Crypto is battle-tested, and in fewer hands

Bitcoin has had a bruising few weeks, and the most useful thing to say about it is how little has actually changed underneath. James Butterfill's latest market update reads the sell-off as a knock to sentiment rather than to structure: close to US$5.8B has left digital asset products over recent weeks, among the heaviest runs of outflows in well over a year, and yet the asset class sits roughly flat for 2026. The causes are familiar and external — an Iran conflict that refuses to resolve, a rate curve that has flipped from pricing cuts to pricing hikes, and an AI-and-IPO bid quietly drawing liquidity out of everything around it. His verdict, that Bitcoin is "beaten up, not broken," is worth reading in full rather than in summary.¹

What the headline price obscures is who did the selling, and here first-quarter 13F analysis is the more revealing document. Professional holdings fell 17% over the quarter, but the exit was narrow: hedge funds and brokerages accounted for almost all of it, with Morgan Stanley clearing its position as it launched its own spot ETF and Jane Street trimming in line with its market-making. Set against that, banks more than doubled their exposure, financial advisers barely moved, and sovereign money kept accumulating. According to Matthew, "leveraged and tactical strategies unwind." This is what a drawdown looks like once the marginal holder has changed. The fast money rotates out; the patient money sits.

The suffering of the class-of-2016 coins

The same maturation shows up in the plumbing, and it is not always comfortable to watch. We have seen this this week with two coins from the early days: Zcash and Cardano.  A security researcher working for Shielded Labs found a flaw in Zcash's Orchard circuit that could, in principle, have minted unlimited counterfeit ZEC without leaving a trace, a bug that had survived years of expert scrutiny since 2022.¹ It was disclosed privately, closed within days, and is now the subject of a proposed upgrade designed to prove the supply was never debased. Two details deserve attention. The discovery leaned on the newest AI tooling, used here as a white-hat instrument rather than a weapon. Thankfully. 

In the meantime, TapTools, an analytics platform that served as Cardano's default front-end, is winding down within two weeks, the second high-profile Cardano exit in six weeks, after JPG.Store.² Charles Hoskinson, to his credit, said the quiet part out loud, warning of a "wave of failures" among older projects and conceding that his own plan to backstop them never cleared governance. For holders, though, it does not change the outlook. Battle-testing culls as much as it tempers, and a long downturn is where the immature projects quietly run out of oxygen.

All the rage: the new kids on the block

Which leaves the survivors, and the striking feature of this cycle is how few of them the largest institutions have actually blessed. Bitcoin is one, as the 13F data makes plain. The other, improbably, is Hyperliquid. Jeff Sprecher, who runs the company that owns the New York Stock Exchange, told an investor conference last week that the eleven-person exchange is "bigger than Nasdaq" by volume, and that his team had met its founders repeatedly, weeks after his own industry had lobbied regulators to rein it in.³ He was not alone in noticing. Eric Rosengren, the former president of the Boston Fed, weighed in on the same Wall Street Journal piece to argue that liquidity is migrating to decentralised venues and away from costlier centralised ones.⁴ When the NYSE's owner and a former Fed official independently reach the same conclusion about a DeFi exchange, the recognition becomes difficult to dismiss. In his latest article, our Senior Ethereum Research Associate Luke Nolan explains “what makes HYPE genuinely different”: “Over time”, he writes, “the token should perform akin to the underlying business, meaning it can be valued like equity in a way most crypto assets cannot.” 

The question is no longer whether crypto can survive a hostile tape. It has, more than once, and the institutional base beneath the price is steadier than the price itself. The open questions are narrower and more mundane. The first is Kevin Warsh, whose first FOMC meeting on 16–17 June will tell us more through tone than through any rate decision; he has signalled he intends to give markets less forward guidance, in an economy whose data still argues against cuts. The second is where the marginal dollar goes, for now into AI and the IPO pipeline rather than into tokens. The third is the narrowing itself: after this much stress-testing, the largest allocators recognise only a handful of names as genuinely institutional.

This reads less like a retreat from the asset class than like the slow work of sorting it, and the names that come through tend to be the ones built and maintained by people who stay when the price does not. That, more than any weekly flow figure, is the story worth following.

¹ Zooko Wilcox, Jason McGee & Taylor Hornby, "The Orchard Counterfeiting Vulnerability — and next steps," Shielded Labs, 4 June 2026.

²The Block, 2–3 June 2026.

³ Jeffrey Sprecher (ICE/NYSE), Bernstein Strategic Decisions Conference, 27 May 2026.

⁴ This Crypto-Trading Platform Is Emerging as Wall Street’s Convenience Store, WSJ, 2 June 2026.