Market View
Short-term Support?
The FTX Recovery Trust should proceed with the second round of user repayments starting today (May 30) with over $5B in cash and stablecoins to be sent to creditors within the next three business days via BitGo and Kraken. These include creditors in the five classes 5A, 5B, 6A, 6B and 7:
Creditor class | Description | Recovery rate |
Class 5A | Dotcom Customer Entitlement Claims: Institutional lenders, trading firms, and Alameda counterparties with international claims | 72% |
Class 5B | U.S. Customer Entitlement Claims: US-based customers of FTX | 54% |
Class 6A | General Unsecured Claims: Claims not backed by collateral and not otherwise classified | 61% |
Class 6B | Digital Asset Loan Claims: Creditors who loaned digital assets to FTX or its affiliates | 61% |
Class 7 | Convenience Claims: Smaller claims ≤ $50,000 | 120% |
Recall that the FTX Recovery Trust made its initial round of creditor payments on February 18, 2025 for the convenience classes with smaller claims ≤ $50,000, ultimately distributing around $7B to that cohort. However, despite the release of additional liquidity, the lack of strong pro-crypto catalysts around that time – alongside tariff headlines on the macro front – ultimately kept pressure on digital assets with the COIN50 index falling by 16% (to end-February).
We think the expected outcome following the second round of repayments could be different because (1) payments will be made in stablecoins whereas the first round of payments were made in a mix of cash and crypto, (2) the recent shift in market regime has signaled more bullish sentiment, and (3) greater regulatory clarity could help catalyze creditor behavior among institutional players. That said, the situation around tariffs remains fluid, as evidenced by the US trade court’s overturning of President Trump's reciprocal tariff strategy only to be sustained on appeal. Nevertheless, what’s less clear to us is whether this will be more supportive for large cap names like bitcoin or for altcoins further down the risk curve.
Three Days in Las Vegas
The Bitcoin 2025 Conference in Las Vegas delivered some key political and technological announcements this week, marking a pivotal moment for the mainstream adoption of crypto and coinciding with a new all-time-high for BTC/USD. US Vice President JD Vance’s keynote speech discussed bitcoin's potential as a strategic asset in the competition between the US and China, arguing that regulatory clarity in the US is necessary to keep innovation from going offshore. He also argued that stablecoins don't threaten the “integrity” of the USD, but rather, that they're a "force multiplier of our economic might."
Meanwhile, White House Crypto Czar David Sacks delivered one of the more significant policy announcements of the conference, suggesting that the US government has "a legal path to acquire more bitcoin" under President Trump's executive order establishing a Strategic Bitcoin Reserve. Sacks explained that while the executive order initially only authorized the acquisition of bitcoin from seizures or forfeitures, its language permits future purchases if done without increasing the national debt or requiring new taxes.
Corporate Treasury Buying Continues
Following Strategy's (formerly MicroStrategy) lead, sports marketing company SharpLink's (SBET) ether treasury strategy caused an over 400% surge in its stock and boosted ETH, after announcing plans to raise $425M. SOL Strategies has also filed a preliminary base shelf prospectus with Canadian regulators to raise up to US$1B via various instruments to invest in the Solana ecosystem. GameStop's share price increased before its 4,710 BTC ($513M) purchase this week but then dropped following the official announcement, illustrating a "buy the rumor, sell the fact" pattern. In a related note, Trump Media & Technology (DJT) also announced plans to raise $2.5B ($1.5B in stock, $1B convertible notes) to finance the purchase of BTC sometime in the future.
In total, there are about 70 public companies that have crypto on their balance sheets, though only about 25 of those are copying the Strategy playbook. Meanwhile, corporates are not the only entities adding crypto to their balance sheets, as Pakistan Crypto Council Chief Executive Officer Bilal Bin Saqib announced a new BTC reserve at Bitcoin 2025, which they could hold indefinitely. We think Pakistan’s move may influence more emerging economies to consider holding bitcoin or other crypto assets for their strategic reserves.
13F Filings for 1Q25
The latest 13F filings for US spot BTC ETFs (1Q25) indicate institutional ownership slipped from 29% to 25% of all fund shares, which we think is largely due to a decline in hedge fund participation in the basis trade. Indeed, CFTC reported that leveraged funds’ short positions fell by $3.3B during this period as the basis yield for trading CME 30d futures vs spot declined from over 11% on January 1 to around 6% on March 31. (This has since picked up and currently sits at around 9%. See Chart 2.) On the other hand, investment advisors grew their share from 10.8% to 12.4% over the quarter.
Regulatory Update
Following the cloture vote on May 19, the US Senate is expected to pass the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act by the end of next week – though a final vote has not been scheduled. Separately, the US House Financial Services Committee has also signaled support for stablecoin legislation with a similar proposal (the STABLE Act).
A stablecoin law could then pave the way for a crypto market structure bill next, which would create a national registration for crypto exchanges, broker/dealers, custodians and protocols – replacing the current patchwork of state licenses with a federal regulator (or set of regulators). Indeed, Chairman French Hill of the US House Financial Services Committee yesterday (May 29) introduced the bipartisan Digital Asset Market Clarity Act of 2025 (CLARITY Act) that would delineate the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing digital assets, among other things.
In our view, this could foster more innovation in the US by enabling developers to build regulated and compliant applications. We think these bills are expected to lead to increased innovation in the crypto ecosystem, particularly in the payments space, and will help to make crypto more accessible to retail users.
