On the policy front, there were tentative signs of progress on the digital asset market structure bill. As CoinDesk’s Jesse Hamilton reported, White House-hosted talks between crypto industry representatives and bankers yielded incremental movement, though no compromise has yet emerged.
At the same time, cracks from the recent crypto downturn are still surfacing. Chicago-based crypto lender Blockfills, as CoinDesk reported, is exploring a sale after enduring a $75 million lending loss during the recent price crash and having temporarily suspended client deposits and withdrawals last week. With crypto prices tumbling sharply in recent months, investors have been bracing for potential blowups like those of Celsius and FTX in 2022. So far, however, the fallout appears contained — on the one hand, tempering worst-case fears, but on the other, avoiding the kind of complete washout that set the stage for the bottom of that brutal bear market and the beginning of the 2023-25 bull run.
Still, risks outside the crypto sphere continue to loom that leave investors hesitant to take risks.
Worries about mounting stress in credit markets flared up after private-equity company Blue Owl (OWL) permanently curbed redemptions in its $1.7 billion retail-focused private credit fund. OWL fell 6% on Thursday, while the shares of other major private credit managers, including Apollo Global (APO), Ares Capital (ARES) and Blackstone (BX) slid more than 5%.
Geopolitical tensions remain another overhang, with the prospect of U.S. military action against Iran still in play amid an ongoing regional buildup. Crude oil rallied another 2.8% over $66 per barrel, hitting its highest price since August.
Traders play defense
That caution is reflected in crypto derivatives markets, Jake Ostrovskis, head of OTC at trading firm Wintermute, pointed out. Many traders are buying downside protection while limiting upside participation, he noted, which means they are effectively paying for insurance against another drop while capping potential gains in a breakout to the upside.
The average U.S. bitcoin ETF cost basis now sits near $84,000, leaving a large share of ETF investors underwater — nursing a 20% paper loss on average — and potentially vulnerable to "capitulation selling" if prices slide further.
Still, total ETF holdings remain within about 5% of their peak in bitcoin terms, suggesting institutions are trimming exposure rather than rushing for the exits.
coindesk.com
