Event Overview

Recently, there has been a personnel restructuring in the U.S. cryptocurrency regulatory landscape: Michael Selig has been confirmed as the CFTC Chairman this month, while Paul Atkins is at the helm of the SEC. Both have been referred to as the "dream team" for advancing cryptocurrency regulation by venture capitalist and podcast host David Sacks in public comments. Under this narrative, the market initially interpreted it as a key turning point for the U.S. to formally shift from "litigation-based management" to a "rules-based" approach, but the performance of capital has lagged significantly. Data shows that there has been a net outflow of approximately $589 million from Bitcoin spot ETFs in recent weeks, while Ethereum-related ETFs recorded a net outflow of about $80.3 million, contrasting sharply with the continuous weeks of capital withdrawal against the backdrop of "regulatory goodwill." Community sentiment has thus become polarized: on one hand, there is optimism towards the perceived friendly regulatory team and clearer rule systems, believing it will facilitate long-term institutional entry; on the other hand, investors are uneasy about price corrections, continuous ETF outflows, and the reality that Bitcoin's real returns, adjusted for inflation, do not match nominal highs, amplifying the dissonance between optimistic institutional expectations and short-term withdrawal experiences, which is increasing market sentiment volatility.

New Regulatory Landscape

According to industry media reports, Michael Selig was officially confirmed as CFTC Chairman on the 23rd of this month, while the SEC is led by Paul Atkins, a former regulatory official. Both are responsible for key regulatory aspects of commodities and securities under the same administration. David Sacks openly stated on social media that he views Selig and Atkins as the "dream team" for cryptocurrency regulation, believing this combination appears at a "critical juncture" for the crypto industry. This step is not arbitrary but is based on the regulatory path that has "turned around" since the Trump administration took office: market research indicates that the SEC has gradually shifted from high-frequency litigation and vague enforcement to establishing clear rules; the CFTC has institutionally recognized BTC and ETH as "commodities," allowing them to be used as collateral for derivatives; and the Office of the Comptroller of the Currency (OCC) has begun issuing national trust charters to crypto companies like Circle and Ripple, incorporating them into the federal banking regulatory framework. Consequently, the jurisdictional tug-of-war between the SEC and CFTC over token attributes and derivatives has shifted towards a collaborative division of labor, where "the SEC is responsible for tokenization and capital market aspects like ETFs, while the CFTC strengthens regulation of commodities and derivatives, including prediction markets." For the industry, this means that crypto assets are being systematically integrated into the existing financial regulatory framework, pushing crypto from the "gray margins" to a regulatory status equivalent to securities and commodities, thereby reshaping the thresholds and pathways for capital participation in the long term.

Capital and Prices

In contrast to the optimistic narrative surrounding the "regulatory dream team," the current signals from the capital side are relatively cold. Data from ETF statistics shows that there has been a net outflow of approximately $589 million from Bitcoin ETFs in recent weeks, while Ethereum ETFs also recorded a net outflow of about $80.3 million, continuing the previous redemption trend. This indicates that while institutional expectations are improving, some medium- to short-term capital is choosing to realize profits or reduce exposure, and regulatory friendliness has not immediately translated into incremental buying in the secondary market. Alex Thorn from Galaxy further revealed the dissonance in perceived returns from an inflation perspective: even though BTC's nominal price surged to about $126,000 during this round of upward movement, when adjusted for 2020 purchasing power, it only equates to about $99,848—meaning that in terms of real purchasing power, Bitcoin "has never truly stood above $100,000." Against this backdrop, the excitement from nominal new highs is eroded by inflation, while downward volatility is fully experienced by investors, exhausting the psychology of long-term holders. Meanwhile, pressure on miners is amplified during the downward phase: some key opinion leaders have mentioned signs of rising electricity costs and overall operational costs, along with significant depreciation in mining equipment prices. If prices remain stagnant below high-cost ranges for an extended period, marginal miners may be forced to sell to maintain cash flow, creating additional on-chain selling pressure, compounded by ETF redemptions, resulting in dual pressure on the spot market.

Policy Friction and Game Theory

While the macro regulatory framework is becoming more friendly, specific legislative friction has not diminished. Taking the widely discussed GENIUS Act as an example, this act is seen as a key step in providing a unified framework for "dollar-denominated crypto payments" and stablecoin-like tools, with its core being to set clear reserve requirements and payment and settlement rules for compliant stablecoins, allowing dollar stablecoins to be recognized as "quasi-deposits" or "payment tools" within the existing financial system. However, the traditional banking sector is highly sensitive to this direction, and reports indicate that there has been an increase in lobbying efforts recently, hoping to reopen discussions on the bill or even delay its implementation. Coinbase CEO Brian Armstrong described the banks' backlash on social media as "crossing the red line," subjectively judging that traditional banks will ultimately "embrace" stablecoins and related revenue opportunities for yield and business expansion. In addition to the payment-related game, tax legislation is also viewed by some observers as a potential "cold water": if relevant laws require more precise and real-time capital gains reporting, it could force some investors to passively sell coins during specific windows to raise tax funds. Meanwhile, Congress has shown unusual bipartisan cooperation on several crypto-related issues—such as stablecoin legislation being jointly promoted by Democrats and Republicans, and SEC and CFTC-related provisions advancing under bipartisan compromise—but there remains localized resistance regarding stablecoins competing with bank deposits and undermining traditional financial "seigniorage," resulting in a regulatory path characterized by "clear direction but fluctuating rhythm."

Prediction Markets and Regulatory Technology

Under the new regulatory landscape, prediction markets have been pushed to the intersection of policy and capital. Platforms like Polymarket have gained backing from well-known investors, including Peter Thiel, over the past year, with valuations skyrocketing, transforming them from niche products into important off-market information platforms for "betting on political and macro events," naturally drawing the CFTC's attention. The CFTC views these markets as derivatives or gambling products based on commodity law frameworks, while also being forced to recognize their systemic value as "information aggregation tools"—a large number of market participants "vote with real money" on elections, interest rates, and regulatory trends through prediction contracts, making their prices important signals of policy expectations. Therefore, the CFTC tends to delineate compliance boundaries for prediction markets through unified regulation and technical review: which events can be traded, how to limit single-account risks, and how to conduct KYC/AML. On the technical side, the evolution of multi-source verification oracles and decentralized settlement mechanisms is seen as a key lever to meet regulatory technology (RegTech) requirements. For example, platforms like Polymarket use a result confirmation mechanism that combines multi-source data with manual and programmatic reviews, determining contract settlement prices in a publicly traceable manner at expiration, reducing manipulation space. This design enhances trust in the fairness of settlements among users and regulators, while also providing regulatory agencies with "auditable and accessible" technical interfaces, which in turn influences their tolerance and attitude towards the entire sector.

Long and Short Logic Hedging

At this stage, the narratives from both bulls and bears are hedging against each other. In the bullish camp, views represented by David Sacks argue that a clearly positioned, rules-oriented regulatory leadership like Selig and Atkins, combined with congressional progress on stablecoin legislation, will clear key obstacles for institutional entry: the ETF channel has already opened, the commodity attributes of BTC and ETH have been officially confirmed, and companies like Circle and Ripple have obtained federal-level licenses. The remaining issues are more about execution rhythm than correctness of direction. Under this logic, short-term ETF net outflows and price corrections are seen as "handovers before institutional upgrades," which do not alter the long-cycle structure. The relatively pessimistic perspective focuses on real data: continuous net outflows from ETFs, prices struggling to stabilize near new highs, and the "inflation-adjusted returns not matching nominal performance" revealed by Alex Thorn all weaken the narrative of "long-term holding must win." Additionally, if there are unexpected interest rate hikes, economic fluctuations, or a resurgence of risk aversion in the future, crypto assets, as risk assets, may still come under pressure. Longer-term concerns manifest as a "dispersed fear list": potential impacts of quantum computing breakthroughs on existing cryptographic systems, the crowding-out effect of AI computing power and electricity resources on mining, and even the possibility of large exchange blowups or larger-scale thefts in 2026. Some market participants believe these extreme scenarios are not fully accounted for in current prices, remaining more at the level of "verbal risk premiums," creating a dissonance between optimistic regulatory narratives and medium- to long-term technical and operational risks.

Future Market Scenario Assessment

From a configuration perspective, the future trajectory of Bitcoin and broader crypto assets will largely depend on the interaction between the pace of regulatory implementation and capital flows. In an optimistic scenario, the SEC and CFTC, under the leadership of Selig and Atkins, successfully complete rule-making, and stablecoin and GENIUS-related bills are passed and implemented in Congress, leading to a commercial division of labor between banks and crypto companies; during this process, ETF net outflows gradually ease, and even attract long-term capital back after macro rates stabilize or enter a mild downward channel, at which point an increase in institutional allocation will provide medium- to long-term support for prices. The prerequisites for achieving this scenario include: policy formulation remains coherent without excessive swings, and the macro economy avoids severe recession and unexpected re-inflation leading to aggressive rate hikes. In a neutral to pessimistic scenario, the pace of regulatory advancement falls short of expectations, with increased lobbying from banks and some congressional resistance amplifying delays or introducing more restrictive clauses into key bills; ETF redemption pressures continue, compounded by passive selling from miners under electricity and equipment depreciation pressures, leading to prices fluctuating repeatedly in high ranges or even breaking down in phases. In such a scenario, even if the long-term institutional direction remains friendly, the market may experience a prolonged period of capital redistribution and valuation repricing. For participants, a more pragmatic approach is to build an observation framework around several key indicators rather than fixating on specific price targets or time points: including the formal texts and execution progress of relevant U.S. regulatory rules and bills; weekly capital flows of BTC and ETH ETFs and their linkage with macro capital curves; data reflecting industry pressures such as miner income, hash rate distribution, and secondary market prices of mining equipment; as well as the Federal Reserve's interest rate path, inflation expectations, and changes in overall risk premiums for risk assets. Dynamically adjusting positions and cycle assumptions along these indicators may be more critical than simply betting on one end of the "dream team" or "liquidity depletion."

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