How crypto is being devoured by TradFi, killing Satoshi’s dream by rewarding centralization

Bitcoin’s price, and thus the entire crypto market, is increasingly being anchored by flows through regulated wrappers. Crypto is increasingly being subsumed by TradFi rather than offering an alternative to the broken system Satoshi criticized.

U.S. spot ETF subscriptions and redemptions are now posting day-to-day swings that increasingly dominate the daily narrative tape.

In practice, “priced by ETF flows” means the ETF print has become the cleanest, most legible proxy for marginal U.S.-dollar demand during U.S. hours, often the first number desks check before debating what happened on crypto-native venues.

According to Farside Investors’ Bitcoin ETF flow dashboard, the U.S. complex logged a net outflow of $250.0 million on Jan. 9, 2026.

That was followed by net inflows of $753.8 million on Jan. 13 and $840.6 million on Jan. 14.

The three-session sequence places marginal demand, and the story told about that demand, in an instrument set designed around traditional market plumbing.

The change matters because the question of “crypto independence” is shifting from protocol rules toward market structure.

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Bitcoin’s issuance schedule and validation remain a function of the network.

Access and liquidity are being re-mediated through brokerages, custodians, ETF authorized participants, and regulated derivatives.

That pathway also reintroduces familiar constraints: creations and redemptions, collateral schedules, and risk limits.

Each can affect how quickly positioning is added or removed when macro conditions change.

1. The practical consequence is an execution-edge shift. When incremental demand is expressed via ETF creations and managed through AP and prime workflow, and then hedged through regulated derivatives, the earliest signals are less likely to appear as an obvious spot bid on a crypto exchange. They show up first in inventory, basis, spreads, and hedging flows that are legible to traditional desks and harder for crypto-native traders to observe in real time.
2. ETFs also introduce a timing mismatch that changes how price discovery propagates. Bitcoin trades 24/7, while ETFs do not, and creations/redemptions batch through authorized participants. That can make the flow tape look like it “lags” the first move. But the next U.S. session’s flow print increasingly becomes the confirmation layer that dictates sizing, hedging, and whether risk gets added or reduced.

Derivatives and correlations are reinforcing TradFi-style risk transfer

Regulated derivatives have scaled in parallel, reinforcing a risk-transfer layer that sits adjacent to spot crypto markets.

The second-order effect is that risk is increasingly transferred in venues where the mechanics are optimized for institutional execution. A large allocator can express directional exposure via ETF shares, hedge with CME futures and options, and manage inventory through prime relationships, a loop that routes the most important trades through channels built for size, not transparency.

As that loop deepens, crypto-native traders can still influence prices at the margin, but they are more often reacting to positioning that has already been warehoused and hedged elsewhere.

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CME Group said its crypto complex reached an all-time daily volume record of 794,903 futures and options contracts on Nov. 21, 2025.

It also reported year-to-date average daily volume up 132% year over year, with average open interest up 82% to $26.6 billion in notional terms.

If institutions continue to hedge through these venues, then leverage and de-risking can be transmitted through margining and volatility controls familiar to traditional portfolios.

That can happen even when part of the system still settles on-chain.

Macro behavior has also converged with conventional risk assets in ways that reshape how Bitcoin is treated inside allocation models.

CME research put Bitcoin’s correlation with the S&P 500 at 0.40 from Jan. 2, 2020, to Dec. 30, 2022.

It put the correlation at 0.30 from Jan. 3, 2023, to April 14, 2025.

Over the same windows, CME put Bitcoin’s correlation with the Nasdaq 100 at 0.42 and 0.30.

Correlation is not a permanent state, and the later window shows a lower coefficient.

Yet the post-2020 regime embeds a reference point for institutions that frame BTC as part of a broader risk bucket, rather than an isolated system.

Stablecoins and tokenized Treasuries are becoming the liquidity chokepoints

Stablecoin structure adds a separate constraint because the unit of account for most on-chain activity is concentrated in a small number of issuers.

It is also exposed to the compliance perimeter of banks and payment partners.

The DeFiLlama stablecoins dashboard showed a total stablecoins market cap of $310.674 billion and USDT dominance of 60.07% in a point-in-time view retrieved on Jan. 16, 2026.

Dashboard values fluctuate, making concentration a live factor in on-chain liquidity conditions.

A market that settles and collateralizes in a narrow set of IOUs can see access, listing, and redemption pathways become the effective chokepoints.

That can happen even when applications execute on public chains.

Tokenized cash equivalents are also shifting the boundary between crypto rails and financial-market infrastructure.

The RWA.xyz Treasuries dashboard showed total value of $8.86 billion for tokenized U.S. Treasuries “as of 01/06/2026.”

Activity is organized around named platforms and entities visible on the dashboard, including Securitize, Ondo, and Circle.

The product category behaves like a bridge between on-chain settlement and conventional short-duration instruments.

It provides collateral that is legible to compliance and treasury teams that have not historically treated crypto-native assets as cash management tools.

Europe’s timelines and the BIS blueprint are defining the regulated endgame

Policy timetables in Europe place dates on how quickly regulated access can be enforced in practice.

The European Commission's Markets in Crypto-Assets regulation (MiCA) became fully applied on Dec. 30, 2024, with stablecoin provisions effective since June 30, 2024.

The Digital Operational Resilience Act (DORA) has been applied since Jan. 17, 2025.

ESMA and the European Commission also published guidance that national competent authorities ensured compliance by crypto-asset service providers regarding non-MiCA compliant asset-referenced tokens and e-money tokens “as soon as possible, and no later than the end of Q1 2025.”

For market participants, the calendar converted “regulatory risk” into execution planning across listings, custody, and stablecoin availability.

Central banks and international standard-setters have articulated a longer-run model that competes with open stablecoin settlement rather than banning it.

The Bank for International Settlements has framed a tokenized unified ledger around a “trilogy of tokenised central bank reserves, commercial bank money and government bonds.”

It also said, “Stablecoins… fall short, and without regulation pose a risk to financial stability and monetary sovereignty.”

The BIS earlier described in 2023 a “unified ledger… combining central bank money, tokenised deposits and tokenised assets.”

That architecture implies a destination where tokenization is built with central-bank anchoring and supervised intermediaries.

It also suggests stablecoin issuance and circulation are pulled into a regulated envelope.

The market’s own forward numbers are also being set in institutional terms.

Citi’s stablecoin report forecast $1.9 trillion in issuance in a base case and $4.0 trillion in a bull case by 2030, according to Citi Global Insights.

Even the low end of that range would recast stablecoins from a crypto-native payment tool into a money-market-scale category.

That shift can pull on-chain liquidity toward compliance-driven distribution.

The path to 2030 can be framed as competing ways to reconcile decentralized execution with regulated money.

One route is institutional capture of the economic layer, where ETFs concentrate BTC access, regulated derivatives concentrate hedging, and stablecoin issuance consolidates under licensing.

That produces a market in which protocol decentralization coexists with permissioned distribution.

Another route is a two-speed stack, where regulated settlement assets interact with public-chain execution through standardized data and messaging.

That can allow financial institutions to adopt selective on-chain components without shifting money creation into open networks.

There are early signals of the second model in market infrastructure pilots that treat blockchains as data and workflow rails rather than a replacement for regulated recordkeeping.

DTCC described a Smart NAV pilot designed to disseminate trusted fund net asset value data on-chain using a “chain-agnostic” approach.

DTCC said it worked “along with 10 market participants and Chainlink,” according to its pilot overview.

Chainlink has also described connecting institutions to blockchain networks using existing infrastructure and messaging standards in its write-up of work with Swift.

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Those efforts map a plausible bridge layer where data integrity and interoperability are treated as the scarce resource, rather than native tokens.

The same bridging concept also reframes “independence” into components that can diverge.

• Asset-rule independence refers to protocol constraints such as issuance and validation.
• Access independence refers to the ability to buy and hold without broker-mediated chokepoints.
• Liquidity independence refers to whether on-chain money is diversified across issuers and redemption paths.
• Settlement independence refers to whether final settlement happens on open networks.
• Governance and standards independence refers to who sets operational rules for the interfaces that matter.

ETF flow volatility, CME’s derivatives scale, stablecoin concentration, and tokenized Treasuries growth each sit on different parts of that matrix.

Each points to a market where the economic layer is becoming easier for traditional finance to instrument.

What happens next for Bitcoin and the broader crypto market

As 2026 opens, the numbers show how quickly the center of gravity can move when demand, hedging, and cash management migrate into regulated venues and tokenized cash equivalents.

That can happen even while protocol decentralization remains intact.

The next four years will be measured in flow prints, open interest, stablecoin concentration, and the share of collateral that arrives as tokenized government paper.

Indicator Point-in-time datapoint Source U.S. spot BTC ETF net flows -$250.0 million (Jan. 9, 2026); +$753.8 million (Jan. 13, 2026); +$840.6 million (Jan. 14, 2026) Farside Investors Regulated crypto derivatives scale 794,903 contracts record daily volume (Nov. 21, 2025); YTD ADV +132% YoY; avg OI +82% YoY to $26.6 billion notional CME Group Stablecoin market size and concentration Total stablecoins market cap $310.674 billion; USDT dominance 60.07% (retrieved Jan. 16, 2026; live values fluctuate) DeFiLlama Tokenized U.S. Treasuries Total value $8.86 billion (as of 01/06/2026) RWA.xyz 2030 stablecoin issuance forecast $1.9 trillion base case; $4.0 trillion bull case Citi

The definitional fight over crypto independence is now being decided in regulated access, regulated risk transfer, and regulated money rails.

Daily ETF creations and redemptions are already printing as the marginal datapoints many desks watch first.

Flows aren't the only driver of price, but they are the most legible, standardized signal of incremental demand inside the regulated wrapper stack.

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Sep 7, 2025 · Christina Comben Is DeFi doomed to be consumed by TradFi?

Out of the millions of blockchains and tokens tracked by CryptoSlate and others, I'd argue there's now maybe only two blockchains not on life support and a handful of tokens.

1. Bitcoin remains the darling of the blockchain space, but liquidity is increasingly being controlled via institutional flows.
2. Ethereum continues to serve as the ‘settlement layer' for much of blockchain's integration into TradFi systems.
3. Solana is the only real ‘challenger' to Ethereum's dominance, but it mostly attracts momentum traders rather than real global utility.
4. XRP continues to retain mindshare within the industry, while activity and usage fall mainly on Ripple's desire to integrate services within institutional demand rather than DeFi.
5. Outside of those four projects, perhaps Chainlink's dominance as a critical infrastructure piece of the institutional and DeFi puzzle positions it as one of the few remaining outsiders.
6. Privacy coins have a growing place among crypto natives' portfolios as a reaction to increasing regulation, but usage dwarves Bitcoin or Ethereum.

The blockchain industry's goal of creating a decentralized, open, and fair financial system to rival the outdated and broken traditional one seems to be moving farther and farther away.

We are currently on course for a financial system with all the surveillance features of CBDCs hidden under the guise of a ‘crypto revolution.'

CBDCs may be banned or discredited in name, but stablecoins run by centralized corporations cosplaying as ‘DeFi' rather than decentralized open-source projects can be just as dangerous.

As Tyler Durden put it, “Sticking feathers up your butt does not make you a chicken.”

I believe that we need to return to a focus on decentralization and open-source code and celebrate institutional adoption of crypto far less.

We're not replacing TradFi with DeFi right now; we're giving TradFi the power to track, freeze, and control money without any of the ‘freedom' crypto was supposed to deliver.

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