Introduction
Bitcoin's slide below US$70,000 (currently trading at AU$94,408.68 as of 12:00 PM AEDT) has tested conviction across markets, but clarity is emerging. The CLARITY Act edges closer to passage, institutional capital is flowing back through new channels, and real-world adoption is accelerating. From Dragonfly's US$650 (AU$923) million fund to Steak 'n Shake's Bitcoin treasury strategy, builders are moving forward while traders capitulate. Vitalik Buterin's critique of prediction markets and diverging ETF flows between the US and Europe highlights a sector still finding its footing, but the shift from speculation to infrastructure has never been more apparent.
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European ETF Investors Hold Steady Amid Bitcoin's 22% Slide, While Vitalik Calls Out Prediction Market "Corposlop"
Bitcoin has sold off sharply in 2026, dropping more than 22% and briefly falling below US$70,000 (AU$99,935) to levels last seen in late 2024. The decline has reignited concerns about volatility and triggered brief ETF outflows, but European crypto investors appear unfazed. European digital asset ETF flows turned negative during the peak of January's volatility but quickly recovered, posting two consecutive weeks of net inflows in February even as Bitcoin showed little sign of rebounding.
The divergence between Europe and the United States is striking. After more than US$2 (AU$2.8) billion flowed into US crypto ETFs in the week ending January 16, comparable outflows occurred during the week ending January 23 amid peak volatility. US outflows have remained negative since then, contrasting sharply with Europe's recovery. On a year-to-date basis, combined US and European digital asset ETF flows remain negative.
Michael Field, chief European markets strategist for Morningstar, noted that "crypto was touted as a safe-haven and a diversifier from more traditional assets. What we are learning, however, is the correlation to other assets, like equities and bonds, is higher than people originally believed". Stephen Dover, chief market strategist at Franklin Templeton Institute, attributed the selloff to macro conditions: "Uncertainty around interest rates, global liquidity, and geopolitics continues to weigh on all risk assets. Crypto often reacts first to these shifts because it trades 24/7 and carries higher embedded leverage than traditional markets".
While markets grapple with volatility, Ethereum co-founder Vitalik Buterin has issued a sharp critique of where capital is flowing within crypto. In a recent post on X, Buterin warned that prediction markets are "over-converging" on cryptocurrency price speculation, sports wagering, and other high-engagement trades that offer "dopamine value" but limited long-term societal benefit. He described the trend as a slide towards "corposlop," cautioning that overreliance on uninformed traders can create unhealthy product incentives.
Buterin attributed this shift partly to revenue pressures during bear markets, suggesting teams may feel compelled to lean into these categories because they generate income when broader conditions are weak. He identified three types of participants in prediction markets: "smart traders" who supply information, "naive traders" who lose money on incorrect views, and "hedgers" who accept expected losses to reduce risk, noting that current platforms lean heavily on the first two categories.
When one X user argued that financially desperate people are gambling by default, Buterin replied bluntly: "Yeah, and encouraging financially desperate people to gamble is bad because the likely outcome is that they become even more financially desperate".
Beyond criticism, Buterin proposed repositioning prediction markets as tools for hedging rather than speculation, and suggested moving away from reliance on US dollar-backed stablecoins, which he argued could constrain decentralisation. As an alternative, he proposed creating price indices for major categories of goods and services, paired with prediction markets tied to those indices, allowing individuals to hold personalised baskets representing expected future expenses rather than a single fiat-pegged token.
Together, these developments highlight a market caught between fear-driven volatility and questions about whether crypto's current trajectory serves speculation or genuine utility.
CLARITY Act Gains Momentum as Dragonfly Closes US$650M Fund
While markets struggle with volatility, two significant developments suggest the crypto industry's infrastructure is maturing rapidly: the CLARITY Act is edging closer to passage, and institutional capital is returning through new channels.
Ripple CEO Brad Garlinghouse has predicted an 80% chance the CLARITY Act will pass by the end of April, despite significant pushback over key provisions. The crypto bill aims to provide clearer regulations for the industry and has sparked constructive discussions between crypto firms and banking institutions. "Let's not let perfection get in the way of progress," Garlinghouse stated, stressing that regulatory clarity is essential for the industry's future growth.
The main sticking point has been the stablecoin yield provision, which caused enough friction that Coinbase withdrew its support for the bill after failing to reach consensus. This disagreement has stalled the bill's passage since January, but Garlinghouse remains optimistic, calling on the industry to accept a compromise. Ripple's CLO Stuart Alderoty has also expressed hope, believing that negotiations between the crypto industry and financial institutions are moving forward towards a resolution.
The White House has set February as a critical month for resolving outstanding issues. US Treasury Secretary Scott Bessent said passing the bill would provide "great comfort to the market" amid ongoing volatility, highlighting the importance of clear federal regulations for digital assets. Bessent warned that if Democrats take control of the House in November, the coalition pushing for the bill's passage could collapse, making the next few months crucial. Polymarket traders are currently pricing in a 62% chance of the bill's passage following another round of meetings scheduled for later this week.
As regulatory clarity approaches, institutional capital is flowing back into crypto, albeit through different channels than the last bull cycle. Crypto venture capital firm Dragonfly Capital has closed its fourth fund, raising US$650 (AU$923) million to invest in the next phase of blockchain companies. Rather than chasing consumer apps, the firm is targeting traditional financial products built on blockchain rails, including credit card-like services, money market-style funds, and tokens tied to real-world assets such as stocks and private credit.
"This is the biggest meta shift I can feel in my entire time in the industry," said Tom Schmidt, a general partner at Dragonfly. The fundraising comes after what Rob Hadick, fund general partner, described as a "mass extinction event" in the crypto VC ecosystem, as higher interest rates and token price declines thinned the investor pool.
The shift in capital flows is noteworthy. Venture funding for blockchain companies cooled in 2025, but the capital mix has changed. Traditional early-stage venture deals slowed, while more money began flowing through public listings, private investments in public equity (PIPEs), debt raises and post-IPO equity offerings. Last month alone, 111 crypto companies raised a combined US$2.5 (AU$3.54) billion across IPOs, PIPEs, debt and equity offerings, suggesting institutional capital is returning through different channels.
The sector focus has also evolved. Instead of backing layer-1 blockchains and consumer-facing apps, investors are directing capital towards stablecoin infrastructure, institutional custody, digital asset treasury strategies and trading platforms. Dragonfly's US$650 (AU$923) million fund signals that, despite the downturn in crypto venture investing, sizable pools of capital are still backing projects that aim to connect blockchain technology more directly with traditional finance.
Together, these developments paint a picture of an industry moving from the "Wild West" era towards regulated, utility-focused infrastructure. We believe this is exactly the environment needed for sustainable growth in the digital economy.
From Tokenised Gold Dividends to Bitcoin Burgers
While traders fixate on price action, a quieter revolution is unfolding: companies are actually deploying Web3 infrastructure in the real economy. From tokenised commodities to stablecoin banking rails and Bitcoin-accepting fast food, the shift from speculation to utility is accelerating.
Elemental Royalty Corporation (ELE) has become the first publicly listed gold company to offer shareholders the option to receive dividends in blockchain-based tokens backed by gold. Shareholders can now elect to receive returns in Tether Gold (XAUT), a stablecoin backed by physical gold, rather than fiat money, providing exposure directly tied to the price of gold with the added flexibility of digital settlement.
The Canada-based royalty company announced the move on Tuesday, marking a significant milestone in bridging traditional commodities with blockchain infrastructure. The move comes after Tether bought one-third of Elemental last year. Gold-backed tokens have emerged as a fast-growing asset class, with the total market for tokenised gold surpassing US$5 (AU$7.1) billion. XAUT currently leads the sector in both volume and supply, with much of this growth driven by retail investors seeking exposure to gold without relying on traditional custodians or intermediaries.
On the infrastructure side, Bridge, the stablecoin company acquired by payments giant Stripe, has been granted conditional approval from the Office of the Comptroller of the Currency (OCC) for a national trust banking charter. Upon full approval, the firm would be able to custody digital assets, offer and issue stablecoins, and operate stablecoin reserves.
"Stablecoins are becoming core financial infrastructure," the firm posted on X. "Institutions need regulatory clarity, operational resilience, and scalable systems to build with confidence. A national trust bank establishes that foundation". The firm's conditional approval follows that of other major stablecoin and crypto firms, including Circle, Ripple, and Paxos, which received conditional approval from the OCC in December. Other major players, including publicly traded crypto exchange Coinbase and Trump-linked World Liberty Financial, have also applied for their own national trust banking charters.
Bridge submitted its application in October, but the rush of crypto-related applications followed the OCC's May decision to reaffirm that banks can hold and manage crypto assets for their customers, and the July signing of the GENIUS Act, which regulates the issuance and trading of stablecoins. These applications are now receiving scrutiny from traditional banking's largest lobbyists, who have urged regulators to slow charter-granting decisions, highlighting the growing tension between traditional finance and crypto infrastructure.
Perhaps most surprisingly, mainstream adoption is playing out at street level. Fast-food chain Steak 'n Shake reported that same-store sales have risen "dramatically" since it began accepting Bitcoin payments in May 2025, though the company did not release specific revenue figures tied to Bitcoin activity. The chain attributed the growth to the combination of a "decentralised, cash-producing operating business" with its Bitcoin strategy.
All Bitcoin collected at participating locations flows directly into the company's Strategic Bitcoin Reserve rather than being converted to cash at the point of sale. The reserve has grown to approximately 161.6 Bitcoin, currently valued at around US$10.96 (AU$15.6) million. Steak 'n Shake reported same-store sales growth of 11% in Q2 2025 and 15% in Q3 2025, outpacing major competitors including McDonald's, Domino's, and Taco Bell during the same periods.
Beyond payments, the chain has integrated Bitcoin into its employee compensation structure. In January, it rolled out a Bitcoin bonus programme through Bitcoin rewards firm Fold, paying hourly employees US$0.27 (AU$0.38) in Bitcoin per hour worked, subject to a two-year vesting period. The programme targets Gen Z and Millennial workers, who make up the bulk of restaurant staff in the United States.
Despite the sales lift, the reserve is carrying an unrealised loss. The company's average purchase price sits at just under US$92,851 (AU$131,739) per coin, placing its current holdings roughly 26% below that cost basis. Vineet Budki, CEO of venture capital firm Sigma Capital, described the model as demonstrating what a real digital asset treasury strategy looks like when attached to a cash-generating operating business.
Samuel Patt, co-founder of Bitcoin technology firm op_net, noted that merchant demand for Bitcoin payments remains limited at this scale and will require improvements to the Lightning Network or broader network scaling before other chains follow. Patt described Steak 'n Shake as an "outlier" for now, though large merchants proving the model in practice could eventually give others a path to follow.
From boardrooms to burger joints, the message is clear: Web3 infrastructure is moving beyond the speculative phase and embedding itself into real economic activity. Whether it's dividends paid in tokenised gold, stablecoin banking charters, or Bitcoin bonuses for fast-food workers, the experiments are accelerating, and the infrastructure is getting built.
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Founder's Corner
Traders are currently fixating on Bitcoin’s slide below US$70,000, but they’re missing the forest for the trees. While "naive traders" get washed out by short-term volatility, the real story is the massive capital migration from speculation toward utility. Vitalik Buterin recently called out the rise of "corposlop", prediction markets and products that prioritise "dopamine value" over societal benefit. He’s right to be sceptical, but the antidote is already here. Dragonfly’s US$650 million fund isn't chasing the next meme coin; it’s backing the unsexy, indestructible rails of the future, credit services and money markets built on blockchain. We are witnessing a "mass extinction event" for speculative fluff, leaving only the builders who understand that the "Wild West" must mature into a regulated, institutional-grade ecosystem.
The most fascinating proof of this shift isn’t happening on Wall Street, but at your local burger joint. Steak ’n Shake’s move to build a Strategic Bitcoin Reserve and pay employees in BTC bonuses is the ultimate reality check for the sceptics. Despite an unrealised loss on their holdings, their same-store sales are outpacing competitors like McDonald’s and Domino's because they’ve integrated digital assets into a cash-producing operating business. From gold mining companies paying dividends in tokenised gold (XAUT) to Stripe’s Bridge securing a national trust charter, the infrastructure is moving beyond "proof of concept" and into the real economy.
Richard Voice, Co-Founder, Wayex
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