As the crypto landscape continues to evolve at breakneck speed, today's deep dive couldn't be more timely. From stablecoins reshaping the financial backbone of our industry to Ethereum's strategic pivot at a critical crossroads, the stories that matter are unfolding before our eyes. Whether you're tracking the power law dynamics of altcoin valuations or monitoring Bitcoin's remarkable resilience amid macro headwinds, our comprehensive analysis cuts through the noise to deliver insights that matter. The regulatory wildcards and institutional adoption patterns we explore today aren't just academic discussions—they're the forces actively reshaping your portfolio's potential.
Dive in with us as we unpack the strategies, trends, and pivotal moments that will separate the winners from the losers in this next chapter of crypto.
Stablecoins: Business Models, Regulation, and the Endgame
Stablecoins have become the backbone of the crypto economy, serving as both a payment rail and a store of value for users worldwide. The business models behind stablecoins are rapidly evolving, with issuers like Circle and Tether facing new competition from banks, fintechs, and even blockchain protocols themselves. At the same time, the regulatory landscape is shifting, with US legislation on the horizon that could fundamentally reshape the industry.
The core of the stablecoin business model has historically been interest income from reserves (primarily US Treasuries). Tether, with a global focus and minimal regulatory overhead, has become the most profitable player, earning $13B in net income with just 50 employees. Circle, by contrast, faces high distribution costs (paying $900M to Coinbase) and regulatory expenses, resulting in much thinner margins.
A key trend is the “stablecoin sandwich”: value is increasingly captured by the chains (e.g., Base, Tron) and apps (e.g., Coinbase, Robinhood) that distribute stablecoins, rather than the issuers themselves. This has led to a proliferation of new stablecoins (RLUSD, PYUSD, etc.) and the rise of infrastructure players (Zero Hash, Mesh) that abstract away the complexity of chains and assets.
Yield-bearing stablecoins, which could offer better return on savings than traditional banks, are structurally blocked.
Regulation is a looming wildcard. The US stablecoin bill may block yield-bearing stablecoins, favoring banks and incumbents and potentially stifling innovation. Yield-bearing stables (BUIDL, Benji, Sky, Ethena) are growing rapidly, especially outside the US, offering users a way to earn on their savings. The “endgame” is a world where stablecoins are ubiquitous, programmable, and integrated into every fintech and banking app, with infrastructure players enabling seamless interoperability.
Investors should watch for:
The impact of US legislation on yield-bearing stables and non-bank issuers
The continued shift of value capture from issuers to distribution and infrastructure
The global growth of stablecoins as both a payment and savings vehicle, especially in emerging markets.
Ethereum’s Strategic Pivot: L1 Scaling, Product Mindset, and the Rollup Roadmap
Ethereum is at a crossroads. After years of prioritizing research and decentralization, the network is now facing competitive pressure from product-focused chains like Solana and a shifting industry “meta” that rewards user experience and growth. The Ethereum Foundation (EF) is undergoing a cultural and leadership transformation, with a renewed focus on L1 scaling, product-market fit, and delivering tangible value to users and developers.
Ethereum, in many ways, is in a very good and healthy spot, but, like, something clearly went wrong. And I think the best way I can kind of describe what I think that is is that we never really took seriously the downside consequences of decentralization.
The core issue identified by EF researchers and community leaders is that Ethereum neglected the downside of decentralization: no one was responsible for ensuring the whole system made sense as a product. The “rollup-centric roadmap” was correct in the long term, but Ethereum failed to scale the L1 and provide a compelling user experience in the short and medium term. As a result, growth and mindshare have shifted to L2s (Base, Optimism, Arbitrum) and competitors like Solana.
The new strategy is to aggressively scale the L1 (targeting 3x increases per year, aiming for 100M–300M gas limits), improve block times and UX, and offer valuable services to L2s (interop, DA, sequencing). The EF is bringing in new leadership (Tomasz Stańczak, Hsiao-Wei Wang) and product-focused voices, moving away from the “ivory tower” research culture. The goal is to make Ethereum the obvious default for new apps and users, with L2s as seamless extensions rather than competitors.
Investors should watch for:
The pace of L1 scaling and UX improvements
The success of the EF’s cultural and leadership changes
Ethereum’s ability to retain mindshare and liquidity in the face of fast-moving competitors.
Altcoin and L1/L2 Valuation, Tokenomics, and Market Structure
The altcoin and L1/L2 landscape is facing a reckoning. With thousands of tokens in circulation, most are structurally unable to capture value, and only a handful will survive in the long run. The “power law” distribution dominates: a few tokens (BTC, ETH, SOL) capture the vast majority of value and liquidity, while the long tail trends toward zero.
There’s basically always been infinite tokens. And by infinite tokens, what I mean is tokens beyond the carrying capacity of the market.
Speakers debated whether the proliferation of new L1s/L2s and tokens is a new problem or a persistent feature of crypto. The consensus is that most tokens are “vaporware,” with poor tokenomics, high inflation, and little value accrual. Market manipulation, lack of transparency, and poorly designed airdrops exacerbate the problem. The OM/Mantra crash, which wiped out $5B+ in market cap in hours, is a case study in the risks of illiquid, manipulated markets.
For investors, the lesson is clear: focus on power law winners, avoid the long tail, and demand transparency and real value accrual. The future of altcoin investing will be shaped by better market structure, more rigorous token disclosures, and a shift toward tokens that actually capture a share of protocol revenues or utility.
Bitcoin Price, Macro, and Institutional Adoption
BTCUSD
Bitcoin’s price and adoption are increasingly driven by macroeconomic factors and institutional flows. The current environment is shaped by US-China trade tensions, tariffs, Fed policy, and the broader “risk-off” mood in global markets. Despite volatility, Bitcoin has shown remarkable resilience, holding steady even as equities and other risk assets have sold off.
Institutional adoption is accelerating: ETFs have gathered $35B+ in assets in a year, the US government holds $17B+ in Bitcoin, and sovereign wealth funds and nation-states are exploring strategic reserves. The debate over “diminishing returns” and whether Bitcoin’s cycles are over is ongoing; some see a “slow burn” with less volatility, while others expect explosive moves as new catalysts emerge.
Bitcoin is increasingly viewed as a macro asset, not just a tech play. Regulatory clarity (SAB 121, self-custody, market structure bill) is a tailwind, and the shift from CeFi to DeFi lending is strengthening the on-chain economy.
Investors should watch for:
The impact of macro shocks (tariffs, trade war, Fed policy)
The pace of institutional flows
The evolution of Bitcoin’s role as a global reserve asset.
As we wrap up this edition, the crypto landscape continues to present both challenges and opportunities. From stablecoins revolutionizing financial infrastructure to Ethereum's strategic pivot, from the power law dynamics of altcoin markets to Bitcoin's resilience in turbulent macro conditions – these aren't just trends to observe, they're forces actively shaping your investment journey.
What aspects of today's analysis resonated most with you? Which strategic shifts are you implementing in your own portfolio?
We'd love to hear your thoughts – simply hit reply and share your perspective on how these developments are influencing your approach. If you found value in today's insights, please forward this newsletter to colleagues and friends who might benefit from staying ahead of the crypto curve. Together, we navigate this complex landscape with clarity and purpose. Until next time, stay vigilant and strategic in your crypto endeavors.