Institutions Fear DeFi

The outlook appears cautiously optimistic, though a Trump tweet storm is all it would take to change that. The CLARITY Act is making some progress, the incoming Fed Chair is a fan of crypto and institutional whales are continuing to accumulate BTC. However, as JPMorgan has warned, the losses suffered by DeFi protocols in recent weeks are a serious turn-off for many on Wall Street when it comes to crypto more broadly.

Away from Wall Street, many regular investors have long bemoaned the lack of access for the type of early-stage investments that have made many VCs and well-connected individuals fabulously rich over recent decades. That appears to be changing now, with new platforms emerging and regulations adapting to supposedly offer retail an earlier bite of the pie. Below, we look at whether the playing field really is being levelled, or whether the so-called ‘smart money’ still has the edge.

🚫 Risky Business 🚫

Bitcoin has claimed another huge scalp, this time in the form of investment banking behemoth Morgan Stanley. The company - which has almost $2 trillion in AUM and employs over 80,000 people across dozens of countries - has launched the Morgan Stanley Bitcoin Trust (MSBT) for its wealthy clients, becoming the latest holdout to finally hear Bitcoin’s siren call.

However, any suggestion that Morgan Stanley has gotten all starry-eyed over Bitcoin is well and truly shot down in the accompanying prospectus for MSBT. These documents are very much an arse-covering exercise of course, highlighting all possible risks and pitfalls of the product and its underlying asset so the issuer can’t get sued by disgruntled investors if it all goes south. But, alongside all the usual caveats, one in particular stands out: Morgan Stanley warns that the crypto market is heavily manipulated.

In today’s video, we break down this prospectus and look in detail at Morgan Stanley’s concerns surrounding Bitcoin and crypto more broadly. We reveal how MSBT is just another corporate product designed to capitalise on Bitcoin’s success and look at just how much Morgan Stanley believes its wealthiest clients should allocate to it.

You can watch that video here.

📈 Crypto Market Forecast 📈

It’s been a turbulent week for crypto, yet Bitcoin continues to show resilience in the face of macro headwinds. At the time of writing, BTC is trading around $78,300, having clawed back from its recent lows near $76,000. Gold sits at roughly $4,570 per ounce while Brent crude hovers around $108 per barrel: a stark reminder that the Iran war remains the dominant force shaping global markets.

The institutional bid for Bitcoin has not wavered. Spot Bitcoin ETFs recorded $471 million in net inflows on Thursday, the highest since late February. BlackRock's IBIT alone has accumulated over 800,000 BTC, hitting a massive milestone that underscores how deeply crypto has embedded itself in mainstream portfolios. Strategy continues its relentless accumulation, with Michael Saylor announcing another $2.54 billion BTC purchase this week. The firm now holds over 818,000 BTC. When the largest holders are buying aggressively into weakness, it tells you something about where they see value.

Yet the derivatives market is flashing warning signs that should be heeded. Negative funding persists, indicating that short positioning is as crowded as it has been all year. Historically, such extreme bearish positioning creates the conditions for violent squeezes. Traders are betting heavily against a rally that the spot market seems determined to deliver.

The regulatory backdrop in the US continues to shift in crypto's favour. SEC Chair Paul Atkins declared the agency has ended regulation through enforcement, a clear break from the prior administration's adversarial posture. Meanwhile, Fed nominee Kevin Warsh has backed crypto's place in finance during his Senate hearing, signalling that the incoming Fed leadership views digital assets as a legitimate component of the financial system rather than a threat to it.

The battle over stablecoin yield in the CLARITY Act reached a landmark resolution on Friday. Senators Tillis and Alsobrooks released the compromise text: stablecoin yield based purely on holding reserves is prohibited, but activity-based rewards tied to real participation on crypto platforms are permitted. Coinbase CEO Brian Armstrong's immediate response was simply: "Mark it up." The legislation can now proceed to a Senate Banking Committee markup hearing, removing the last major procedural obstacle to US crypto market structure law passing in 2026.

However, DeFi's vulnerabilities remain a concern for institutional adoption. The $292 million Kelp DAO exploit has sent shockwaves through the ecosystem. JPMorgan has explicitly cited DeFi exploits and flat growth as key factors holding back institutional adoption. The industry's ability to address security concerns will determine the pace at which traditional finance integrates with on-chain protocols.

The macro picture remains dominated by geopolitics. Brent crude surged above $100 as US-Iran peace talks paused, before pulling back slightly. Bitcoin erased weekend gains as the ceasefire faced renewed pressure. The correlation between crypto and risk assets means that any escalation in the Strait of Hormuz situation will pressure BTC, while a genuine breakthrough would likely trigger a relief rally across all risk assets.

Looking ahead, the setup is cautiously bullish. ETF flows remain strong. Institutional accumulation continues unabated. The regulatory environment is the most favourable it has been in years. The main risk is the same risk that has dominated markets for months: the Iran war. If the ceasefire holds and talks progress toward a resolution, Bitcoin has room to push through $80,000 and test higher levels. If tensions escalate and oil spikes further, expect crypto to face renewed selling pressure alongside equities.

The base case is that BTC grinds higher over the coming weeks. Negative funding, strong ETF inflows, and continued corporate treasury accumulation all point to a market where the shorts are offsides. The $80,000 level remains the key resistance to watch. A decisive break above it would confirm the bullish thesis; another rejection would suggest more time is needed to build a base.

🥷 Retail Goes Private 🥷

For decades now, the average retail investor has been complaining about not having the same access to private markets as a really rich person or VC fund does.

After all, who wouldn’t want to invest in the next Uber, Facebook, Google, Amazon or Airbnb when they’re just starting out? Those companies made many early investors 10x to 1000x returns on their investments when they went public years later.

Over time, this frustration gave rise to a number of semi-liquid products that offered retail investors indirect exposure to private investments via complicated legal structuring. Examples include interval funds, tender-offer funds, non-traded BDCs, non-traded REITs and other evergreen vehicles. That said, these products were far from being as simple as logging into Robinhood to invest. For the most part, retail frustration with the situation remained. Many have been demanding a change in regulation to allow better access.

In recent years, this has seen some countries begin to soften their stance around the matter.

For instance, the most consequential development in recent years has been President Trump's Aug 2025 executive order, which directed the Department of Labor to rewrite ERISA fiduciary guidance so that 401(k) plans can include private equity, private credit, real estate and digital assets. A week after the order, the SEC issued ADI 2025-16, which removed the long-standing staff position that registered closed-end funds investing more than 15% of their assets in private funds had to limit themselves to accredited investors with $25,000 minimums.

Europe too passed ELTIF 2.0 (in force since Jan 2024), which scrapped the €10,000 minimum and the 10% portfolio cap that had kept long-term private fund vehicles out of European retail accounts. According to research by the Morningstar, 189 new ELTIF vehicles have been authorised in the two years since the rules changed.

In crypto too, the easing regulatory environment has allowed platforms like Hyperliquid, Binance Wallet and Jupiter to offer ‘tokenised stocks’ (including stocks of companies not yet on the public markets) for retail participants to speculate on.

To all intents and purposes, it looks like retail access to private markets is the best it’s ever been. That said, are we really getting the kind of early access we envisioned? Or, are we being bamboozled with cheap knockoffs instead?

Well, the answer to that is more apparent when we look closer at two “retail-friendly” developments that came in the last couple of weeks.

The first is AngelList’s launch of USVC - a regulated venture fund that allows US investors to buy its basket of private market holdings with as little as $500 and no accreditation requirements whatsoever.

The offering only looks more appealing when you see that its portfolio consists of stakes in high-demand AI companies like xAI, Anthropic, OpenAI, Sierra, Vercel, Crusoe and Legora. Naval Ravikant, AngelList's co-founder, pitched the launch on X as a product allowing retail investors a chance to “buy the future.”

The second development is Robinhood Ventures Fund I’s (NYSE: RVI) $75 million purchase of OpenAI common stock. For context, RVI is a closed-end fund that began trading on the New York Stock Exchange in March. Like USVC, it offers retail access to private market exposure with no accreditation requirement and no performance fee. The only difference between the two is that USVC is private and illiquid, while RVI trades intraday like any listed equity. With the latest purchase, RVI’s portfolio now holds OpenAI alongside Airwallex, Boom, Databricks, ElevenLabs, Mercor, Oura, Ramp, Revolut, SpaceX and Stripe.

On the face of it, both products seem incredibly bullish for retail access to private markets. However, a growing question offers a different perspective to these products – whether we’re being tricked into becoming exit liquidity for the true early-stage investors of these companies.

After all, USVC’s own website states that the median age of a US company at IPO has climbed from six years in 1980 to 13 years today. While USVC calls that as seven years of “extra growth,” it’s also true that it’s seven more years of holding time for private investors compared to decades ago.

In fact, Prequin’s latest global report on Private Market Trends states that roughly 80% of investors it surveyed had cited exits as their top concern in the short term. Distributions to LPs have also been in drought for four straight years. Private equity returned roughly 5.8% annualised from 2022 through September 2025 against the S&P 500's 11.6%.

While USVC and RVI may offer exposure to shares of xAI and OpenAI at a portfolio valuation set in late-stage rooms, the seller on the other side of that trade is a 2017 angel investor or an early employee who bought in at one-thousandth of the price. The seller in this trade locks in a 200x while the buyer is taking a position at $852 billion valuation (OpenAI) hoping for a 2x on IPO.

While it’s true that we’re getting early access, this isn’t the same as buying a high-growth stock like Apple or Amazon in their early days. It’s more appropriate to call this risk transfer rather than retail empowerment.

The marketing around these products also tends to dress them up differently than what reality presents. For instance, a closer look at many of these products will reveal fee structures that erode a chunk of the alpha which retail investors are supposedly exposed to via these products. In fact, the same is true for USVC. While the fund is publicly marketed as having a 1% management fee with no performance fee. A closer look at the details on their website shows net annual expenses around 2.5% and the gross expense ratio around 3.6% once you include underlying fund fees.

Even the tokenised stocks we mentioned earlier are, in form and function, closer to derivatives than real on-chain versions of equities. An unseasoned investor might mistakenly believe otherwise.

The unfortunate truth is that desire and reality do not see eye to eye very often. While regulations may have softened in recent years, it’s far from ideal for the average retail investor to truly gain access to the same opportunities professional private market investors have. Most cannot stomach nor identify the risk that comes from participating in these markets. Utopia does not exist.

🔥 Hot Deal Of The Week 🔥

If you’re looking for a reliable, regulation-forward on-ramp into crypto, Coinbase remains one of the most trusted platforms globally. It offers a clean user experience, strong security practices, and straightforward access to both spot markets and longer-term holdings. For newer users in particular, it removes a lot of the typical friction around onboarding, funding, and custody, while still giving more experienced users the tools they need to operate efficiently.

Right now, there’s an added incentive to get started. Through our link, new users can receive up to $40 in Bitcoin rewards when signing up and completing the required steps. It’s a simple way to begin building a position while setting up a platform that you can rely on long term.

👉 Sign up to Coinbase here to claim your Bitcoin reward and get started today.

🏆 What's New at CoinBureau.com This Week? 🏆

* Stay Ahead in Crypto with These Game-Changing Analysis Platforms
* Best Decentralized Exchanges for Advanced Crypto Traders in 2026
* Best DeFi Yield Farming Platforms in 2026: Top Protocols, APYs and Strategies
* Understanding Blockchain Interoperability: A Complete Guide In 2026
* What Is DeFi Insurance? A Complete Guide

📖 Quote of the Week 📖

“Courage taught me no matter how bad a crisis gets... any sound investment will eventually come back.” - Sir John Templeton

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.