Ether (ETH) remains under pressure after failing to reclaim the $2,150 resistance level. Despite the decline, ETH’s aggregate open interest has increased by roughly 350,000 ETH, suggesting new short positions are entering the market.
With more than $1.5 billion in bearish positions clustered above $2,150, a successful defense of the $2,000 support zone could trigger a sharp short squeeze and a relief rally for ETH.
Overcrowded ETH trade may lead to a relief rally
ETH has failed to reclaim $2,150 after dropping below it on May 17. The resistance capped the price from February to April, limiting a strong breakout.
With the price consolidating near $2,000, crypto trader Ardi said,
“Sub-$2,000 is coming for ETH shortly. We’ve already seen a -20% correction from the range highs, and price is now completely outside the ascending channel.”
ETH/USD, one-day chart analysis by Ardi. Source: X
ETH futures data indicate a more nuanced setup during the current dip. Aggregated open interest has climbed by roughly 350,000 ETH over the past day, even as the price trended lower to $2,060. The divergence between price and OI suggests fresh short positions, rather than long liquidations, which is driving the price lower.
Aggregated funding rates remained strongly positive at 0.0049% this month, showing traders still paying to maintain long exposure despite falling prices. The combination of rising open interest and positive funding implies aggressive positioning on both sides for the time being.
ETH price, funding rate and open interest. Source: Velo chart
This could create a liquidity hunt on both sides. $2,000 stands out as the nearest pivot zone. The long-leveraged positions-at-risk data exceed $1 billion, making it a critical level for short-term direction.
That setup leaves ETH open to a potential short squeeze. A successful defense of $2,000 could force shorts covering into the liquidity pocket above $2,150, where more than $2.1 billion in short-term liquidity is concentrated, leading to a relief rally.
ETH liquidation map. Source: CoinGlass
Related: Tom Lee predicts supercycle amid Bitmine’s largest Ethereum buy in 2026
ETH retail participation keeps shrinking
Ether has steadily lost participation from mid-sized holders since 2023, reflecting weak conviction among the retail investors. Wallets holding between 100 and 1,000 ETH controlled roughly 16.2 million ETH during the 2023 peak, but that figure has since dropped to around 8.75 million ETH.
Ether balance by holder value. Source: CryptoQuant
Meanwhile, larger investors played a key role in Ethereum’s 2024 rally. Holdings among addresses with 1,000–10,000 ETH rose to 15.8 million from 12.4 million ETH before distribution began in October 2025. As of May 25, balances in this cohort had fallen back to 12.7 million ETH, indicating reduced exposure after the rally.
However, Ether’s largest holders continue to accumulate aggressively. ETH wallets holding between 10,000 and 100,000 ETH increased their balances by nearly 30% over the past year, rising to 19 million ETH from 14.7 million ETH. The trend suggests that mega-whales continue absorbing ETH supply even as participation from mid-sized holders declines.
Related: Ethereum bull David Hoffman explains why he sold his ETH
Elon Musk could soon control one of the largest corporate bitcoin BTC$74,911.19 holdings in public markets if Tesla and SpaceX ultimately merge, according to reports surrounding ongoing internal discussions about combining the companies.
CNBC reported Tuesday that Musk has discussed with colleagues the possibility of folding Tesla and SpaceX together, citing people familiar with the talks. A current Tesla employee told CNBC that many workers at the electric vehicle company have long expected such a transaction to eventually happen and that the possibility is openly discussed internally.
Another person close to the company reportedly said growing overlap between the businesses — particularly around power infrastructure and computing constraints tied to artificial intelligence — has increased collaboration between the firms.
The potential merger would also create one of the largest corporate bitcoin treasuries in the world.
Tesla currently holds 11,509 bitcoin, while SpaceX owns 18,712 bitcoin, according to public disclosures and blockchain treasury tracking data. Combined, the companies would control 30,221 bitcoin worth roughly $3.3 billion at current prices.
That total would make the merged company the fifth-largest public corporate holder of bitcoin globally.
The combined holdings would trail only Michael Saylor’s Strategy (MSTR), bitcoin investment firm Twenty One Capital (XXI), Jack Mallers’ bitcoin-focused venture and bitcoin mining companies Metaplanet and Marathon Digital Holdings (MARA.)
SpaceX is also expected to begin trading on the Nasdaq next month after obtaining a private market valuation of roughly $1.25 trillion earlier this year following its merger with Musk’s artificial intelligence company, xAI.
A combination between Tesla and SpaceX would further tighten Musk’s growing network of interconnected technology businesses spanning electric vehicles, aerospace, artificial intelligence, payments and communications infrastructure.
Neither Tesla nor SpaceX has publicly confirmed merger plans.
Tesla first disclosed bitcoin purchases in 2021 and briefly accepted the cryptocurrency for vehicle payments before suspending the option over environmental concerns tied to bitcoin mining. Musk has remained one of the most influential public figures in crypto markets, often moving prices through comments on bitcoin and dogecoin (DOGE.)
A forty-year-old Texas bank is stepping onto the national stage to challenge Wall Street’s push to get a grip on the digital asset industry.
United Texas Bank (UTB) secured approval from the Office of the Comptroller of the Currency (OCC) to convert from a state-chartered financial institution into a nationally chartered bank on May 15, Scott Beck, the president and CEO of the firm, told CoinDesk on Wednesday.
The conversion move, Beck added, is to position his crypto-friendly bank as the primary bridge between the cryptocurrency industry and traditional financial institutions and to provide digital asset services he said the UTB has years fully delivering, while “Wall Street continues to tiptoe.”
The conversion granted by the OCC came with two conditions that Beck said have now been met. “Those conditions were satisfied as of today, May 27,” he said. Since 2024, the UTB operated under a Consent Order with the Federal Reserve, which related to its Bank Secrecy Act and compliance infrastructure.
“Rather than viewing that as a setback, we treated it as a mandate to build something exceptional, and we did. The result is UTB PRISM SENTINAL, our proprietary BSA/AML compliance platform,” he said.
The milestone makes the UTB one of the first banks in the U.S. to successfully complete an OCC conversion since the passage of the Dodd-Frank Act 15 years ago, Beck added. He said the conversion also uniquely positions UTB as a bridge between crypto firms worldwide into the U.S. banking system, access that very few banks today are willing to give.
“The concept for United Texas Bank is a centralized value hub,” said the chair of UTB, a bank he himself said is unknown nationally, but widely sought out by crypto firms.
“If you’re a digital asset player, you can’t get an account at a Bank of America or a Citibank. You can come to United Texas Bank and basically have full access to the U.S. dollar,” he said, adding that his bank has been providing services to reputable crypto firms for about five years, handling over $120 billion in transactions for them yearly.
Standing with the giants
Beck explained that the strategic OCC conversion places the Dallas-based institution on par with money-center giants like Bank of America and JPMorgan Chase, granting it identical federal licensure, full trust powers and direct access to the Federal Reserve’s wire and ACH systems, while retaining the FDIC insurance it had.
However, unlike traditional Wall Street firms that are beginning to explore the crypto ecosystem, UTB already “underpins a massive chunk of global crypto liquidity, clearing $10 billion a month in U.S dollar volume for foreign banks, over-the-counter (OTC) desks and major exchanges.
UTB is not alone in the race for a competitive place within the growing crypto sector in the United States. Last week, Minnesota signed into law new rules allowing local banks to fight Wall Street for cryptocurrency profit. The state banks and credit unions joined forces with lawmakers to push legislation granting them authorization to provide crypto custody services to their clients.
For UTB, the conversion marks an ambitious operational pivot, Beck added. While crypto startups have spent years chasing limited, trust-only charters that bar them from the Federal Reserve’s payment rails, UTB’s national charter bypasses those restrictions entirely.
A U.S. first
“We are the first to move across to the national banking stage with full access to the Federal Reserve for wires and ACH,” Beck added.
By shifting away from the Texas Department of Banking and positioning itself directly under the OCC, UTB aligned its corporate structure with the executive branch of the federal government, shielding its clients from the fractured regulatory landscape that historically choked crypto firms, Beck said.
To capitalize further on its federal upgrade, the bank is launching UTB Atomic, an artificial intelligence-driven, real-time payment network engineered to bring back the round-the-clock liquidity infrastructure that collapsed when Silvergate and Signature Bank did.
In a 24/7 crypto market, traditional bank closures create massive settlement bottlenecks for institutional traders operating at 3:00 a.m.. UTB Atomic solves this by enabling instant, off-balance-sheet clearing between institutional clients while a parallel AI network, UTB Prism Sentinel, continuously conducts real-time blockchain surveillance to neutralize compliance risks, Beck explained.
“The biggest issue that faces the larger financial institutions is the ability to actually track what’s happening as the payments are coming through,” Beck said, adding that the system is purpose-built to navigate upcoming regulatory thresholds like the federal stablecoin frameworks under the GENIUS Act and Clarity Act.
With a comprehensive digital asset custody and full-service trust department slated to launch this summer, UTB aims to bridge traditional finance and crypto and positioning itself as the native financial plumbing for the next era of global commerce, Beck said.
China’s Supreme People’s Court (SPC) said it will study new adjudication rules for virtual currency and cross-border finance cases as part of a broader push to clarify how courts handle digital economy disputes.
“We will conduct in-depth research on the adjudication rules for new cases such as virtual currencies and cross-border finance, formulate judicial interpretations on civil compensation involving insider trading and market manipulation as soon as possible,” said Liu Guixiang, Judicial Committee member of the SPC, during a press conference, reported Chinese news outlet Yicai on Wednesday.
The court also plans to study judicial protection rules for artificial intelligence cases and data property rights, including disputes involving data ownership, data transactions and AI-generated content.
The development aims to draft clearer internal judicial standards on how courts should decide disputes and liability in crypto and AI intellectual property rights-related lawsuits. The promised guidelines may improve the court’s consistency in the growing number of crypto and AI-linked cases in the country.
The comments come months after a high-profile lawsuit involving Chen Zhi, the Chinese-born founder and chairman of Cambodia’s Prince Group, who was arrested in Cambodia on Jan. 6, 2026, and extradited to China shortly after, where he faces charges related to operating pig butchering scam compounds. In October 2025, the US Department of Justice seized about $15 billion worth of Bitcoin (BTC) from Zhi’s suspected operations.
US authorities charge Chen Zhi and seize $15 billion in Bitcoin. Source: Justice.gov
China’s ban on all crypto transactions remains in place
Mainland China has had a rocky relationship with the cryptocurrency industry.
In December 2013, the People’s Bank of China (PBOC) banned financial institutions from offering Bitcoin-related services and stated that Bitcoin was not recognized as a currency, in its first major prohibitive step against the crypto industry.
Related: South Korean funeral company records $33M unrealized loss on leveraged ETH ETFs
In September 2021, ten Chinese agencies, including the central bank and securities regulators, issued a blanket ban on all crypto transactions, Bitcoin mining and activities tied to initial coin offerings (ICOs) in the country.
In February, the PBOC banned the issuance of unauthorized offshore Chinese yuan-pegged stablecoins and the unapproved issuance of tokenized real-world assets (RWAs).
The structure of the digital yuan, China’s CBDC. Sources: Cointelegraph
The latest ban came shortly after the Chinese government approved commercial banks to share interest with clients holding the country’s digital yuan, a central bank digital currency (CBDC) managed by state authorities.
The development signal that the PBOC is doubling down on its efforts to launch its own yuan-backed CBDC as a new form of digital fiat money, instead of stablecoins.
Magazine: 50K investors fight Korean crypto tax, Singapore cancels Bsquared: Asia Express
An attacker minted more than 5.4 trillion vsdCRV on Arbitrum after a suspected compromise of a StakeDAO-linked deployer key, though thin liquidity limited the realized proceeds to about $91,000.
Blockchain security firm PeckShield said Wednesday the attacker swapped part of the minted vsdCRV for 43.7 Ether (ETH), worth about $91,000, and bridged the funds to Ethereum. Onchain analyst EmberCN said the attacker swapped about 16.83 million vsdCRV, while the remaining tokens had little meaningful liquidity to exit.
EmberCN estimated the 5.4 trillion vsdCRV at about $763 billion on paper, though the figure does not represent the attacker’s realized profit or the protocol’s confirmed loss.
The incident highlights the gap between nominal token values and extractable value in decentralized finance exploits, where attackers can mint enormous token amounts but only cash out what available liquidity allows. In this case, the attacker’s proceeds were limited by the small size of vsdCRV liquidity pools.
StakeDAO said it was aware of the incident and warned its users not to interact with vsdCRV.
Stake DAO said it was aware of the incident. Source: Stake DAO
Incident points to a deployer-key compromise
Shalev Keren, chief product officer and co-founder of crypto key-management firm Sodot, told Cointelegraph that the StakeDAO incident was “structurally similar” to other deployer-key compromises seen this year, including the Wasabi incident last month, which drained about $5.5 million in crypto.
Keren said a single StakeDAO deployer key on Arbitrum was used to repoint the vsdCRV cross-chain bridge configuration to an attacker-controlled contract on Ethereum. About 25 seconds later, that contract sent a LayerZero message back to Arbitrum, causing the legitimate Arbitrum token to mint more than 5 trillion vsdCRV to the attacker.
Related: Crypto hackers stole $17B over past 10 years: DefiLlama
“There is no smart contract bug here and no flaw in LayerZero,” Keren said. “There is one private key, controlling one privileged configuration function, with no multi-signature and no delay between the configuration change going through and the mint clearing onchain.”
Keren said the broader issue for DeFi protocols in 2026 is no longer only whether contracts are audited, but whether the operational keys behind those contracts remain single points of failure.
Magazine: ETH bears growling, Tom Lee’s buying, XRP to ‘explode’: Market Moves
Robinhood (HOOD) is giving retail traders a new way to automate investing: letting artificial intelligence make decisions and place trades on their behalf.
Customers can now connect third-party AI agents to Robinhood accounts to manage trading activity and even complete purchases through virtual credit cards, Robinhood announced Wednesday. The rollout includes two products, Agentic Trading and the Agentic Credit Card.
The tools effectively turn AI assistants into automated financial operators that can monitor markets, rebalance portfolios or execute strategies without requiring constant attention from the customer.
A trader who wants exposure to artificial intelligence stocks could instruct an AI agent to build and maintain a portfolio focused on the sector. Another user could ask an agent to automatically buy oversold stocks based on a predefined trading strategy.
Automated AI trading
The company said users will also be able to automate purchases through AI-connected virtual credit cards. Customers can direct agents to monitor prices for products or complete purchases once certain conditions are met.
Robinhood is pitching the tools as a way to reduce the amount of time customers spend researching investments or tracking deals manually.
The new products mark clear examples of AI-driven financial automation moving from hedge funds and institutional trading desks into mainstream retail investing apps.
Until now, automated AI trading systems have largely been confined to Wall Street firms with dedicated risk-management teams and quantitative trading infrastructure. Robinhood’s move opens those capabilities to smaller investors using consumer-grade AI tools.
That shift also raises questions about how much control retail users should hand over to autonomous systems, especially in volatile markets.
Robinhood said it designed the products with several guardrails. AI agents operate through separate trading accounts with access limited to only the funds customers allocate. Users receive notifications whenever trades occur and can disable agents instantly.
The company also added spending controls and optional manual approvals for AI-driven purchases.
Initially, Agentic Trading will support stock trading only while it remains in beta. Robinhood said support for options, crypto and futures trading is planned later.
HOOD shares climbed 1.5% to $75.20 during the U.S. morning on Wednesday’s following the announcement.
Jefferies said it expects a new wave of crypto and blockchain-related public listings as institutional adoption of digital asset infrastructure accelerates across Wall Street and the payments industry.
In a report published after its first Digital Assets Investor Conference in New York, Jefferies said it expects a surge of crypto-related public listings over the next two years and believes the sector could grow into a $1 trillion public market within five years.
The conference, which gathered executives from 35 digital asset companies alongside roughly 150 institutional investors, focused less on bitcoin price speculation and more on how blockchain systems are increasingly being integrated into traditional finance.
Jefferies said conversations with clients showed investors are becoming more convinced that blockchain technology is moving beyond experimentation and into core financial infrastructure.
“Client engagement continues to grow as focus shifts to emerging beneficiaries as banks, exchanges, asset managers, fintechs and payments companies integrate blockchain infrastructure,” the report said.
The crypto IPO market has slowed this year after a booming 2025 that saw several digital asset firms successfully go public amid rising bitcoin prices and renewed investor appetite for crypto-related stocks. The recent pullback in listings has largely tracked broader market volatility and macroeconomic uncertainty, but another wave of offerings is expected to come later this year with several crypto companies, including Securitize and Payward, the parent company of Kraken, finalizing IPO plans.
Jeffries also pointed to tokenization — the process of representing financial assets on blockchain networks — as one of the biggest drivers behind that shift. Executives at the conference said tokenized money market funds, private credit products and blockchain-based settlement systems are already moving into production following recent regulatory guidance that reduced legal uncertainty around digital assets.
The trend of Wall Street adopting blockchain technology and not focusing on the crypto prices has been a recurring theme in recent months. Giant financial institutions, such as JPMorgan, Morgan Stanley and other traditional Fintech firms, are going all-in on adopting the technology into their business model, regardless of what the price of bitcoin is doing.
In fact, tokenization and stablecoins were the main topics at Consensus Miami this year, overshadowing all other crypto-related discussions. “We’re moving into a world where essentially the entire economy is going to be tokenized,” said Joseph Lubin, CEO and founder of Consensys in Miami.
Jefferies argued that further regulatory clarity could accelerate adoption even more, particularly among heavily regulated financial institutions. The bank pointed to the proposed CLARITY Act, which would establish a broader market structure framework for digital assets in the U.S., saying that the legislation could become “the missing piece” that drives more institutional investments and pushes blockchain-based finance further into the mainstream.
‘Tech disruption’
The report also highlighted how traditional financial firms are increasingly partnering with crypto-native infrastructure providers rather than competing directly with them.
Panelists at the conference described a growing ecosystem where banks, trading platforms and payments firms use blockchain networks to reduce settlement times, improve capital efficiency and launch new financial products.
Earlier this year, tokenization firm Securitize partnered with transfer agent Computershare to help public companies issue tokenized shares directly within existing shareholder record systems, while crypto platform Bullish (BLSH), the owner of CoinDesk, agreed to acquire transfer agent Equiniti for $4.2 billion to strengthen its blockchain-based settlement infrastructure.
Stablecoins and tokenized payments were repeatedly cited as key areas of near-term growth, especially as payment companies look for ways to lower the cost of cross-border transfers and operate around the clock.
The conference featured executives from firms including Ripple, Kraken, Galaxy (GLXY), Bullish (BLSH) and Consensys.
While institutional adoption was the biggest catalyst when BlackRock first started bitcoin exchange-traded funds, how the adoption would look was among the most talked-about topics back then. Fast forward to today, and it seems these sophisticated investors are viewing the sector as a disruptive technology that can enhance their business model in the long term, rather than short-term speculative trading.
Jefferies said the discussions reflected a broader change in investor attention away from meme coins and speculative trading activity toward blockchain systems generating revenue from trading, payments, lending and tokenized financial products.
“Investors frequently overestimate the magnitude of tech disruption in the near term and underestimate it over the longer term,” the report said.
Welcome to our institutional newsletter, Crypto Long & Short. This week:
Ravi Tanuku on how the GENIUS Act repriced bitcoin’s monetary premium
Jesper Johansen on looped ETH staking without lending market exposure
Top headlines institutions should pay attention to by Francisco Rodrigues
“NEAR Intents fee run-rate holds as price recovers off $1 lows” in Chart of the Week
Thanks for joining us!
-Alexandra Levis
Expert Insights
The GENIUS Act Repriced Bitcoin’s Monetary Premium
– By Ravi Tanuku, managing member & general partner at Natural Capital & Director at Krakacquisition Corp.
Gold has outperformed Bitcoin by nearly 100% since July 18, 2025. Same macro environment. Opposite outcomes.
The usual explanations don’t survive the simplest question: if this is just a cycle top, why is gold still working?
Bitcoin didn’t break because of cycles, sentiment or quantum risk. It broke because the U.S. government built a better version of what Bitcoin provided to millions around the world, and signed it into law on that date. The GENIUS Act regulated stablecoins with 100% reserves in U.S. dollars or Treasuries. In doing so, it created a government-sanctioned alternative to Bitcoin, in effect shifting “digital dollar” demand from Bitcoin to stablecoins.
Chart: Normalized performance of bitcoin (XBTUSD) vs Gold (XAU), in BGN. Source: Bloomberg.
What bitcoin was actually used for
The standard framing is that bitcoin has three use cases: dollar access, digital gold and speculation. Most of the discourse focuses on the latter two. The adoption data points somewhere else.
According to Chainalysis, the top crypto-adopting countries are Nigeria, Vietnam, Turkey, Argentina and Ethiopia. The common thread isn’t speculation or sound money ideology. It’s capital controls and currency depreciation against the dollar.
That pattern suggests bitcoin’s dominant real-world function was as an alternative dollar access point for consumers and businesses whose governments restricted it. Speculative flows and institutional vehicles like ETFs can be larger in dollar terms at any given moment. But dollar access was the most consistent secular demand. It was the structural bid that gave bitcoin its floor and its long-running relationship with global M2 money supply.
Chart: Bitcoin vs global M2 money supply. Source: Bloomberg.
The risk-adjusted data make this concrete. Since the November 2021 cycle peak, a buyer in Nigeria, Turkey, Ethiopia or Vietnam who held bitcoin spent 26 of the next 52 months underwater relative to someone who simply held U.S. dollars. Both delivered strong absolute returns in local currency terms: bitcoin returned 275%, dollars returned 172%. But bitcoin’s annualized volatility was 68% versus 18% for dollars, producing a Sharpe ratio of roughly 0.5 compared to 1.5 for just holding USD. Bitcoin’s maximum drawdown was 66%. The dollar holder’s was 6%.
Chart: Bitcoin vs dollars in emerging markets, indexed from Nov 2021 cycle peak. Source: Bloomberg.
These buyers weren’t making a speculative bet on digital gold. They were trying to hold dollars. bitcoin was the best available wrapper, but the returns accrued to the dollar exposure, not to bitcoin specifically. A regulated stablecoin captures the same currency depreciation tailwind without the drawdowns.
The migration was already underway before the GENIUS Act. According to Artemis, B2B stablecoin payments surged 30x to over $3 billion monthly by early 2025, with cross-border settlement as the primary driver. The Act accelerated a shift that was already visible.
What happened after
Stablecoin market cap went from ~$211 billion in January 2025 to over $306 billion by October, up 45%. Monthly issuance doubled from ~$6.6 billion pre-GENIUS to over $13 billion in the three months after the Act. Bitcoin fell 43%. Capital didn’t leave crypto. It just stopped needing bitcoin to get where it was going.
Chart: Gold vs bitcoin (scaled) vs stablecoin supply (market cap), with GENIUS Act passage marked. Source: author chart data from Bloomberg.
Then the macro gave us a clean test of the digital gold thesis. In late 2025, cyclical reacceleration built across the real economy. Commodities rallied. Gold, silver and copper made new highs through January 2026. Bitcoin sold off alongside SAAS stocks and unprofitable tech. By fourth quarter 2025, its quarterly correlation with IGV hit +0.64, the tightest since the 2022 bear market.
In this cycle, the market did not treat bitcoin as a monetary hedge.
The test ahead
The CLARITY Act aims to regulate bitcoin as a commodity. That classification could matter. Right now Bitcoin sits in regulatory limbo that makes it hard for institutional allocators to slot it into commodity portfolios alongside gold and silver. Formal commodity status changes the compliance conversation, creates index inclusion logic and gives pension funds and endowments a framework to allocate.
The GENIUS Act may have impaired the dollar access use case permanently. CLARITY could revive the digital gold thesis under a new regulatory identity.
The test isn’t whether bitcoin rallies post-CLARITY. Any oversold asset can bounce on a catalyst. The test is the correlation regime. Within one to two quarters of CLARITY’s passage, does Bitcoin begin recoupling with gold? Or does it continue trading with long-duration growth?
There’s an irony here. The crypto industry spent years lobbying for regulatory clarity. The first major regulation formalized a competitor that made bitcoin’s core function obsolete. Whether the second major regulation gives it a new structural identity or confirms the old one is gone is the open question.
Watch what bitcoin trades with, not where it trades. The correlation regime will be the signal.
Principled Perspectives
Looped ETH Staking Without Lending Market Exposure
– By Jesper Johansen, CEO & founder, Northstake
Most leveraged staking strategies on Ethereum follow the same playbook: deposit ETH, receive a liquid staking token, borrow against it on a lending protocol and repeat. It works — until it doesn’t. Liquidation risk, variable borrow rates and smart contract exposure across multiple protocols make the approach fragile at institutional scale.
There is a simpler path. One that captures a comparable yield without ever touching a lending protocol.
The rates and the spread
Native Ethereum validator staking currently yields approximately 2.9% APY. Lido’s stETH — the largest liquid staking token — yields approximately 2.4%. The gap exists because Lido socialises rewards across all stETH holders, including ETH that is sitting idle in entry and exit queues earning nothing. The more queue activity there is, the wider the spread.
That rate differential varies but recently hit 50 basis points. The rate differential is the foundation of this strategy.
How it works
Strategy execution leverages Lido V3 staking vaults and Northstake’s Staking Vault Manager to capture the rate differential and loop it. A vault operator stakes ETH natively on Ethereum validators, earning the full ~2.9% APY. You then mint stETH against that staked position – not by borrowing, but through Lido’s native minting mechanism within the stVault. The minted stETH is exchanged for staked ETH, which can be consolidated back into the vault’s validators via EIP-7251 consolidation. Each loop adds exposure. Minted stETH can also be exchanged for liquid ETH and staked in the stVault, however, this makes it subject to the entry queue.
At ten loops, the strategy delivers approximately 6.6% APY — roughly double the base staking rate. A 6.94% liquidity buffer is maintained as a reserve. The full position can be unwound as fast as the validator exit queue, currently sitting at around eight days, or immediately by depositing stETH back into the vault to bring down vault liability, while ETH is unstaking.
Crucially, no lending protocol is involved. The leverage is structural, created entirely by leveraging the rate differential of stETH within Lido’s vault architecture. There are no liquidation thresholds, no variable borrow costs, and no counterparty dependency on a lending market.
Example: Uses wstETH (non-rebasing version of stETH) and assumes secondary market as opposed to consolidation.
The risks are real but known
Duration risk is the primary consideration. Initial seed capital must pass through the validator entry queue, currently around 56 days. Subsequent scaling uses validator consolidation rather than the queue, but full deployment still takes 60–76 days depending on consolidation cycles.
Validator underperformance or slashing events can erode the spread. If the rate differential compresses, additional loops can be added; if it widens uncomfortably, the position can be reduced by partially unstaking.
Crucially, you can always redeem 1 stETH for 1 ETH with Lido. A depegging of stETH does not create a negative carry, due to the mechanics of how Lido’s stVaults manages vault liability. In the worst case, should the stVault liability become unhealthy, Lido executes a forced rebalance of the stVault where ETH is unstaked bringing down the liability.
Adding downside protection using CESR
One emerging development worth noting: staking risk insurance products now exist that can guarantee a minimum yield benchmarked to the Composite Ether Staking Rate (CESR), representing the average annualised validator yield. Under these policies, if a validator underperforms relative to CESR due to slashing, technical failure or operational error, the insurer covers the shortfall. For institutional allocators who need yield predictability, this converts the strategy’s variable return profile into something closer to a fixed-income instrument — leveraged staking yield with a guaranteed floor.
Who is this for?
Institutional capital is moving into staking structurally, not speculatively. They are looking for strategies that can deliver enhanced yield without introducing lending-market exposure or adding complexity. For asset managers, this strategy can also help reinforce the liquidity management of staked ETH ETFs.
The spread is there. The infrastructure and tooling to capture it exists.
Headlines of the week
– By Francisco Rodrigues
Institutional crypto kept filling in around the edges this past week as the SEC moved toward tokenized stocks on DeFi and cleared cash-settled bitcoin options for Nasdaq, Prometheum staked out broker-dealer distribution for onchain securities, and prediction markets faced a House Oversight insider-trading probe just as Hyperliquid pushed deeper into the same product line.
SEC to propose tokenized stock framework as Wall Street efforts deepen: The planned innovation exemption would let third parties issue tokenized public equities for DeFi trading without issuer approval. The move extends the March approval of Nasdaq’s tokenized securities framework.
Bitcoin options are coming to Nasdaq. Here’s what it means for you: The SEC conditionally approved Nasdaq PHLX to list cash-settled, European-style bitcoin index options under QBTC, tracking the CME CF Bitcoin Real Time Index.
Hyperliquid is emerging as a challenger to traditional exchanges and prediction markets, says FalconX: HIP-3 markets are pulling pre-IPO bets on Cerebras, Anthropic and SpaceX onto the platform, with HIP-4 outcome contracts targeting Polymarket and Kalshi and HYPE up 94% in three months.
Congress hits Polymarket and Kalshi with a massive insider trading probe: House Oversight Chair James Comer sent letters to Shayne Coplan and Tarek Mansour demanding records by June 5 on identity verification, geo-restrictions and unusual-trade detection, after Bubblemaps flagged 80 Polymarket bets with a 98% win rate tied to US military operations.
Prometheum bets Wall Street distribution is the missing link for tokenized securities: The SEC-registered firm launched infrastructure to let broker-dealers and RIAs offer tokenized securities and crypto assets through traditional brokerage accounts, covering issuance, trading, custody, clearing and settlement.
Chart of the Week
NEAR Intents fee run-rate holds ~$36 million annualized as price recovers off $1 lows
Weekly fees on NEAR Intents annualized to $36 million as of week ending May 24, holding within a $32–58 million band since late February after peaking at $124 million in mid-November — even as NEAR round-tripped from $3.16 in late September down to a $1.06 low in late February, before recovering to $2.7 at the start of this week
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Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.
Sanctioned crypto exchange HTX is pushing back against the United Kingdom’s decision to blacklist Huobi Global S.A., the Panamanian company behind the platform, over allegations it helped Russia move money through a shadow “A7” network.
In its latest Russia sanctions package on May 26, the UK accused Huobi Global of providing financial services and economic resources to entities already under restrictions for supporting Moscow’s war economy.
The government said it was targeting “crypto and illicit finance networks” exploited by Russia, including the Kremlin-backed A7 “shadow” system that helps channel funds into the country’s war economy.
The sanctions and new blockchain analysis highlight growing Western concern that Russian-linked actors continue to use major crypto platforms to move funds despite sweeping restrictions imposed since Moscow’s invasion of Ukraine.
The package of 18 designations targets A7-linked infrastructure, including a Kyrgyz bank and what the Foreign Office described as “a major global cryptocurrency exchange” suspected of funnelling more than $1.5 billion back into the Kremlin’s hands, subjecting them to UK asset freezes and bans on the provision of financial services.
UK sanctions include Huobi Global. Source: UK government.
In a Tuesday post on X, HTX argued the designation applies only to Huobi Global as a separate legal entity and said its online exchange and user funds remain unaffected. However, a new blockchain analytics report shared with Cointelegraph Wednesday claims the platform processed billions of dollars tied to Russian counterparties and darknet markets.
UK pressure mounts on HTX
Global Ledger said the exchange processed about $21.06 billion in “high-risk” crypto flows between 2021 and May 2026. Of that total, at least $7.64 billion was linked to Russian high-risk entities and darknet markets, including Garantex, its successor Grinex, A7A5 and the now-defunct Hydra marketplace, alongside other sites such as Kraken darknet and Mega darknet.
Related: US sanctions Sinaloa cartel-linked Ethereum addresses
The report also flagged sizeable flows involving Huione Group, Nobitex, Hezbollah and North Korea-linked Lazarus, suggesting HTX’s exposure may extend beyond Russia.
UK officials on Tuesday said HTX helped move about $1.5 billion back to Russia’s coffers, according to Bloomberg, a fraction of the more than $7.6 billion in Russia-linked flows estimated by Global Ledger, based on multi-year onchain tracing of Bitcoin, Ether and Tether on Tron.
HTX processed funds linked to high-risk entities. Source: Global Ledger
The UK’s Financial Conduct Authority has also been tightening the screws on HTX. It began High Court proceedings in October 2025 against Huobi Global and individuals said to control it, alleging they illegally promoted crypto trading services to UK consumers in breach of the country’s strict financial promotion rules.
HTX has rejected the UK’s allegations, saying the designation targets a separate legal entity and stressing its commitment to full compliance and cooperation with law enforcement agencies.
The exchange said global operations are running normally and that user funds remain safe, while Global Ledger’s analysis argued that sanctioned Russian networks have continued to tap liquidity on major centralized exchanges despite mounting restrictions.
Cointelegraph reached out to both HTX and Global Ledger for further comment on the report and the UK measures, but did not receive responses by publication.
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A major experiment led by the Bank for International Settlements (BIS) found that tokenization could help fix some of the biggest pain points in cross-border payments, from slow settlement times to costly reconciliation between banks.
Project Agorá, a joint effort between the BIS, seven central banks and more than 40 private financial institutions, concluded that tokenized central bank reserves and commercial bank deposits could support atomic settlement across currencies and jurisdictions.
Atomic settlement refers to transactions completing on an “all-or-nothing” basis, reducing the risk that one side of a cross-border payment fails while the other succeeds.
The initiative involved the Federal Reserve Bank of New York, Bank of England, Bank of Japan, Swiss National Bank and other central banks alongside large commercial banks and financial firms.
Project Agorá participants now plan to move beyond simulations toward testing real-value transactions involving some currencies and institutions. The Bank of Canada also joined the initiative this week.
The findings landed as global banks and asset managers ramp up their own tokenization efforts. DTCC, Wall Street’s clearing house, plans to roll out its tokenized settlement infrastructure for stocks, ETFs and U.S. Treasuries, while Nasdaq and NYSE-owner Intercontinental Exchange are both developing blockchain-based systems for tokenized stocks.
A cross-border transfers can bounce between several intermediary banks before reaching its destination at present, often taking days to settle and creating operational risks along the way. Using tokenization and blockchain rails could mean fewer delays and failed payments in the global financial system, the report showed.
The BIS, often described as the “central bank for central banks,” has become increasingly active in blockchain and tokenization research as governments and financial firms rethink how money and securities move globally.
The agency, however, warned that stablecoins — digital currencies tied to fiat money issued on blockchain by private companies — could pose risks to the financial system, urging to speed up efforts to regulate the sector.
