Custodia CEO and key crypto determine Caitlin Long has questioned the readiness of conventional finance companies for his or her first-ever crypto winter. Speaking with CNBC on Friday on the Wyoming Blockchain Symposium 2025, Long emphasised that whereas Wall Street’s rising involvement has fueled the present market cycle, its legacy programs and threat fashions could show insufficient when the inevitable bear market returns.
Wall Street Titans May Not Be Ready For A Crypto Market Downturn – Custodia Boss
In answering a query on the importance of institutional involvement within the crypto market, Long contrasted the early days of crypto, when retail traders and grassroots members labored to increase decentralization and safe networks like Bitcoin and Ethereum, with right this moment’s panorama dominated by institutional finance. According to the Custodia founder, the cycle is now largely pushed by Wall Street titans who’re constructing monetary wrappers, derivatives, and company treasuries round digital property.
Notably, institutional participation in crypto has hit report highs lately. The Spot Bitcoin ETFs, which launched early final yr, have been TradFi’s largest digital asset success, boasting $53.80 billion in cumulative inflows. Meanwhile, Spot Ethereum ETFs are starting to collect momentum, registering $8.20 billion for the reason that starting of July alone.
While this inflow has undoubtedly introduced credibility and capital to the sector, Long warned that the normal playbooks of those establishments will not be suited to property with finite provide, e.g, Bitcoin. The former Morgan Stanley govt and Custodia CEO stated:
….They (TradFi) are completely comfy taking extra leverage than you’ll take with an asset of finite provide as a result of they’ve all these mechanisms to bail them out within the occasion that provide for an asset turns into too tight. They have low cost window. They have fault tolerances constructed into the securities system in order that if the books don’t stability, it’s okay. They can at all times go the subsequent day and get the shares from the market the subsequent day.
By distinction, crypto operates in actual time with no exterior buffers. Caitlin Long explains that this structural distinction might go away TradFi companies uncovered in the event that they try to use standard leverage and hedging methods to a market that behaves somewhat otherwise. Having witnessed a number of boom-and-bust cycles since 2012, the Custodia boss expressed certainty that one other downturn will come regardless of the outstanding market progress within the current cycle, and questions whether or not conventional gamers will have the ability to stand up to its impression.
Crypto Market Overview
At the time of writing, the full market crypto cap is valued at $3.95 trillion, following a minor 0.94% decline up to now day.
Featured picture from Fox Business, chart from Tradingview
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