Today in crypto, digital asset markets bounced 2.5% after US President Donald Trump sent mixed signals over a possible Iran deal. A researcher at the Bitcoin Policy Institute suggested that US dollar-pegged stablecoins and Bitcoin share a “symbiotic” relationship and a surge in token supply is diluting returns and breaking the link between fundamentals and price.
Trump-Iran deadline chaos sends crypto higher
Crypto markets bounced 2.5% as US President Donald Trump sent mixed signals over a potential deal with Iran to reopen the Strait of Hormuz, including reports of a possible ceasefire that could permanently end the war.
In an expletive-laden post on the Truth Social platform on Sunday, Trump threatened that Iran would be “living in Hell” if the Strait of Hormuz is not reopened.
However, he also acknowledged in a Fox News interview that Iran is “negotiating now” and expressed optimism about a “good chance” of a deal within 24 hours.
Total market capitalization has climbed about $70 billion, or 2.5%, to an 11-day high of $2.44 trillion in early trading on Monday on the news. Bitcoin tapped $69,500 on Coinbase, according to TradingView.
The small jump has led to total liquidations of around $255 million over 24 hours, 73% of them being short positions, according to data from CoinGlass.
Bitcoin and US dollar have a 'symbiotic' relationship: BPI exec
US dollar-pegged stablecoins and Bitcoin (BTC) share a “symbiotic” relationship, mutually benefitting from rising adoption, according to Sam Lyman, head of research at Bitcoin Policy Institute (BPI), a Washington DC-based digital asset advocacy organization.
“Bitcoin is beneficial to the US system because the largest Bitcoin trading pair is BTC/USD,” or Tether’s USDt (USDT) stablecoin, which is backed by cash deposits and short-term US government debt, Lyman told Cointelegraph.
He said Bitcoin and dollar-pegged stablecoins share a similar relationship to the dollar and oil. Under the petrodollar system, which began in the early 1970s, international oil sales are priced in dollars, driving more demand for the currency.
Crypto faces ‘existential’ token problem as supply outpaces value creation
The rapid growth in the number of crypto tokens is outpacing the value they generate, creating an “existential” problem for the industry, according to Michael Ippolito, co-founder of Blockworks.
In a series of posts on X, Ippolito noted that while total crypto market capitalization remains relatively strong, the average value per token tells a different story. “The average coin is only slightly higher than where it was in 2020 (!) and down ~50% since 2021,” he wrote.
Median token returns have also deteriorated sharply. Most tokens are down roughly 80% from their highs, suggesting that gains have been concentrated in a narrow set of large-cap assets, while the broader market underperforms, Ippolito claimed.
He argued that the imbalance appears to be driven by a rapid expansion in token supply. “We created a TON of new assets and STILL total market cap is flat,” he wrote, adding that this dynamic effectively dilutes value across a growing pool of tokens.
