Crypto markets have surged under the Trump administration’s pro-crypto stance — but the sharp pullback this week (Bitcoin < $90,000, wiping out $1.2T in 6 weeks) has revived concerns about spillover risks into traditional finance.
Despite reaching $3.2T in total value and $197B/day in trading volume, crypto remains small relative to global markets — yet increasingly connected.
Where Crypto Intersects With Mainstream Finance
1️⃣ Stablecoins & U.S. Treasuries
Stablecoins are now a major transmission channel:
- Tether holds $181B reserves → $112B in U.S. Treasuries
- Circle holds $24B in Treasuries
A redemption wave could impact bank deposits & the short-term debt market.
2️⃣ Public Markets Exposure
Crypto-linked stocks = $225B market cap (only 1.8% of global equities).
2025 saw 4 crypto IPOs, raising $1.2B (3.3% of U.S. IPO value).
3️⃣ Bank Exposure Rising
ECB: Crypto custody jumped from €400M (2023) → €4.7B (2024).
Basel data: €5.9B in prudential crypto exposure.
U.S. regulators have also loosened rules, increasing bank involvement.
4️⃣ Crypto Funds & ETFs
Post-2024 Bitcoin ETF approval:
- 367 digital-asset ETPs globally (vs. 104 in 2021)
- $222B AUM (still tiny vs. $17.4T in traditional ETPs)
The Bigger Picture
Bitcoin’s 0.84 correlation with the S&P 500 shows crypto is now tightly tied to broader risk sentiment — meaning crypto volatility can increasingly influence mainstream markets.