- Digital Wealth Insider Newsletter
- Posts
- Price Is the Greatest Distraction
Price Is the Greatest Distraction
The moves that matter most are under the surface.
Mike Klein
August 11, 2025
If you judge crypto by price alone, you’re missing the plot.
In fact, you’re missing almost everything.
Price is a lagging indicator, and in crypto, it’s a pretty bad one. Digital asset markets are still inefficient. The stock market’s had over a century to iron out its kinks. It’s deep, it’s liquid, and it’s shaped by a web of institutions that keep it rational.
Crypto? Not there yet. It’s still retail-driven, reactive, rumor-vulnerable, with wild swings between euphoria and panic.
Underneath that surface volatility, the real story is the infrastructure being built. The signals worth tracking are:
Who’s building the TradFi rails
Which technologies are making the technology stronger, safer, and easier to use
Where the serious capital is actually flowing
Case in point: just a few months ago, Ethereum was trading for less than half its current price. Today it’s higher (ETH ~$4,300), but the fundamentals? Mostly unchanged. Price moved. The underlying thesis didn’t.
Here’s what we’re going to cover in this issue, and why it matters if you manage serious capital:
Tokenized Treasuries: what they are, who’s winning the flow, and the thesis behind them
Banking deregulation: why it just opened the floodgates for stablecoins and strengthened ETH’s value case
Ethereum’s dominance in the RWA market — and its status as the darling of ETF flows
Which L2s are actually producing sequencer profits
Where AI × Crypto has gone from pitch to progress
Strong investors don’t chase charts. They watch signals, and in this issue, we break down the ones they’re acting on now.
Tokenization: Finally Picking Up Speed for a Significant Launch
BlackRock’s BUIDL fund is one of the most overlooked, but most important, things that’s happened in crypto this year.
First: BlackRock doesn’t move casually. They’re the largest asset manager in the world. Every product they launch is preceded by exhaustive diligence, compliance review, and strategic positioning. Second: their choice of rails matters. BUIDL is on Ethereum. You can check the size and holdings yourself on rwa.xyz.
📊 Current Stats:
AUM: ~$2B
Payouts: Daily accrued dividends, on-chain
Utility: Already being used as collateral at major venues
The Bigger Picture
This isn’t just about one product. It’s about what this signals to the rest of the financial world. If you think other asset managers aren’t studying BlackRock’s playbook, or even calling their executives for guidance, you’re kidding yourself.
BlackRock has effectively greenlit Ethereum as a home for institutional-grade, yield-bearing financial products. And when the biggest player plants their flag, others tend to follow.
The Category in Context
Growth here isn’t being driven by retail FOMO. It’s asset managers, the “measure three times, cut once” crowd. This is selective, sticky capital embedding itself into rails that will be very hard to replace later.
Banking Deregulation: The Floodgates Are Open
There’s been a massive shift in the banking environment, one most people outside of crypto can’t fully appreciate.
For the last few years, if your company had “crypto” in its name or disclosed ties to digital assets, you risked getting debanked. Accounts shut down overnight. New ones nearly impossible to open. Even major exchanges were scrambling as certain banks cut off fiat on-ramps. Our own fund went through it (multiple accounts closed, constant hoops to keep operations running). It was more than inconvenient; it was existential.
That’s changed.
In the last few months, the Federal Reserve, FDIC, and OCC have pulled back the restrictive guidance that forced banks to treat crypto like radioactive waste. President Trump went further, warning that banks engaging in what’s now called Operation Chokepoint could be fined. That’s not just a policy reversal, it’s a public shaming of the old rules as unconstitutional.
The result:
Banks can now custody digital assets, issue stablecoins, and run blockchain nodes without special permission.
49% of banks already report using stablecoins in some form for payments.
I’ve seen the change firsthand. A few years ago, I was in rooms educating banking executives about blockchain. Back then, they thought they had years to figure it out. Now they’re realizing they have months (maybe less) if they want to stay competitive.
And the competition is coming fast. JPMorgan, BNY Mellon, State Street, and others are building tokenized asset products directly on Ethereum and L2 rails. Stablecoin payments are starting to replace SWIFT and ACH in early bank-to-bank transfers.
Why this matters for crypto:
This is the linchpin connection between decentralized finance and the traditional banking system, something the industry has needed for years. With legislative tailwinds, political green lights, and the most conservative players in finance now incentivized to act, we’re likely to see a flood of new rails and products that bring trillions in traditional capital directly into crypto ecosystems.
Look for investment opportunities that enables TradeFi rails to play catch-up.
Ethereum’s Institutional Proof Point
Ethereum’s taken a beating in headlines: “ETH is dead” was practically a meme for months. The problem? Most of that sentiment was based on price alone. Price dropped, people assumed it reflected fundamentals, and the narrative fed on itself.
Yes, Ethereum has its issues. It’s not the most technically advanced L1. Plenty of impressive competitors have emerged, and we hold some of them in the fund. But when it comes to institutional adoption, Ethereum still sits on the throne.
The receipts:
$19B+ in total inflows to spot ETH ETFs since launch in 2024.
83% of all tokenized RWAs live on Ethereum.
80% of tokenized U.S. Treasuries are on Ethereum.
7.2% of all ETH is held in corporate treasuries, ETFs, or long-term wallets.
And institutions are doubling down:
SharpLink Gaming raised $200M to expand its $2B ETH treasury.
BitMine Immersion is buying ETH at 12× the pace of MicroStrategy’s Bitcoin purchases, targeting 5% of total ETH supply.
From a fundamentals standpoint:
~30% of ETH is staked, earning ~2.73% yield.
Net supply is essentially flat.
Multiple OTC desks report they’re running out of ETH inventory.
In venture, I’ve seen plenty of “we have the best tech” companies disappear while their better-distributed, more-adopted rivals took the market. Adoption wins, and by that measure, Ethereum is winning big.
Layer-2s, Restaking, and Ethereum’s Economic Moat
If Ethereum is the institutional base layer, Layer 2s (L2s) are the scaling arms that make it more usable.
The “are L2s parasitic?” debate has been around for years, but Vitalik has been clear: L2s are part of Ethereum’s scaling plan, not an unplanned chain-mutation. They were designed into the system intentionally, and every L2 transaction ultimately settles back to Ethereum, strengthening the L1’s economic gravity
Their setup today feels a lot like ETH five months ago: hated in the market while fundamentals quietly improve.
Arbitrum is down roughly 80% from its all-time high near $2.40. Optimism’s off about 84% from its March 2024 peak. Those are ugly drawdowns, but they’re happening against a backdrop of rising usage, protocol launches, and real-world integrations. Robinhood is building its own Arbitrum chain. Coinbase Ventures continues seeding Base’s ecosystem, which already leads in sequencer revenue despite having no token.
The risk: return potential has our attention….but the economics are still tricky. Most L2 tokens today are just options on future monetization. Sequencer fees largely stay with the entity running the chain, not the tokenholders. Until that changes, they’re not direct cash flow plays.
But here’s the bigger picture: every L2 transaction still settles on Ethereum. ETH benefits no matter which L2 wins. And with restaking platforms like EigenLayer coming online, Ethereum’s yield stack is growing, creating new institutional strategies that combine L2 adoption with additional staking returns.
The takeaway: beaten-down L2s and other ETH utility-enhancing protocols could be set up for a redemption arc if governance improves monetization, while Ethereum captures value all along the way.
AI × Crypto: One of the Most Important Battles Ahead
We’ve been saying it for a while: AI × Crypto isn’t a side narrative, it’s one of the most important technology battles of the next decade.
The reason is simple. As centralized AI companies consolidate, they also control access. If the future is AI-driven, being banned from using it could be as catastrophic as being banned from the internet today. That’s not hypothetical, the power to deny access will exist unless permissionless alternatives are built.
Decentralized AI is tackling this from multiple angles:
1. Compute distribution – Centralized AI data centers are already straining power grids. Networks like Render (RNDR, ~$14–15B mcap), Akash (AKT, ~$2.7B mcap), and io.net (IO, ~$1.8–2.0B mcap) distribute compute across global contributors. They’re often cheaper, faster to scale, and open to anyone.
2. Data sourcing & control – Models are only as good as the data they’re trained on. Ocean Protocol focuses on permissioned data sharing. Grass enables decentralized data gathering at scale, and from a product perspective, they’ve nailed onboarding and usability.
3. Incentive-driven ecosystems – Bittensor (TAO) takes a different approach. It’s not a single model, but an entire economy of AI subnets competing to provide inference, data, and tools. The incentive layer is still evolving, and has run into tokenomics issues, but it’s one of the few projects thinking about the full AI × Crypto stack.
The common thread: these aren’t speculative “AI meme” plays, they’re solving structural bottlenecks (compute, data, access) that are only going to get sharper. We think the most exciting decentralized AI projects haven’t even launched yet, and valuations in the centralized AI space suggest there’s massive upside if these networks hit traction.
Price moves last. Adoption moves first.
Price moves last. Adoption moves first.
From BlackRock’s $2B+ Ethereum fund to banks flipping from shutting accounts to issuing their own tokenized assets, the rails for the next decade of finance are being laid now.
And as centralized AI consolidates, decentralized AI won’t just be a niche — it’ll be essential.
We’re positioning before the headlines. That’s where the best entries are.
Join Our LP Strategy Call
We’re kicking off a recurring call for fund LPs and interested allocators:
Behind-the-scenes strategy
Live subnet performance data
Portfolio construction
What we’re watching next
If you're already in the fund, you’ll be invited automatically.
If you're not but want in - reply and we’ll make sure you're looped in.
Talk soon,
Mike
Founder, Digital Wealth Insider
https://digitalwealthinsider.com
An ask
If this newsletter is helpful for you, feel free to pass along a subscription link to your friends (https://www.digitalwealthinsider.com/).
Disclaimer:
This content is for informational and educational purposes only and should not be construed as investment, legal, or financial advice. Nothing in this newsletter constitutes a solicitation, recommendation, or endorsement of any investment strategy or protocol. Digital assets are highly volatile and carry risk. Always do your own research and consult with a licensed advisor before making financial decisions.