BTC hits record high on ETF inflows, US dollar decline

Exchange-traded funds (ETFs) helped push the BTC token to a new record high price, but the gains appear to be coming at the expense of the U.S. dollar.

The BTC token set another fiat price record of $126,080 on October 6, and while it’s since retreated to ~$122,000 (by late Tuesday), the prevailing mood remains bullish. In a break with precedent, the new record occurred despite a lack of major BTC buys by so-called ‘treasury’ companies like Strategy (NASDAQ: MSTR).

Instead, the push came from BTC spot-based ETFs, which enjoyed $1.2 billion worth of inflows on October 6, the second-largest daily total ever, behind only the day after Donald Trump won the U.S. presidential election last November. Over the first four trading days of October, nearly $3.5 billion flowed into BTC ETFs.

Blackrock’s (NASDAQ: BLK) BTC-based IBIT claimed $970 million of that $1.2 billion, bringing its net assets under management (AUM) to nearly $100 billion. As of October 6, IBIT held 791,346 BTC, up from ~661,000 in June.

IBIT’s price slipped 3% on Tuesday but remains—in the words of Bloomberg ETF analyst Eric Balchunas—“the most profitable ETF for Blackrock by a good amount now based on current aum.” IBIT is also on pace to become the fastest ETF to top $100 billion in AUM, which would make it only the 19th ETF to attain this level since 1993.

In total, all crypto ETFs reported just under $6 billion in inflows last week, with $5 billion of that coming in the U.S., another $563 million in Switzerland, and $312 million in Germany (both of the latter setting new records).

The Securities and Exchange Commission (SEC) might be currently out of action due to the ongoing federal government shutdown, but last month it announced plans to dramatically lower the bar for new ETF applicants and previously announced that staking didn’t violate U.S. securities laws.

So on October 6, Digital Currency Group’s (DCG) Grayscale Investments platform made history by announcing that its Grayscale Ethereum Trust ETF and Grayscale Ethereum Mini Trust ETF had become the first U.S.-listed spot crypto ETFs to enable staking, offering investors the opportunity to earn extra ‘yield’ on their holdings. (Grayscale also announced its non-ETF Solana trust is also now offering staking.)

Grayscale staked 32,000 ETH worth ~$150 million to get this ball rolling. The staking will be passive, done via institutional custodians and a network of ETH validator providers. The company plans to announce other product staking opportunities in due course.

Grayscale was technically beaten to the punch by REX-Osprey, which launched a SOL-focused ETF with staking rewards in July. However, this wasn’t a standard spot ETF and fell under the Investment Company Act of 1940 rather than the Securities Act of 1933.

Dollar drama

Also hitting new record highs this week is the price of gold, with gold futures topping $4,000 for the first time ever on October 7. For the year to date, gold prices have risen by 50%, as investors seek safety in the arms of safer havens than the U.S. dollar.

The dollar hasn’t had the easiest year, falling 10% since January, putting it on track for its worst performance in four decades. The decline has been blamed on the toxic mix of Trump’s tariffs, rising concerns over the burgeoning federal debt, falling interest rates and now the government shutdown (which shows no signs of ending anytime soon).

Things could get even worse for the dollar if Trump follows through on his public musings that he might issue tariff stimulus/rebate checks as “a distribution to the people, almost like a dividend to the people of America.”

The stimulus checks issued during the COVID crisis were credited with goosing the price of BTC and other tokens, and history could repeat itself here. However, the impact of another ‘free money’ bazooka right now could further boost inflation and accelerate the dollar’s decline.

Foreign governments have been diversifying away from U.S. Treasury bills, pushing the dollar’s share of central bank reserves from 57.8% at the end of Q1 to 56.3% at the end of Q2, the lowest point in over three decades. (Although some suggest the reality isn’t so bad when you factor in exchange rates.)

On October 6, Citadel Securities CEO/majority owner Ken Griffin told Bloomberg that he was “seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-a-vis US sovereign risk.” Griffin called the investor shift “really concerning” in terms of what this ‘debasement trade’ portends for America’s future.

If stablecoin issuers are to be believed, the situation would be even worse without them buying T-bills as fiat reserves for their dollar-denominated tokens. A couple weeks ago, Eric Trump told the New York Post that “stablecoins will save the U.S. dollar,” while his brother Don Jr. told the audience at last week’s Token2049 conference in Singapore that stablecoins will be “the thing that preserves dollar hegemony around the world” and will “backfill a deficit created by those countries who are trying to get away from that.”

The Trump brothers are each co-founders of World Liberty Financial (WLF), the decentralized finance (DeFi) platform that issued the USD1 stablecoin earlier this year. USD1’s current market cap is just over $2.6 billion, the bulk of which is held in government money market funds, according to the most recent reserve attestation (up to August 31) issued by BitGo, custodian of USD1’s fiat reserves.

WLF CEO Zack Witkoff told the Token2049 audience that “we’re flying to every single corner of this globe, convincing people to onboard to USD1 which, in effect, convinces those people to go buy U.S. Treasuries … dollarizing the world, we do it as a patriotic mission, but it’s also very good for the world.”

Witkoff also revealed that WLF was “actively working on” a plan to tokenize real-world assets (RWAs), including “oil, gas, things like cotton, timber, all of those things,” up to and including aspects of the Trump family’s real estate portfolio.

Witkoff said WLF wants “USD1 to be the base pair for these [tokenized] assets, because we view it as the most trustworthy and most transparent and the most cultured stablecoin on Earth.”

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Crypto wants to be banks, banks want to be crypto

Last week, the Coinbase (NASDAQ: COIN) digital asset exchange announced that it had joined the rush to acquire a National Trust Company Charter from the Treasury Department’s Office of the Comptroller of the Currency (OCC).

However, Coinbase claims that it has “no intention of becoming a bank.” What Coinbase claims to be after is the ability “to launch new products beyond custody, including payments and related services, with the confidence of regulatory clarity, fostering broader institutional adoption.”

Coinbase’s chief legal officer Paul Grewal tweeted that the company’s state-level charters had got it this far “but with crypto playing a bigger role in our everyday lives, it’s time for the clarity, consistency, and opportunity a federal-level charter affords.” A national charter “will ensure our customers get the same legal protections wherever they live.”

Carl Slabicki, BNY’s executive platform owner for treasury services, told Bloomberg the idea is to help “banks overcome legacy technology constraints, making it easier to move deposits and payments across their own ecosystems—and eventually, across the broader market as standards mature.” 

This isn’t BNY’s first foray into the blockchain space, having previously participated in a pilot program to tokenize RWAs led by Digital Asset Holdings. This summer, BNY announced a collaboration with Goldman Sachs (NASDAQ: GS) on a plan for tokenized money market funds. BNY is also participating in SWIFT’s shared digital ledger for 24/7 cross-border payments. 

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Stock markets want to be prediction markets

On October 7, Intercontinental Exchange Inc. (NYSE: ICE), the parent company of the New York Stock Exchange (NYSE), announced that it was investing “up to $2 billion” in predictions market Polymarket.

The all-cash deal, which values Polymarket at ~$8 billion (that’s pre-investment, and Polymarket claims the value is $9 billion), will see ICE become “a global distributor of Polymarket’s event-driven data.” The parties have also agreed to collaborate on “future tokenization initiatives.”

ICE chair/CEO Jeffrey Sprecher said the deal will capitalize on “opportunities across markets which ICE together with Polymarket can uniquely serve.” Polymarket founder/CEO Shayne Coplan called the deal “a major step in bringing prediction markets into the financial mainstream” and said tokenization requires “collaboration between established market leaders and next-generation innovators.”

Coplan later tweeted that ICE’s Sprecher “is all-in on utilizing his assets, including NYSE, to usher in a new financial era of tokenization … There is so much to build when you combine the force of ICE’s institutional scale and credibility with Polymarket’s consumer + cultural savvy and distribution.”

Coplan also tweeted regarding two previous Polymarket funding rounds, “which were never announced.” Earlier this year, Peter Thiel’s Founders Fund led a $150 million round (with a host of other participants), while Blockchain Capital led a $55 million round last year “before the election.” The round earlier this year valued Polymarket at just $1.2 billion, showing how high crypto’s profile has been raised as 2025 has progressed.

Polymarket was forced to shed its U.S. customers in 2022 after the Commodity Futures Trading Commission (CFTC) ruled that the company was operating without authorization. But in July, Polymarket paid $112 million to acquire QCEX, a CFTC-licensed derivatives exchange, and last month the CFTC issued a ‘no-action’ letter regarding QCEX’s plans to offer “fully-collateralized option contracts on various underlying commodities, assets or indices.” 

The day before the ICE news, Polymarket announced that it was now accepting BTC deposits, adding to its already crypto-friendly deposit list of USDC, USDT, ETH, and other tokens (winnings are paid out in USDC).

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Market structure molasses

The U.S. Senate has continued to function (somewhat) during the government shutdown, but the longer the discord, the greater the doubt that Congress will get a finished digital asset market structure bill onto Trump’s desk for signing into law by year’s end.

While senators may be showing up for work, their staffs are officially on furlough, meaning fewer opportunities for the various parts of this process—Republicans, Democrats, the Banking committee, the Agriculture committee, stakeholders, lobbyists, Trump—to reach something resembling agreement on how to proceed.

Dems on the Banking committee have been pleading with their GOP counterparts to allow them greater input into the Responsible Financial Innovation Act’s (RFIA) final text. Those pleas included equal access to “technical assistance offered by regulatory agencies” like the CFTC and SEC, neither of which is currently doing much of anything beyond the absolute necessities.

The Banking committee originally hoped to have its market structure draft marked up by the end of September, but this was pushed to the week of October 20. Since that revised timeline was issued before the shutdown became official, the actual timeline could depend on how long the government remains shut.

On October 6, Crypto in America’s Eleanor Terrett reported that Sen. Cory Booker (D-NJ) was now leading the Agriculture committee’s Dems in the bipartisan discussions to craft their version of the market structure bill. Ranking member Amy Klobuchar (D-MN) had been leading the talks, but for unknown reasons has ceded this role to Booker, a noted crypto advocate.

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Market de-structure

On Tuesday, the AFL-CIO issued a letter to Banking Committee chair Tim Scott (R-SC) and ranking member Elizabeth Warren (D-MA), expressing its opposition to the RFIA. The AFL-CIO, which represents America’s unionized workers, believes the RFIA “poses risks to both retirement funds and to the overall financial stability of the U.S. economy.”

The AFL-CIO fears that allowing digital assets into pension schemes and 401(k) retirement plans will expose both workers and retirees to “the volatility of this asset class.” The RFIA also “substantially weakens both federal and state enforcement tools to police … fraud, conflicts of interest, and other unethical practices.”

For what it’s worth, the AFL-CIO unsuccessfully opposed the CLARITY Act, the market structure bill approved by the House of Representatives in July, on which much (but not all) of the RFIA is based. So there are limits to the AFL-CIO’s Capitol Hill clout.

But the threat to state authorities’ ability to police crypto activities appears very real to those state authorities. On October 2, Bloomberg quoted Amanda Senn, director of the Alabama Securities Commission, saying the RFIA doesn’t grant state authorities implicit authority to supervise crypto operators, which could limit her state’s ability to bring a fraud prosecution.

With federal agencies appearing disinterested in cracking the whip,, Senn said “if you don’t have the states paying attention and prosecuting fraud, nobody is looking out.”

Robert Whitaker, director of law enforcement affairs at blockchain risk/intelligence platform Merkle Science, said that “with dedicated government cryptocurrency crime units being disbanded and new stablecoin offerings launching at pace, we’re likely to see fraud rise, much as it did after the ICO ‘cowboy’ era of 2018–2019.”

Last month, the North American Securities Administrators Association (NASAA) warned the Banking committee that the RFIA’s redefinition of what constitutes an ‘investment contract’ “will have devastating effects on anti-fraud efforts by adding so many elements and conditions to the investment contract analysis that form, not substance, will determine whether regulators can take action.”

The SEC’s current leadership has stated that it will continue to crack down on serious crypto crimes, noting the $110 million fraud complaint filed against Unicoin this spring. The CFTC’s Pham said last week that the agency was actually taking more enforcement actions this year than in previous years, although she didn’t break out how many of these actions were against individuals/entities in the digital asset sector.

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