Weekly Top Stories - 12/26/25

In this week’s newsletter, Alex Thorn writes about Bitcoin’s performance and near-term prospects, as well as the interplay between federal market regulators and Congress’s efforts to pass comprehensive market structure legislation; Lucas Tcheyan writes about a rare orderly DAO wind down amidst the rise of prop AMMs on Solana.

🟥 Bitcoin On Verge of Red Yearly Candle

Bitcoin heads into New Year's on the verge of a red yearly candle. Despite a monster year filled with regulatory unlocks, institutional adoption, and significant support from the Executive Branch of the federal government, BTCUSD is currently -6.3% YTD and -8.25% YoY. To post a positive return for 2025, BTCUSD will need to post a daily close above $93,389 on New Year's Eve next week.

Despite the lackluster end of year performance, which has seen BTCUSD trade as low as -36% from its Oct. 6, 2025, all-time high of $125,296, the U.S. Bitcoin ETPs have remained much more steadfast, with cumulative inflows only drawing down by -9% since their October all-time high of $62 billion.

Bitcoin faced headwinds from significant whale distribution, the October 10 leverage wipeout, and competing macro trades like AI, hyperscalers, gold, and the Mag 7, which we wrote about in a November note to clients.

OUR TAKE:

Bulls hoping for a green yearly candle still have 5 days left to make a push into the mid-$90k range, but Bitcoin investor sentiment undoubtedly feels lackluster at the moment. A significant options expiry at the end of the month clear some of the outstanding dealer gamma that has encouraged bitcoin to stay pinned between major $85k and $90k, and January may prompt some portfolio managers to take a fresh look at the world’s oldest cryptocurrency. There are reasons why the quiet period we’ve seen for the last month will not persist in the near term.

Despite the tepid finish, 2025 was a banner year for Bitcoin. Even Bitcoin’s staunchest supporters wouldn’t have believed some of 2025’s headlines just a few years ago. Take some of these for example: White House establishes Strategic Bitcoin Reserve, SEC Chairman Announces Shift to Onchain Financial Markets, President Signs Landmark Stablecoin Law, Trump Pardons Silk Road creator Ross Ulbricht, Wall Street Banks Embrace Crypto, Czech Central Bank Buys $1 million in Bitcoin, Square Rolls Out Bitcoin Payments to 4 million Merchants, Morgan Stanley Recommends a 4% “Opportunistic” Crypto Portfolio Allocation, IBIT is Only ETF in Top 2025 Flows with Negative Return, and on and on. 2025 has been filled with dozens of positive headlines for Bitcoin that in the past would have sparked euphoria. Today, these victories feel like par for the course. Maybe we really are “tired of winning?”

Holders of the U.S. Bitcoin ETPs have been remarkably steadfast, which only further highlights the growing maturation of the asset class. Indeed, despite the fact that 60% of ETF inflows are underwater at current prices, and BTC has suffered a -36% drawdown from all-time high, lifetime cumulative inflows are down only -9%. So, who has been selling? The call is coming from inside the house. Since July 2025, the number of coins held in long-term hands has declined with more magnitude than at any time in the 8 years since the 2017 bull run. Whether OG sellers (and there have been some) or swing traders, older onchain holders have been net selling into new brokerage account entrants. While it can lead to price drops in the case of waning absorption demand, ultimately, this distribution is a long-term positive. Bitcoiners’ average cost basis is rising. More and more people believe bitcoin is more and more valuable. Bitcoin’s realized market cap (the aggregate value of all coins if priced at the time they last moved onchain, a decent gauge of investors' aggregate principal investment) is more than $1.1 trillion, while the realized price (the average price at which all coins on the network last moved onchain) is more than $56k. For an asset to mature requires early adopters to distribute coins from a few hands to the many – that’s how you build a much more widely distributed base for the future.

Black Christmas (1974)

In addition to these and other positive structural developments, the world is hunting for non-dollar hedge assets. April 2025 was one of the first times in history that a -10% move in the S&P 500 did not coincide with dollar appreciation – indicating that risk-off traders did not flee to the dollar for safety. As I wrote in our 26 Predictions for 2026 report, we believe it is likely only a matter of time before “Bitcoin follows gold to become widely adopted as a monetary debasement hedge.” It doesn’t take much to start a stampede in that direction – a few major allocators, central banks, or nation-states might be all it takes to spark the fuse and light a fire. – Alex Thorn

🏛️ New CFTC Chair While Congress Keeps Working

Mike Selig sworn in as 16th CFTC Chairman as Senate punts market structure bill until 2026. Former SEC Crypto Task Force’s chief counsel Mike Selig was sworn in as the next chairman of the Commodity and Futures Trading Commission on Monday. Selig’s ascension marks the latest personnel win for the crypto industry, and he is expected to continue work to allow the integration of bitcoin, stablecoins, and digital assets into the commodity and derivatives trading markets.

The week before, Senate Banking Chair Tim Scott (R-SC) announced that the pivotal committee would not hold a markup of the Responsible Financial Innovation Act (RFIA) until some time in “early 2026.” Scott’s spokesperson said, “Chairman Scott and the Senate Banking Committee have made strong progress with Democratic counterparts on bipartisan digital asset market structure legislation.”

OUR TAKE:

Selig was a key deputy to SEC Commission Hester Peirce as chief counsel to the SEC’s Crypto Task Force and he knows the issues well, along with bringing significant background in CFTC rules and the Commodity Exchange Act. Crypto now has sympathetic policy progressives leading both key federal market regulators in SEC Chairman Paul Atkins and CFTC Chairman Mike Selig. Together, these two agencies can supply a lot of the regulatory clarity the crypto industry, with the exception of (i) granting explicit authority to trade spot crypto and (ii) matters requiring protections from the Bank Secrecy Act (BSA) (such as subjecting developers to bank-like regulations or making DeFi front ends or smart contracts comply with AML/KYC obligations).

Indeed, the hangups between Republicans and Democrats in the U.S. Senate over the market structure bill are mostly about the other issues – primarily, how to handle DeFi within the bill, if at all. Democrats are looking for ways to combat international money laundering, though many of their suggestions to do so would cross key red lines for Republicans. Finding some middle path that can get 60 votes in the Senate has been an ongoing challenge now for more than 4 months.

Whether or not those issues get resolved, and a Senate companion bill to the House’s CLARITY Act (which passed the House in July) can make it to the President’s desk, the crypto industry is poised to get significant clarity from the two key market regulators, regardless. Much of the content in the market structure bills revolves around delineating jurisdictional lines between the two agencies, but with the two regulators now run by former colleagues, it’s likely the SEC and CFTC may be able to address some of that delineation through guidance and coordination, even absent congressional action. Yes, codifying these jurisdictional lines and classifications (and other wish-list items like developer and self-custody protections) into federal statute would have the most long-term durability and clarifying effect on institutional adoption. But even if we don’t get them in federal law, crypto is likely to get them through guidance and rulemaking. That could provide the crypto industry with a degree of regulatory comfort over the next several years, no matter what Congress is able to accomplish. – Alex Thorn

🗳️ Governance Discipline & the Rise of Prop AMMs

Lifinity, an aggregated market maker (AMM) protocol on Solana and early contributor to the Solana ecosystem announced it will wind down operations following a community governance vote. Unlike many past DeFi shutdowns, Lifinity’s exit was not driven by an exploit or insolvency, but by sustained competitive pressure and a sober assessment of long-term viability in an increasingly crowded AMM landscape. With market share peaking at approximately 18% of Solana DEX volumes in 2024, Lifinity’s share has steadily eroded as market structure matured, falling to less than 2% in 2025.

The wind-down was formalized through a DAO governance proposal that asked token holders to determine whether the protocol should continue operating or pursue an orderly shutdown and capital return. The proposal passed with overwhelming support, authorizing the team to cease front-end operations, unwind remaining positions, and convert the protocol’s treasury into USDC for distribution to LFNTY token holders. Under the approved plan, both the core treasury and remaining development funds will be consolidated and returned pro rata, with a defined claims process and a redistribution mechanism for any unclaimed funds after a set period.

OUR TAKE:

The Lifinity wind-down is notable for two primary reasons. First, it represents a rare example of a DAO-led protocol voluntarily winding down operations without significant controversy. This is increasingly uncommon in today’s market, where many DAOs continue to grapple with unresolved questions around token-holder rights, protocol ownership, and the relationship between governance tokens and underlying economic value.

In Lifinity’s case, those tensions were largely reconciled. The DAO controlled the protocol, owned the liquidity, and ultimately exercised that authority to return capital to token holders. This outcome was aided by the fact that Lifinity operated as a profitable business, with more than $40 million in balance sheet assets, leaving real value to distribute. Still, the process ultimately depended on the core team acting in the best interests of token holders, a dynamic that has proven fragile across much of DeFi. As we’ve covered extensively over the past year, aligning token value with protocol economics remains one of crypto’s most persistent challenges, in part reflecting tokens launched during an era shaped by regulatory constraints.

Second, Lifinity’s shutdown underscores the rapid shift Solana’s market microstructure, driven in large part by the rise of proprietary AMMs (Prop AMMs). Unlike traditional AMMs that passively provide liquidity through preset curves, prop AMMs actively quote prices and update their effective pricing curve using protocol-owned capital. On Solana, they also address key market microstructure constraints, especially the lack of deterministic priority for cancelling or updating quotes through oracle-driven update mechanisms that help ensure quotes refresh at the top of the block during volatile conditions. This capability is critical for market makers to provide tight spreads and has become a core focus of Solana’s core and application developer teams through initiatives such as application-controlled execution (ACE) and multiple concurrent proposers (MCP). As a result, prop AMMs have come to dominate Solana DEX activity, accounting for more than two-thirds of total DEX volumes in recent months and at times outcoming centralized exchanges in spot volumes for SOL-USD pairs. Their success is even now drawing attention beyond Solana, with EVM teams beginning to explore similar designs.

As we close out 2025, Lifinity’s story signals progress in aligning token holders with protocol value and in the maturation of blockchains as competitive financial infrastructure. – Lucas Tcheyan

Charts of the Week

Bitcoin closed Christmas Day 2025 at $87,844, right in the middle of the $84k-93k range in which it’s traded for the last month. The tightness of the range has pushed BTCUSD’s 30-day realized volatility to levels not seen since before October 10.

Other News

💰 Former FTX US Chief Raises $35M to Launch Bermuda Regulated Perps Exchange

⚡ Bitcoin Briefly Flashes to $24K on Binance’s USD1 Pair in a Sudden Spike

🤝 Crypto M&A Hits a 2025 Record of $8.6B as Trump Era Regulatory Shift Fuels Deals

🧾 EU Crypto Tax Reporting Begins in January, With Asset Seizure on the Table

🌐 HashKey Capital Raises $250M in First Close for $500M Blockchain Infrastructure Fund

🪙 Trump Media Moves 2,000 BTC After Fresh Inflows Hit Company Linked Wallets

🏛️ Hong Kong Targets 2026 Legislation for Virtual Asset Dealer and Custodian Rules

🔧 Gnosis Completes Hard Fork to Recover $9.4M From Balancer Exploit Funds

🎯 Crypto.com Builds an In-House Market Maker for Its Prediction Markets