Alexis Sirkia on why blockchain utility thrives as Bitcoin and Ether falter

Markets are jittery, yet the blockchain continues to hum. With Bitcoin enduring a bruising month, sentiment cooling and prices faltering from their recent highs, it is trading in the mid-$60k range this week, and institutional outflows from both BTC and Ethereum are mounting.

Yet beneath the surface volatility, something more structural is unfolding across crypto markets. On-chain activity for payments, stablecoins and DeFi remains robust. Total value locked in DeFi has been far more resilient than prices alone suggest, and stablecoin supply and DEX volumes show pockets of demand not apparent when you only watch BTC.

According to Alexis Sirkia, Captain of Yellow and a long-time market maker for Ethereum and Ripple before founding Yellow, the current drawdown is not an isolated event. It is the product of converging pressures.

“We are witnessing a convergence of macro stress and state-level selling as the global appetite for risk fades,” he explains. Institutional outflows from Bitcoin and Ethereum are not random; they signal recalibration.

This is important because Bitcoin does not trade in a vacuum. It is now deeply integrated into global liquidity cycles. When macro conditions tighten, digital assets feel the strain.

Kevin Warsh’s recent remarks that emerging technologies such as AI represent a deflationary shock added fuel to the fire. The implication of slower interest rate cuts strengthened the US dollar. A stronger dollar typically weighs on risk assets, and Bitcoin is no exception. Capital rotates accordingly, liquidity thins and momentum stalls.

The minor recovery at the end of last week proved fragile. As Sirkia notes, it ran out of steam in thinner weekend trading. That detail is instructive; weekend rallies in crypto often lack institutional depth. When volume fades, support levels become vulnerable.

At the same time, geopolitics has reasserted itself. Rising tensions between the US and Iran have intensified global uncertainty. In such environments, capital seeks shelter. Gold and US Treasuries become attractive. Crypto, despite its “digital gold” narrative, still behaves as a high-beta asset during acute risk-off episodes.

This capital flight triggered what Sirkia describes as a liquidation cascade. Markets leveraged to the hilt cannot absorb rapid shifts in positioning. Perpetual futures funding, margin borrowing and structured yield products amplify moves in both directions. When support breaks, forced selling accelerates declines.

Also read: $2.5Bn Bitcoin leverage flush is a reset, not a funeral – Heritage Falodun

“The market became a crowded room where everyone rushed for the same narrow exit at once,” he says. That metaphor captures the reflexivity of crypto leverage. Liquidity appears abundant in calm conditions, but it vanishes under stress.

Yet here is the paradox: while speculative liquidity contracts, on-chain utility continues to expand.

Stablecoin volumes remain robust. Cross-border payments through blockchain rails are still processing billions. DeFi lending markets, though smaller than their peak, maintain active collateral flows. Savings products built on tokenised dollars continue to attract users in emerging markets seeking protection from local currency depreciation.

Bitcoin: What the massive liquidity points to

It suggests a bifurcation; there is speculative liquidity, driven by derivatives and ETF flows. Then there is transactional liquidity, anchored in real use-cases. The former is cyclical and sensitive to macro tightening. The latter is structural and linked to financial infrastructure.

Institutional outflows from Bitcoin and Ethereum ETFs indicate risk management, not necessarily a rejection of the asset class.

Meanwhile, stablecoins increasingly resemble shadow dollar infrastructure. In periods of geopolitical stress, demand for dollar exposure often rises globally. Much of that demand now routes through blockchain networks.

This creates an unusual dynamic. Price may fall while usage grows.

Alexis Sirkia, Captain of Yellow

Regulation remains a swing factor.

The US Senate’s stalling of the CLARITY Act prolongs uncertainty around DeFi frameworks. Capital prefers predictability. Delayed clarity slows institutional expansion into decentralised finance. However, it does not halt grassroots adoption in jurisdictions where regulatory paths are clearer.

Sirkia argues that a sustainable recovery may depend less on price momentum and more on operational efficiency. Mature markets are built on infrastructure, not exuberance. Improved capital efficiency, better risk management in DeFi protocols, and reduced leverage could underpin a more resilient cycle.

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