) price drop also put Michael Saylor’s Strategy on the defensive, with the firm opting not to purchase any BTC for its treasury between March 31 and April 6. Additionally, data from Strategytracker highlighted that the corporation spent $35.65 billion on its Bitcoin holdings, currently reflecting a mere 17% return on a five-year holding period. Related: Michael Saylor’s Strategy halts Bitcoin buys despite dip below $87KCan Bitcoin hold a position above $70K?On the weekly chart, Bitcoin tested the 50-weekly exponential moving average (blue indicator) for the first time since September 2024. A weekly close below the 50-W EMA has signaled the beginning of a bear market in previous market cycles. Bitcoin weekly chart. Source: Cointelegraph/TradingViewThe immediate point of interest below the current price remains at $74,000, which was the early 2024 all-time high. However, the daily demand zone between $65,000 and $69,000 could be a bigger liquidity level based on its significance. The $69,000 level is also the 2021 all-time high price. Additionally, Bitcoin’s weekly relative strength index, RSI, reached its lowest value of 43 since January 2023 at the end of Q1. In August 2023 and September 2024, the RSI recovered from a similar value to trigger a price recovery for Bitcoin. In 2022, when RSI dropped below 40, bears took total control of the market. Anonymous crypto trader Rekt Capital also predicted based on daily RSI value and said, “Historical daily RSI trends in this cycle suggest anything from current prices to ~$70,000 is likely to be the bottom on this correction.”Related: Bitcoin, stocks crumble after ‘90 day tariff pause’ deemed fake news — BTC whales keep accumulatingThis article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Ethereum price falls to 2-year low, but pro traders still have hope
Ether (ETH) price dropped to $1,410 on April 7, marking its lowest level since March 2023. This sharp decline triggered liquidations of leveraged ETH futures worth over $370 million in 2 days, according to CoinGlass data. However, the altcoin managed to recover above the $1,500 mark as the S&P 500 index reclaimed its psychological 5,000 support level.Ether/USD (blue) vs. total crypto market capitalization (magenta). Source: TradingView / CointelegraphOver the past 30 days, Ether has underperformed the broader cryptocurrency market by 14%. Despite this, professional traders are not yet ready to turn bearish, as suggested by Ethereum’s derivatives data and onchain metrics. While this data does not guarantee that Ether’s price has reached its bottom, the reduced demand for bearish positions below $1,600 offers some reassurance for bullish investors.Ether 2-month futures annualized premium. Source: laevitas.chOn April 7, the Ether monthly futures premium rose to 4% after dipping to 3% earlier in the day. Although still below the neutral threshold of 5%, this marks an improvement from March 31, when the indicator hit a low of 2%. Currently, there is a noticeable lack of demand from long positions (buyers), but this is not unusual following a steep 30% drop in ETH’s price over the past month.Ether is a victim of worsening macroeconomic conditionsInvestors remain concerned that escalating global trade tensions could lead to an economic recession and reduce interest in risk-on assets. This scenario also weakens the potential positive impact of a possible interest rate cut during the US Federal Reserve’s (Fed) next meeting on May 6-7. Typically, such a move would benefit the cryptocurrency market by lowering returns on fixed-income investments.Despite US President Donald Trump’s strong push for interest rate cuts, as expressed in his Truth Social post on April 7, Fed Chair Jerome Powell remains cautious about inflation trends. Powell reportedly stated on April 4: “It is too soon to say what will be the appropriate path for monetary policy,” according to Yahoo Finance.Adding further pressure to Ether’s price was Ethereum developers’ decision to delay the Pectra upgrade, originally scheduled for April. Developers have now set May 7 as the target date for its mainnet launch but provided no specific reason for the delay. This comes even though the Hoodi testnet upgrade was successfully implemented on March 26.Ether derivatives display moderate resilience while Ethereum TVL jumps to an all-time highGiven the negative news flow, one might have expected Ether bears to dominate the market entirely. However, derivatives data suggests that bears are not as confident as anticipated. When traders foresee a correction, put (sell) options tend to trade at a premium, pushing the 25% delta skew metric above 6%. Conversely, during bullish periods, this indicator typically falls below -6%.Ether 30-day options skew (put-call) at Deribit. Source: Laevitas.chCurrently, the ETH options skew stands at 10%, the same level as March 31, which remains within bearish territory. However, this reading is significantly less extreme compared to May 2024, when it peaked at 20% amid a sharp ETH price drop from $3,700 to $2,860 within five weeks. In essence, while Ether derivatives markets signal bearish sentiment, they do not reflect panic levels.Onchain data for Ethereum shows resilience despite broader market challenges. The total value locked (TVL) on the Ethereum network reached an all-time high of 30.2 million ETH on April 6—a 22% increase compared to the previous month. This growth outpaced Solana’s 12% increase in SOL (SOL) terms and BNB Chain’s 16% TVL rise during the same period. Ultimately, macroeconomic conditions remain the primary driver of cryptocurrency demand. However, when analyzing Ether derivatives data and Ethereum’s TVL performance, it appears that ETH’s price downside may be limited.This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Nearly 400,000 FTX users risk losing $2.5 billion in repayments
Nearly 400,000 creditors of the bankrupt cryptocurrency exchange FTX risk missing out on $2.5 billion in repayments after failing to begin the mandatory Know Your Customer (KYC) verification process.Roughly 392,000 FTX creditors have failed to complete or at least take the first steps of the mandatory Know Your Customer verification, according to an April 2 court filing in the US Bankruptcy Court for the District of Delaware.FTX users originally had until March 3 to begin the verification process to collect their claims.“If a holder of a claim listed on Schedule 1 attached thereto did not commence the KYC submission process with respect to such claim on or prior to March 3, 2025, at 4:00 pm (ET) (the “KYC Commencing Deadline”), 2 such claim shall be disallowed and expunged in its entirety,” the filing states.FTX court filing. Source: Bloomberglaw.comThe KYC deadline has been extended to June 1, 2025, giving users another chance to verify their identity and claim eligibility. Those who fail to meet the new deadline may have their claims permanently disqualified.According to the court documents, claims under $50,000 could account for roughly $655 million in disallowed repayments, while claims over $50,000 could amount to $1.9 billion — bringing the total at-risk funds to more than $2.5 billion.FTX court filing, estimated claims. Source: SunilThe next round of FTX creditor repayments is set for May 30, 2025, with over $11 billion expected to be repaid to creditors with claims of over $50,000.Under FTX’s recovery plan, 98% of creditors are expected to receive at least 118% of their original claim value in cash.Related: FTX liquidated $1.5B in 3AC assets 2 weeks before hedge fund’s collapseHow FTX users can complete KYCMany FTX users have reported problems with the KYC process.However, users who were unable to submit their KYC documentation can resubmit their application and restart the verification process, according to an April 5 X post from Sunil, FTX creditor and Customer Ad-Hoc Committee member.FTX KYC portal. Source: SunilImpacted users should email FTX support ([email protected]) to receive a ticket number, then log in to the support portal, create an account, and re-upload the necessary KYC documents.Related: Crypto trader turns $2K PEPE into $43M, sells for $10M profitFTX’s Bahamian subsidiary, FTX Digital Markets, processed the first round of repayments in February, distributing $1.2 billion to creditors.The crypto industry is still recovering from the collapse of FTX and more than 130 subsidiaries launched a series of insolvencies that led to the industry’s longest-ever crypto winter, which saw Bitcoin’s (BTC) price bottom out at around $16,000.While not a “market-moving catalyst” in itself, the beginning of the FTX repayments is a positive sign for the maturation of the crypto industry, which may see a “significant portion” reinvested into cryptocurrencies, Alvin Kan, chief operating officer at Bitget Wallet, told Cointelegraph.Magazine: XRP win leaves Ripple a ‘bad actor’ with no crypto legal precedent set
Stablecoins 'in bull market'; Solana sputters: VanEck
Stablecoins are “in a bull market of their own,” even as smart contract platforms — including Ethereum and Solana — sputter amid the marketwide tumult, asset manager VanEck said in an April 3 monthly note.The diminished activity on smart contract platforms reflects cooling market sentiment in cryptocurrencies and beyond as traders brace for the impact of US President Donald Trump’s sweeping tariff policies and a looming trade war. But stablecoin adoption — a key measure of Web3’s overall health — continues apace. This is partly because ongoing macroeconomic uncertainty “could accelerate the strategic case for crypto,” Matthew Sigel, VanEck’s head of research, said in an April 4 X post.Tokenized treasury bills help support stablecoin adoption. Source: VanEckRelated: Circle considers IPO delay amid economic uncertainty — ReportStablecoins gain steamStablecoins collectively added nearly $10 billion in total market capitalization in March as multiple issuers, including VanEck, prepare to launch branded stablecoin products, it said. The inflows persisted despite a steep drop in average stablecoin yields, the asset manager noted. Stablecoin yields now range from around 3% to 5% — near or slightly below Treasury Bills — compared to as high as 10% at the start of the year, it said. Even so, issuance of tokenized Treasury Bills — a primary source of institutional stablecoin yield — increased 26% from February to March, surpassing $5 billion in total issuance, according to the report.Ethereum, Solana slow downMeanwhile, smart contract platforms suffered across-the-board declines in activity, with revenues and trading volumes dropping 36% and 40%, respectively, according to the report. Solana has suffered particularly sharply. Daily fee revenues and decentralized exchange (DEX) volumes diminished by 66% and 53%, respectively, in March, VanEck said.In fact, Solana’s DEX share of volumes once again fell below those of Ethereum and its layer-2 scaling chains (L2s) after briefly surpassing them for the first time in February. Solana lost ground to Ethereum in DEX volume. Source: VanEckThis relative decline partly reflects a slowdown in memecoin trading, which still dominates Solana DEX activity. The segment has suffered since February after a series of memecoin-related scandals soured sentiment among retail traders. On Feb. 14, Libra, a memecoin seemingly endorsed by Argentine President Javier Milei, erased some $4.4 billion in market capitalization within hours of launching.In March, trading volumes on Ethereum’s L2s also experienced declines — retracing by some 18% from February — but held up better than Solana’s, according to VanEck.During the final week of March, “blob fees,” the Ethereum network’s main source of income from L2s, sunk to the lowest weekly levels so far this year, according to Etherscan.Magazine: 7 ICO alternatives for blockchain fundraising: Crypto airdrops, IDOs & more
Bakkt investors file class-action lawsuit after loss of Webull, BoA contracts
A group of investors with cryptocurrency custody and trading firm Bakkt Holdings filed a class-action lawsuit alleging false or misleading statements and a failure to disclose certain information.Lead plaintiff Guy Serge A. Franklin called for a jury trial as part of a complaint against Bakkt, senior adviser and former CEO Gavin Michael, CEO and president Andrew Main, and interim chief financial officer Karen Alexander, according to an April 2 filing in the US District Court for the Southern District of New York.The group of investors allege damages as the result of violations of US securites laws and a lack of transparency surrounding its agreement with clients: Webull and Bank of America (BoA).April 2 complaint against Bakkt and its executives. Source: PACERThe loss of Bank of America and Webull will result “in a 73% loss in top line revenue” due to the two firms making up a significant percentage of its services revenue, the investor group alleges in the lawsuit. The filing stated Webull made up 74% of Bakkt’s crypto services revenue through most of 2023 and 2024, and Bank of America made up 17% of its loyalty services revenue from January to September 2024.Related: Bakkt names new co-CEO amid re-focus on crypto offeringsBakkt disclosed on March 17 that Bank of America and Webull did not intend to renew their agreements with the firm ending in 2025. The announcement likely contributed to the company’s share price falling more than 27% in the following 24 hours. The investors allege Bakkt “misrepresented the stability and/or diversity of its crypto services revenue” and failed to disclose that this revenue was “substantially dependent” on Webull’s contract.“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” said the suit.Other law offices said they were investigating Bakkt for securities law violations, suggesting additional class-action lawsuits may be in the works. Cointelegraph contacted Bakkt for a comment on the lawsuit but did not receive a response at the time of publication.Prices affected by Trump Media reportsBakkt’s share price surged roughly 162% in November 2024 after reports suggested that then-US President-elect Donald Trump’s media company was considering acquiring the firm. As of April 2025, neither company has officially announced a deal.Shares in Bakkt (BKKT) were $8.15 at the time of publication, having fallen more than 36% in the previous 30 days.Magazine: Meet lawyer Max Burwick — ‘The ambulance chaser of crypto’
PayPal, Venmo to roll out Solana, Chainlink transfers
Global payments platform PayPal has expanded its cryptocurrency offerings to include Chainlink (LINK) and Solana (SOL), giving US-based users the ability to buy, sell and transfer the popular tokens. Support for LINK and SOL will be rolled out over the next few weeks and will also be extended to users of Venmo, a US mobile payment platform owned by PayPal, the company disclosed on April 4. Source: CointelegraphRoughly 83 million people used Venmo at least once in 2023, according to the latest available information from PayPal. PayPal’s global reach extends to roughly 428 million accounts as of December, the majority of which are in the United States. The company’s crypto services are available only to US residents. PayPal is expanding its crypto offerings in response to growing consumer demand, according to May Zabaneh, an executive in PayPal’s crypto and blockchain division.“Offering more tokens on PayPal and Venmo provides users with greater flexibility, choice, and access to digital currencies,” she said.PayPal’s US crypto offerings now include seven digital assets in total, including its payment stablecoin PayPal USD (PYUSD).Related: Tabit offers USD insurance policies backed by Bitcoin regulatory capitalPayPal’s stablecoin pushThe launch of PYUSD in 2023 solidified PayPal’s entry into the cryptocurrency market. Roughly one year after its launch, PYUSD surpassed $1 billion in total market capitalization for the first time. Since then, PYUSD’s circulating supply has fallen to around $760 million, according to industry data. PayPal’s US dollar-pegged stablecoin peaked at a market cap of more than $1 billion in August 2024. Source: DefiLlamaTo demonstrate the utility of PYUSD, PayPal settled an invoice with global consulting firm Ernst & Young in October for an undisclosed amount. At the time, PayPal’s senior vice president of blockchain, Jose Fernandez da Ponte, said “The enterprise environment is very well-suited” for stablecoin payments. Despite PYUSD’s modest circulating supply compared to stablecoin leaders USDt (USDT) and USDC (USDC), the company’s involvement in the sector cannot be understated, according to Polygon Labs CEO Marc Boiron.In an interview with Cointelegraph, Boiron credited companies like PayPal and Stripe for catalyzing stablecoin adoption at a time when regulators and enterprises were still uncertain about the technology. Magazine: Unstablecoins: Depegging, bank runs and other risks loom
First Digital redeems $26M after FDUSD depeg, dismisses Sun insolvency claims
First Digital Trust (FDT) has redeemed almost $26 million in stablecoin withdrawals after its FDUSD token briefly lost its US dollar peg following allegations of insolvency by Tron founder Justin Sun.First Digital USD (FDUSD) briefly depegged on April 2, falling as low as $0.87 after Sun claimed that First Digital was insolvent.On April 4, Sun doubled down on his allegations, claiming the firm had transferred over $450 million of customer funds to a Dubai-based entity and that it violated Hong Kong securities regulations.Source: H.E. Justin Sun“FDT transferred $456 million of its custodial clients to a private company in Dubai without their authorization and has not yet returned the money,” Sun claimed.Despite the claims, blockchain data from Etherscan shows First Digital has honored about $25.8 million in FDUSD redemptions since the incident.FDUSD redemptions. Source: Etherscan “We continue to process redemptions smoothly, demonstrating the fortitude of $FDUSD,” noted First Digital in an April 3 X post.When users redeem FDUSD for US dollars, the corresponding amount of FDUSD is burned onchain for the stablecoin to maintain a 1-to-1 peg with the US dollar and ensure the circulating supply matches reserves.Related: Wintermute transfers $75M FDUSD since depegs, in $3M arbitrage opportunityFollowing Sun’s claims, First Digital assured users that it is solvent and that FDUSD remains fully backed and redeemable.Source: First Digital“First Digital stands firm: Justin Sun’s baseless accusations won’t distract from Techteryx’s own failures — our stablecoin FDUSD remains fully backed and solvent,” First Digital stated in an April 3 X post.Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur HayesStablecoin depegs “greater systemic risk” than Bitcoin crashStablecoins depegs pose “a greater systemic risk” to crypto than a Bitcoin (BTC) crash, as “stablecoins are integral to liquidity, DeFi and user trust,” according to Gracy Chen, CEO of Bitget.Stablecoin depegs can cause “cascading failures like the TerraUSD collapse in 2022,” Chen told Cointelegraph, adding:“Current transparency, collateral quality and accountability among leading stablecoin issuers are insufficient — Tether’s lack of full audits, USDC’s exposure to banking risks and algorithmic stablecoins’ fragility highlight the market’s vulnerability to the next depeg event.”“To mitigate risks, the market should enforce real-time audits, prioritize high-quality collateral like US Treasurys, strengthen regulatory oversight and diversify stablecoin usage to reduce reliance on a few dominant players,” Chen added.Additionally, on April 4, Sun announced a $50 million bounty program offered to recover the TrueUSD (TUSD) reserves “misappropriated by bad actors, including FDT.”The bounty amount is equivalent to about 10% of Sun’s liquidity support or the stolen TUSD reserves, he said, adding that the program will be fully transparent, with an official portal launching soon.Source: Justin SunIn May 2022, the $40 billion Terra ecosystem collapsed, erasing tens of billions of dollars of value in days. Terra’s algorithmic stablecoin, TerraUSD (UST), had yielded an over 20% annual percentage yield (APY) on Anchor Protocol before its collapse.As UST lost its dollar peg, crashing to a low of around $0.30, Terraform Labs co-founder Do Kwon took to X (then Twitter) to share his rescue plan. At the same time, the value of sister token LUNA — once a top 10 crypto project by market capitalization — plunged over 98% to $0.84. LUNA was trading north of $120 in early April 2022.Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Has Michael Saylor's Strategy built a house of cards?
Strategy Inc., formerly MicroStrategy, has discarded its core product, assumed a new identity, swallowed over half a million BTC, spawned equity classes with double-digit yields, and inspired an arsenal of leveraged ETFs — a unique and significant market phenomenon.Michael Saylor’s firm has constructed a comprehensive financial framework based around Bitcoin, tying its corporate performance directly to the cryptocurrency’s price fluctuations. As a result, Strategy’s common stock has evolved into a proxy for Bitcoin exposure, its preferred shares offer yields tied to cryptocurrency risk, and a series of leveraged and inverse ETFs now track its equity movements, all fundamentally connected to its substantial Bitcoin holdings.Recently, there was an announcement of another purchase by MSTR (Strategy’s common equity) of close to $2 billion of BTC in one clip, inviting even more raised eyebrows and caution. This concern is not merely because of Strategy’s bet on Bitcoin, but the market architecture which has grown around it. A parallel financial ecosystem has emerged, binding its fate to a risk asset that, as Saylor himself notes, trades 24/7. He’s championed the idea that “volatility is vitality,” suggesting that this constant motion draws attention, sustains interest, and breathes life into the entire “Strategyverse” and its related equities.To some, this is financial innovation in its purest form: bold, unhedged, and transformative. To others, it is a fragile lattice of conviction and leverage, one black swan away from unraveling.From MicroStrategy to Strategy: A pivot into the abyss or the vanguard?MicroStrategy, once a staid business intelligence software provider, has been reborn as Strategy Inc., a corporate avatar synonymous with Bitcoin. The company has made an unabashed leap from offering data analytics to becoming a full-throttle Bitcoin acquisition vehicle.The numbers speak for themselves. As of March 30, Strategy holds 528,185 BTC, acquired for approximately $35.63 billion at an average price of about $67,458 per Bitcoin. The most recent tranche of BTC in 2025 involved the acquisition of 22,048 BTC for around $1.92 billion, at an average of roughly $86,969 per coin. Year to date, Strategy has achieved a BTC yield of 11.0 percent.This shift has transformed MSTR into a proxy Bitcoin ETF of sorts, albeit with operational leverage and corporate risk baked in. But unlike the SEC-blessed spot ETFs, MSTR offers amplified exposure: it behaves like Bitcoin, only more so due to the company’s use of leverage and financial engineering.Read more: MicroStrategy’s Bitcoin debt loop: Stroke of genius or risky gamble?Now, with the introduction of STRK (8% yield) and STRF (10% yield), Strategy has expanded its reach. These preferred shares offer fixed-income style returns, but their performance is deeply tethered to Bitcoin’s fate. When Bitcoin surges, yield-bearing holders cheer. They’re still promised yield when it falls, but their capital risk climbs.Financial innovation? Yes. Structural risk? Most certainly.Market performance of Strategy-adjacent equities (Base = 100). Source: TradingViewWhen indexed to 100 at the start of 2025, the performance of Strategy and related instruments demonstrates the effects of volatility and leverage in the Bitcoin-correlated financial ecosystem. As of early April 2025, MSTR has declined moderately by approximately 8%, tracking the broader downward trajectory of Bitcoin itself, which is down around 16%.The company’s preferred shares, STRF and STRK, have slightly appreciated above their initial indexed values, reflecting investor preference for dividend stability amidst market volatility.MSTU and MSTX have markedly underperformed, dropping around 37% to 38% from their normalized starting points, due to volatility drag and compounding losses inherent in leveraged daily reset structures.This YTD snapshot underscores how leverage magnifies returns and the potential risks associated with short-term market movements.Inside the Strategyverse: Bitcoin as treasury, equity as exposureStrategy’s operating income, still derived from its legacy software business, now plays second fiddle to its crypto balance sheet.However, the firm hasn’t just stockpiled coins; it has created a latticework of financial instruments that reflect and refract BTC price action. MSTR is no longer merely equity; it has become a high-beta Bitcoin play. STRK and STRF are yield-bearing hybrids, offering fixed returns yet functioning like risk instruments in a crypto-linked treasury experiment.The structural concern is this: by tying every new yield product, equity issuance and debt vehicle to Bitcoin, Strategy has effectively replaced diversification with correlation. Critics argue there is no hedge here, only degrees of bullishness.This raises the concern that a company can maintain corporate solvency and investor trust when its financial ecosystem is built atop the volatility of a single, historically unstable asset.Leveraged and inverse productsWhere there is heat, there will be leverage. The market has responded to Strategy’s gravitational pull by creating a suite of leveraged and inverse products tied to MSTR, giving retail and institutional players access to turbocharged Bitcoin exposure without holding the asset directly.Investors seeking amplified returns in anticipation of price gains can deploy strategies such as MSTU (T Rex) or MSTX (Defiance), both offering 2x long daily returns, or MST3.L, which provides 3x long exposure listed in London.Conversely, investors expecting price declines might choose SMST, offering 2x short exposure, or MSTS.L and 3SMI, each providing 3x short exposure listed in London.These instruments are typically employed by traders looking for short-term directional bets and should be handled cautiously due to daily reset mechanics and volatility risks.These are not traditional ETFs. They are complex, synthetic instruments with daily reset mechanisms and inherent decay risks. Volatility drag ensures that even in a sideways market, leveraged longs underperform. For shorts, the risk of a short squeeze, particularly in parabolic bull runs, is ever-present.Related: Trade war puts Bitcoin’s status as safe-haven asset in doubtIn practical terms, these products allow traders to speculate on MSTR’s price with minimal capital outlay. But they also amplify misalignment. A trader betting on Bitcoin’s month-long trend might find that their 3x long MSTR ETF underperforms expectations due to compounding losses on down days.The strategic risk here lies in mismatch: retail investors may perceive these ETFs as direct Bitcoin exposure with leverage. In reality, they are trading a proxy of a proxy, subject to corporate news, dilution, and macro shifts.Exposure at different levels of the Strategyverse. Source: Dr. Michael TaboneIs Strategy’s strategy conviction or leverage risk?Between 2020 and 2025, Strategy has executed over a dozen capital raises via convertible notes, ATM equity programs and, most recently, the STRF preferred offering priced at a 10 percent yield. The March 2025 raise helped fund the latest $1.92 billion Bitcoin buy.It is not just about buying Bitcoin. It is about the market constructing a meta-structure where every market instrument, common stock, preferred shares and synthetic ETFs feeds into the same gravitational pull. Each capital raise buys more Bitcoin. Each purchase pushes up sentiment. Each ETF amplifies exposure. This feedback loop has become the hallmark of Strategy’s financial architecture.With each new issuance, however, dilution risk grows. STRK and STRF investors depend not only on Strategy’s solvency but also on Bitcoin’s long-term appreciation. If BTC stumbles into a prolonged bear market, can those 10% yields continue? For investors, Strategy’s approach presents clear opportunities and risks. It offers a streamlined pathway for gaining exposure to Bitcoin through familiar financial instruments, combining elements of equity, fixed income, and derivatives. At the same time, investors must carefully consider the volatility of Bitcoin itself, the potential impacts of dilution from continuous capital raises, and the overall health of Strategy’s balance sheet.Ultimately, the investment outcome will heavily depend on the trajectory of cryptocurrency markets, the Strategy’s financial management and evolving regulatory landscapes.Magazine: Financial nihilism in crypto is over — It’s time to dream big again