Crypto Long & Short — When Price Stops Working, Yield Starts to Matter
This week’s roundup from our institutional newsletter focuses on a key shift playing out across crypto markets: with prices softened, income from holding digital assets is becoming the primary reason to stay invested.
Expert insight — Ruchir Gupta, co-founder, Gyld Finance
- The pattern is familiar across asset classes: bull markets reward simple risk-taking; when markets cool, attention shifts from headline returns to the cash flows you’re actually earning while you wait. Crypto is in that transition.
- With bitcoin roughly 50% below its peak and speculative flows compressed, crypto-native yield is now a core part of the investment case. Staking and lending returns don’t rely on price appreciation to accrue.
- Current yield examples: the Composite Ether Staking Rate (CESR) sits around 2.5–4% annualized; Solana validator rewards are nearer 6–8%; lending protocols offer variable rates depending on collateral. Those streams are real, diversified, and material to holders.
- Staking participation underscores the point: about 30% of all ETH is staked, an all-time high that continued rising even as ETH spot prices weakened. Investors have been willing to lock capital for yield independent of price action.
- Institutions are responding. After last year’s regulatory clarification on staking for U.S.-registered funds, nearly twenty staking-linked ETFs and ETPs have been launched or filed — including BlackRock’s iShares Staked Ethereum Trust and offerings from VanEck, Grayscale and Fidelity. Morgan Stanley (managing roughly $8 trillion in client assets) applied in February to the OCC for a national trust bank charter to provide crypto custody and staking services.
- But most current staking products are passive: you receive whatever the network pays and retain full price exposure. That leaves substantial opportunity on the table. Staking yield has two traits that make it a potential traded market:
1) Reward variability tied to network activity (transaction volumes, validator set size) gives staking yields a macro-like rate behavior that can be anticipated and traded.
2) Predictable illiquidity — e.g., the ETH validator entry queue is over 60 days — produces a term structure and a forward curve, creating tradable premia between today’s rate and future expected rates.
- Those features point to a nascent fixed-income market for crypto yield: a floating benchmark driven by fundamentals and a real term structure created by queuing and protocol mechanics. What’s missing are regulated instruments that let managers separate income from principal, trade duration, and price forward expectations — analogues of strip bonds, zero-coupon instruments and floating-rate notes in traditional markets.
- DeFi has already experimented: protocols like Pendle Finance tokenize yield and separate principal from income. The mechanics work, but current wrappers are often legally risky for institutions. The likely next step is regulated building blocks that let active managers run duration strategies, price illiquidity explicitly and compete on yield management precision rather than mere access.
- Bottom line: bull markets pay with beta; bear markets reward income. As crypto moves from opportunistic income to mature yield markets, precise risk and yield management will become the defining skill.
Principled Perspectives — Clara García Prieto, founder, BTL
- Five years ago, using bitcoin as collateral in mainstream finance would have sounded far-fetched. Today it’s already happening and will become increasingly common over the next five to ten years — but most participants aren’t ready for the legal and operational risks.
- Bitcoin challenges classic collateral logic: it’s cross-jurisdictional, not recorded in public registries, and controlled by cryptographic keys. That forces a rethink of what “collateral” means rather than a simple transplant of mortgage-style frameworks.
- Bitcoin’s attributes — digital, finite supply, widely held for scarcity and tax reasons — create demand for liquidity without selling. That makes it attractive as collateral or treasury asset, but brings a structural tension: collateralized transactions still require intermediaries to enforce claims, creating custody and counterparty risk in centralized models.
- In DeFi, native bitcoin must be tokenized (introducing smart contract and protocol risk, potential price mismatches and active collateral management requirements), and tax treatment can vary by jurisdiction.
- Corporate treasuries are already exploring bitcoin as a strategic liquidity tool. Early adopters with strong balance sheets could gain financing advantages. However, price volatility means bitcoin cannot fully replace traditional collateral — it will require overcollateralization and robust risk controls.
- The conclusion: bitcoin-as-collateral is inevitable in many forms, but success will depend on careful custody practices, legal clarity and active risk management.
Industry note — Francisco Rodrigues
- The industry continues its slow maturation, with recent headlines highlighting bitcoin’s physical resilience, organizational shifts at the Ethereum Foundation, and further institutionalization of crypto infrastructure.
Chart of the Week
- Weekly crypto card volumes climbed to a new high of $140 million, driven largely by RedotPay’s $91 million contribution.
- The Neobank Performance Index (which includes tokens like Avici and ETHFI) remains down 34% since the start of 2025, but has recovered about 10% month-to-date. That divergence — rising payment utility vs. depressed token valuations — suggests transactional activity and real-world utility are scaling even while asset prices lag.
If you want more, get the latest crypto news and institutional market updates at coindesk.com and coindesk.com/institutions.
Note: Opinions in this newsletter are those of the contributors and do not necessarily reflect the views of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.
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