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Crypto and risk assets continue to show weakness heading into the end of the year, not adding to the holiday spirit. Risky assets are looking for the bottom, guided by fundamental movements supported by ETFs or protocol returns.
Signs
This week closes with continued weakness, and crypto risk in particular. Both the S&P 500 and the Nasdaq 100 moved down -1% this week, with gold being the one instrument showing strength. Likewise, every crypto index we track has sold off slightly throughout the week. In particular, exchange tokens, debt leaders, and the 2025 crypto equity group performed very well during the BTC week, while everything else did not fare well.
The AI sector was the biggest loser for the week, trading down -26%. The drop was led by TAO, which showed a monthly decline after a strong performance in October.
In general, crypto continues to decline, with majors like BTC, ETH and SOL showing weakness while long tail alts make big moves to the downside. The risk is looking for a starting point, which may remain low until prices/purchases become more compelling, and the returns generated from these protocols may decrease. Similarly, executives may need to raise ETF funds to offset the decline, as the support provided by these vehicles has been limited in recent weeks.
Reading of the Week
Michael W. Green published a blog post titled “Taking a Step Backward” that reframes the US financial crisis through visuals and math. Using Ole Peters’ “Equation of Life”, Green argues that the economy naturally stabilizes without redistribution (τ < 0), resulting in systemic inequality. He criticizes the CPI's deviant methods, technological inefficiency, and housing shortages as ways to create wealth. With credit spreads tight and even widening, they are warning of a financial crisis. Green calls for public participation and institutional accountability, and sets the stage for advancing discourse and political dialogue focused on systemic change. read more
The Sky Frontier Foundation published a research report called “Annual State of Sky Ecosystem” explaining what the protocol has achieved the most in economic growth in 2025. The Sky Ecosystem saw an 86% increase in USDS (up to $9.86B), surpassing the broader stablecoin market. Sky Protocol generated $435M in revenue and $168M in profits, with many SKY token purchases and major rewards. With the new clarity through the GENIUS Act and the launch of Sky Agent several times, the report calls for the establishment of strong institutions and the expansion of protocols in 2026, positioning Sky as a leader in sustainable and productive investments. read more
Omid Malekan published a blog post titled “Beware of the Big Promises of TradFi Companies Embracing Tokens” which criticizes financial institutions (DTCC, Visa, SWIFT, Stripe, PayPal) for choosing to embrace the benefits of blockchain while ignoring the risks that exist for their adopted businesses. Malekan argues with these companies that they agree, but they avoid fragmentation, risking compromise with the main principles of crypto. He warns that permission chains and regulatory pressures can undermine the basic principles of crypto. Although he promotes cooperation with TradFi, he urges the crypto community to protect people, permissionless networks and to refuse to disrupt the decentralization of countries to accommodate more children.
@DeFi_Cheetah on X published an article titled “It’s Not ‘Nobody Wants Non-USD Stablecoins’ – It’s ‘No Banks Want Non-USD Currency'” arguing that the real barrier to stablecoin adoption is not demand, but limits on international banking. This piece contrasts how the Basel III rules, financial restrictions, and G-SIB sanctions prevent banks from holding non-USD assets or sending out-of-market derivatives. The result is a lack of liquidity in the non-USD FX markets. The author calls for DeFi-native solutions to bootstrap the unstable USD, warning that relying on traditional FX tools will fail by design. read more
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