Crypto faces 3 barriers to next bull run, STS Digital CEO says

Crypto faces 3 barriers to next bull run, STS Digital CEO saysInstitutional options selling, AI and delayed U.S. crypto regulation are weighing on bitcoin, according to STS Digital CEO Maxime Seiler. Crypto faces three major headwinds before next bull run, STS Digital CEO says. (Yashowardhan Singh/Unsplash)STS Digital CEO Maxime Seiler says institutional volatility-selling, AI investment and delayed U.S. crypto regulation are suppressing crypto prices.Traditional financial firms are rapidly adopting blockchain infrastructure, though much of the value is accruing to incumbents rather than crypto tokens, Seiler says.According to Seiler, the next major crypto rally will require regulatory clarity, easier monetary policy and broader institutional adoption of 24/7 financial markets.Institutional investors selling options, capital rotating into artificial intelligence and delays to U.S. crypto legislation are three of the powerful headwinds holding back price gains in digital assets even as Wall Street steadily embraces blockchain technology, according to STS Digital CEO Maxime Seiler.Bitcoin BTC$62,614.59, the largest cryptocurrency, has struggled in recent months despite record institutional adoption of blockchain, dropping more than 25% this year. Seiler argued that markets have yet to fully price in the rapid integration of the technology across traditional finance."The last four years have seen record institutional adoption of crypto and digital asset technology," Seiler said in an interview with CoinDesk. "What has changed over the past two years is that institutions are increasingly using blockchain to upgrade traditional financial markets to operate 24/7."Banks, exchanges and brokers are working through the operational challenges of around-the-clock markets, including clearing, settlement and margining, he said. Companies such as Kraken and Coinbase (COIN) are accelerating that transition as they expand beyond crypto into broader financial services.Much of the adoption, however, benefits established financial institutions rather than token holders, Seiler said. As traditional finance integrates blockchain tech into existing workflows, less value accrues directly to crypto assets than investors expected several years ago.Founded in 2021, STS Digital is a Bermuda-regulated crypto options market maker that provides 24/7 liquidity and pricing for institutional clients trading digital asset derivatives. The firm specializes in over-the-counter (OTC) trading.AI, regulation add to crypto headwindsAnother barrier to growth is artificial intelligence. Investor enthusiasm for AI has diverted both attention and capital away from crypto, Seiler said.High-profile developments around companies such as OpenAI, Anthropic and the SpaceX (SPCX) IPO have made AI the market's dominant growth narrative, according to Seiler.He also pointed to delays in U.S. market structure legislation, including the Clarity Act, as another factor weighing on sentiment. Regulatory certainty would help to accelerate traditional finance's shift toward 24/7 trading and settlement, while creating a more constructive backdrop for digital assets, he says.Options selling caps volatilitySeiler also said the rapid growth of the institutional crypto options market is suppressing bitcoin's price volatility. Bitcoin’s implied volatility has remained unusually subdued in recent months, with the BVIV Index, a measure of expected 30-day volatility derived from bitcoin options, falling into the mid-30% range in recent months, among its lowest levels of the current cycle, before beginning to edge higher in July.“When you have a volatility sell imbalance, this creates a reflexive loop,” he says.Record levels of options selling by funds, market makers and other institutional participants have created a feedback loop in which collecting option premiums encourages further volatility-selling, compressing both implied and realized volatility, he said. That has effectively capped bitcoin's trading range, limiting the outsized rallies that characterized previous market cycles while leaving the cryptocurrency more exposed during broader market selloffs. The cryptocurrency has been trapped in a relatively tight $60,000-$66,000 trading range over the past month, with repeated attempts to break above resistance or below support failing to generate sustained momentum."There's much less interest in directional bitcoin trading than there was several years ago," Seiler says. "The growth in institutional options selling is compressing the range."Despite the subdued market, Seiler says STS Digital is expanding.The Bermuda-regulated crypto options market maker received its full Class F license this year after progressing through the jurisdiction's regulatory framework. The license allows it to grow without the limits imposed by previous licenses.The company has quadrupled its bitcoin option notional volumes over the past 12 months, Seiler said, attributing the growth to its expanded regulatory status and increasing institutional participation.Catalysts needed Looking ahead, Seiler said he expects meaningful upside for crypto markets will require several catalysts to align, including regulatory clarity, broader institutional deployment of 24/7 financial infrastructure and a more supportive macroeconomic backdrop, potentially including interest-rate cuts or renewed monetary easing.While he does not expect those conditions to emerge in the next few months, Seiler said the market is underpricing both the pace of institutional adoption and the speed at which traditional finance is integrating crypto infrastructure into global capital markets.Read more: Cantor says bitcoin bear market may be entering final stretchAI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. 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