Learning the friendly way

Picture this: Bitcoin soaring past previous all-time highs, altcoins experiencing triple-digit gains, and institutional money flooding into digital assets at unprecedented rates. Sound familiar? These are the hallmarks of crypto bull runs that have minted fortunes and reshaped entire industries.

But here's the trillion-dollar question: Is 2025 going to be the year of the next great crypto bull run?

Looking at the facts: Wall Street titans are accumulating Bitcoin through newly approved ETFs. Central banks worldwide are pivoting their monetary policies. Blockchain technology is finally delivering on its promises with real-world applications that extend far beyond simple speculation. 

Meanwhile, a new generation of crypto projects is solving actual problems (from decentralising physical infrastructure to tokenising trillion-dollar asset classes).

While we’re witnessing a natural part of any market cycle; we're also observing the meeting of technological maturity, institutional acceptance, and macroeconomic conditions that historically precede the most explosive growth phases in cryptocurrency history. 

Let’s explore whether the stage is being set for another “explosive” crypto bull run.

What defines a bull run in crypto?

A crypto bull run represents a sustained period of rising prices across digital assets, typically accompanied by increased trading volumes, heightened retail interest, and positive market sentiment. 

Unlike traditional markets, crypto bull runs are often characterised by their intensity and duration, with assets sometimes experiencing gains of several hundred percent over relatively short periods.

Let’s use historical examples for reference: the 2017 bull run saw Bitcoin rise from under $1,000 to nearly $20,000, while the 2021 cycle pushed Bitcoin to over $69,000 and sparked unprecedented growth in alternative cryptocurrencies. 

These periods were marked by mainstream media attention, institutional adoption milestones, and significant increases in new wallet creation and transaction volumes.

Key indicators of a bull market include sustained price appreciation across major cryptocurrencies, increased trading volumes, growing total value locked (TVL) in decentralised finance protocols, and heightened retail participation evidenced by exchange sign-ups and social media engagement metrics.

Is 2025 the next bull run year? Current market snapshot

The numbers tell a compelling story. Bitcoin has not only demonstrated remarkable resilience throughout 2025 but has done so while institutional demand reaches new heights. The spot Bitcoin ETFs launched in early 2024 continue to attract substantial capital inflows, creating a direct bridge between Wall Street and digital assets that simply didn't exist in previous cycles.

And this institutional momentum is rippling across the broader cryptocurrency ecosystem. Major altcoins have posted impressive year-to-date gains, while the regulatory pipeline remains packed with additional ETF applications, including potential products for XRP, Dogecoin, and other established digital assets. Each approval expands the on-ramp for traditional capital seeking cryptocurrency exposure.

Meanwhile, the underlying infrastructure is showing clear signs of renewed vitality. DeFi protocols have witnessed a resurgence in total value locked, signalling that users are actively deploying capital into decentralised financial services rather than merely holding tokens. 

Exchange volumes have also consistently remained elevated compared to the bear market lows, indicating sustained engagement from both retail traders and institutional participants.

Perhaps most tellingly, this activity is occurring without the speculative frenzy that characterised previous market peaks, suggesting a more mature, sustainable foundation for potential growth ahead.

Top signals indicating a bull market in 2025

Several key indicators suggest the cryptocurrency market may be entering or approaching a bull phase in 2025. As mentioned above, institutional adoption continues to accelerate, with traditional financial institutions expanding their cryptocurrency offerings. The ongoing discussion around national Bitcoin reserves and sovereign wealth fund allocations also represents a significant shift in how institutions are thinking about digital assets.

Macroeconomic factors also appear supportive, with central bank policies potentially creating favourable conditions for alternative assets. And the expansion of global liquidity and discussions around interest rate trajectories could have an effect on investor appetite for higher-risk, higher-reward assets like cryptocurrencies.

Stablecoin market capitalisation has also grown substantially, serving as a proxy for capital ready to be deployed into crypto markets. 

Looking at technical indicators, these suggest a potential shift from Bitcoin dominance toward increased altcoin activity, historically a characteristic of bull market phases. This rotation often signals broader market participation and the beginning of what market participants call "altcoin season."

People also asked: key questions around 2025's bull run

What is driving the 2025 crypto market recovery?

It’s not just hype, it’s momentum backed by major shifts. Spot Bitcoin ETFs have cracked open the door to institutional money, and regulatory clarity has turned question marks into green lights. 

On top of that, governments are exploring Bitcoin as a treasury asset, and legacy industries are weaving blockchain into their tech stacks - and the result appears to be a market increasingly shaped by adoption, real-world applications, and broader institutional engagement.

Is it too late to invest in crypto in 2025?

Not necessarily. If historical patterns hold, there could still be opportunities within the current cycle, though past performance is not a guarantee of future results. Bear in mind that crypto markets tend to move in waves, and each wave brings fresh opportunities across different sectors and tokens. 

With the market now more mature and diversified, investors are no longer limited to chasing just Bitcoin. Timing the top is nearly impossible, but missing the entire ride? That’s a choice.

What are the top altcoins to watch in 2025?

We’re not here to give financial advice. What we can encourage you to look out for are platforms demonstrating real-world usage, developer activity, and institutional partnerships, particularly ones that have garnered increased attention. 

Let’s take a look at the developmental space as an example: Ethereum's continued evolution through its layer-2 scaling solutions, Solana's growing application ecosystem, and Cardano's academic approach to blockchain development represent different approaches to solving scalability and adoption challenges. 

It's safe to say that investors in 2025 are paying close attention to utility, partnerships, and ecosystem depth, not just price charts.

Will regulation help or hurt the bull run?

Regulatory developments present both opportunities and risks for the cryptocurrency market. Clear frameworks can provide institutional investors with the confidence needed to allocate capital, while overly restrictive measures could dampen innovation and adoption. 

The ongoing development of stablecoin regulations and international coordination on cryptocurrency policies will likely continue to influence market dynamics throughout 2025. Keep reading, keep staying informed. 

Top narratives fueling the 2025 bull run

A range of powerful tech trends and adoption themes are currently driving renewed momentum in the cryptocurrency space. Here’s a closer look at what’s gaining traction:

The intersection of AI and blockchain
The integration of artificial intelligence and blockchain is opening up new frontiers with AI-driven applications built on blockchain networks, enabling more secure, transparent, and decentralised data processing. 

This fusion is attracting significant venture capital and top-tier development talent, particularly in areas like decentralised machine learning, predictive analytics, and trustless automation.

Decentralised infrastructure: the rise of DePIN
Decentralised Physical Infrastructure Networks (DePIN) are creating new economic models for real-world infrastructure. By using blockchain incentives, these projects decentralise everything from wireless connectivity to energy grids.

Instead of relying on centralised providers, DePIN networks reward individuals and communities for building and maintaining critical infrastructure, laying the groundwork for more resilient systems.

Web3 gaming and the evolving metaverse
Web3 gaming continues to mature, shifting away from early speculation toward sustainable economic models and improved user experiences. Games are integrating NFTs and tokenised assets in ways that enhance gameplay, rather than distract from it. This evolution is drawing interest from both mainstream users and institutional investors, as gaming platforms begin to offer real value ownership and more immersive digital economies.

Tokenisation of Real-World Assets (RWAs)
Real-world asset tokenisation is becoming a key area of focus for both crypto-native projects and traditional financial institutions. 

By bringing assets like real estate, bonds, and equities onto the blockchain, these initiatives are unlocking liquidity and improving access to previously siloed markets. This has the potential to bridge traditional finance (TradFi) and decentralised finance (DeFi), while creating more transparent, efficient systems for asset management and trading.

Scalability and utility: Layer-2s and liquid staking
Scalability and network efficiency remain essential to long-term adoption. Layer-2 scaling solutions (for example, rollups) are dramatically improving transaction speeds and lowering costs on networks like Ethereum, without compromising security. 

At the same time, liquid staking protocols are enabling users to earn staking rewards while retaining access to their assets, making it easier to participate in network security without locking up funds. These solutions are pushing blockchain closer to mainstream usability.

Historical patterns: what past bull runs teach us

Cryptocurrency markets have historically followed cyclical patterns, often aligned with Bitcoin's four-year halving schedule. These cycles typically feature a period of accumulation following major price corrections, followed by gradual recovery and eventual explosive growth phases.

Analysis of past bull runs shows a thread of common characteristics, usually including progressive institutional adoption, mainstream media coverage, and the emergence of new use cases and applications. Technical indicators such as relative strength index (RSI) and exponential moving averages (EMA) have also been known to provide useful insights into market momentum and potential turning points.

The maturation of cryptocurrency markets has led to some evolution in these patterns, with increased institutional participation potentially leading to less volatile but more sustained growth phases compared to earlier cycles.

Risks and contrarian views

Despite positive indicators, there are, of course, several factors that could derail or delay a potential bull market. Regulatory uncertainty remains a significant risk, particularly regarding potential restrictions on cryptocurrency trading, staking, or mining activities. Changes in monetary policy or unexpected macroeconomic shocks could also redirect capital flows away from risk assets, as we’ve seen happen in recent months.

While the outlook for crypto in 2025 is promising, it’s important to stay grounded. History shows that periods of rapid growth can also attract speculative excess, which often leads to sharp corrections. Given crypto’s relatively small market size compared to traditional asset classes, it remains particularly sensitive to shifts in sentiment and large capital flows.

On the technology front, challenges still exist. Security vulnerabilities, scaling bottlenecks, or network failures can quickly erode trust, not just in individual projects, but across the ecosystem. 

Meanwhile, the growing development of central bank digital currencies (CBDCs) presents a new kind of competition. Their potential to reshape how people interact with digital money could influence how (and where) cryptocurrencies find their place in the global financial system.

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Final thoughts: How to prepare for a potential bull market in 2025

For those looking to enter or expand their position in crypto, education and risk management should take priority over chasing short-term gains. A clear understanding of how the technology works, how regulations are evolving, and what drives market cycles is essential to navigating this space with confidence.

Diversifying across different sectors, from infrastructure and DeFi to gaming and real-world asset tokenisation, can help balance risk while keeping exposure to growth potential. Just as important is keeping your assets secure in a market where transactions can’t be reversed.

Crypto is steadily moving toward institutional maturity, with greater regulatory clarity and more traditional players entering the market. That said, it remains a space defined by both innovation and volatility, factors that continue to attract interest from participants willing to engage with long-term uncertainty.

Whether 2025 becomes a landmark year for digital assets or simply another phase in a longer journey, the building blocks for long-term value are clearly taking shape.

Ultimately, success in this market often comes down to staying informed, staying patient, and having a strategy rooted in long-term thinking rather than short-term speculation. Crypto continues to reward those who approach it with diligence and discipline,  especially when others are distracted by the noise.

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Imagine walking into your favourite store and finding everything 10% cheaper than last month. Sounds great, right? But what if your salary also dropped by 15%, and your home's value plummeted by 20%? Welcome to the complex world of deflation – an economic phenomenon that turns the simple act of waiting to make a purchase into a nationwide economic strategy, and not in a good way.

While we often worry about prices going up, deflation shows us why prices going down can be just as threatening to our economic well-being. In this guide, we'll uncover why some lose sleep over falling prices, explore real-world examples that have shaped nations, and understand why a healthy economy is all about finding the right balance.

What is deflation?

Deflation is when prices of goods and services decrease across the economy over time. It's essentially the opposite of inflation, which is what we're more familiar with (when prices going up year after year).

To put it simply: if inflation means your dollar buys less tomorrow than it does today, deflation means your dollar will buy more tomorrow than it does today.

Imagine walking into your local grocery store and noticing that milk costs $3.50 this month, down from $3.75 last month. Then next month, it drops to $3.25. If this pattern happens across many products and services throughout the economy, that's deflation in action.

Is deflation good or bad?

It's tempting to think deflation is great news (spending less on groceries does sound like the dream). Unfortunately, the reality is more complicated.

The good side:

• Your purchasing power increases
• Your savings are worth more without doing anything
• Essential goods become more affordable

The not-so-good side:

• People delay purchases (why buy today if it'll be cheaper tomorrow?)
• Businesses earn less revenue, leading to potential layoffs
• Debt becomes more burdensome (you owe the same amount, but money is worth more)

The biggest danger is what economists call the "deflationary spiral." This is when falling prices lead to lower production, which causes job losses, which reduces spending power, which pushes prices down further... and the cycle continues downward.

What causes deflation?

Deflation doesn't just happen randomly. There are several key triggers:

1. Contraction in money supply

When there's less money circulating in the economy relative to the goods and services available, prices tend to fall. This can happen when central banks tighten monetary policy or when credit markets freeze up during financial crises.

2. Decreased consumer demand

When people spend less, whether due to economic uncertainty, rising unemployment, or shifting preferences, businesses often respond by lowering prices to attract customers.

3. Increased productivity or efficiency

Sometimes deflation happens for positive reasons. When companies find ways to produce more goods with fewer resources (like through technological innovation), they can pass those savings on as lower prices. Yes, for profit-hungry companies - this is rare, but it’s still possible. 

4. Government and central bank policies

Certain fiscal and monetary decisions can inadvertently trigger deflation, especially if they're too restrictive during economic downturns.

How is deflation measured?

Just like inflation, deflation is typically measured using price indexes, with the Consumer Price Index (CPI) being the most common. When the CPI shows a negative percentage change over time, that's deflation.

It's important to distinguish between:

• Deflation: A general decrease in prices (negative inflation rate)
• Disinflation: When inflation slows down but prices are still rising, just at a slower rate
• Inflation: A general increase in prices over time

Economists look at various sub-indexes too, as deflation might affect different sectors differently. For example, technology products have experienced their own form of deflation for decades, even during periods of overall inflation.

What are the effects of deflation?

Short-term benefits for consumers

In the immediate term, consumers might celebrate as their money stretches further. Essential goods cost less, and savings seem to grow in value automatically.

Long-term consequences

The longer-term picture is where things get problematic:

• Delayed purchases: Consumers postpone buying non-essential items, expecting even lower prices in the future.
• Business challenges: Companies face declining revenues while many of their costs remain fixed.
• Job market impact: As businesses struggle with reduced profits, layoffs often follow, increasing unemployment.
• Wage deflation: Eventually, wages start to decrease too, offsetting any benefit from lower prices.

The deflationary spiral explained

The most feared consequence is the deflationary spiral:

1. Prices fall
2. Consumption decreases (as people wait for even lower prices)
3. Production cuts follow
4. Unemployment rises
5. Less money is spent in the economy
6. Prices fall further
7. Repeat

This vicious cycle is what turned the 1929 stock market crash into the Great Depression, which is why central banks are typically quick to fight even hints of deflation.

Why deflation makes debt worse

One of deflation's cruellest effects is on debt. Here's why:

When prices and potentially wages fall, but your debt stays the same, the real burden of that debt actually increases. Imagine you have a $250,000 mortgage:

• During inflation: Your income likely rises over time, making that fixed payment feel smaller in proportion to your earnings.
• During deflation: Your income might decrease, but your mortgage payment remains unchanged, taking a bigger bite out of your budget.

Plus, the value of the asset you purchased (like a house) might decrease during deflation, potentially leading to negative equity (owing more than the asset is worth).

This debt burden effect can ripple through the economy, leading to increased defaults, foreclosures, and bankruptcies.

How does deflation affect the economy?

The broader economic impacts of deflation can be severe:

Recession and depression risks

Extended periods of deflation are strongly associated with economic contractions. The most famous example is the Great Depression, when U.S. prices fell by roughly 25% between 1929 and 1933.

Reduced business investment

When companies expect falling prices and revenues, they're less likely to invest in new projects, equipment, or employees. Why expand when you expect smaller returns?

Central bank challenges

Fighting deflation can be harder than fighting inflation. While central banks can always raise interest rates to combat inflation, there's a limit to how far they can cut rates to fight deflation (known as the "zero lower bound" problem).

Banking system stress

As borrowers struggle with the increasing real value of their debts, loan defaults rise, potentially threatening financial stability.

Can deflation ever be a good thing?

Yes, in certain contexts, deflation isn't necessarily bad:

Technological deflation

The consistent price drops in electronics like TVs, computers, and smartphones represent a form of "good deflation." These price decreases stem from innovation and efficiency gains, not economic distress.

Sector-specific benefits

Some industries might benefit from deflation in their input costs. For example, manufacturing businesses might enjoy lower raw material prices even if it creates challenges elsewhere.

Short-term vs. structural deflation

Brief episodes of mild deflation don't always spell disaster. It's the persistent, economy-wide deflation that raises red flags for economists.

The key difference is the cause: deflation from increased productivity and technological advancement is generally positive, while deflation from collapsed demand is problematic.

How do governments and central banks fight deflation?

When deflation threatens, policymakers have several tools at their disposal:

Monetary policy tools

• Lowering interest rates: Making borrowing cheaper to encourage spending and investment
• Quantitative Easing (QE): Central banks purchase assets like government bonds to increase money supply
• Forward Guidance: Promising to keep policies accommodative for extended periods to build confidence

Fiscal policy approaches

• Government spending: Increased public expenditure on infrastructure and services
• Tax cuts: Reducing tax burdens to boost consumer spending power
• Direct payments: Stimulus checks or universal basic income proposals

What happens to investments during deflation?

Different asset classes perform very differently during deflationary periods:

Cash and high-quality bonds

Cash and government bonds often perform well during deflation because their fixed returns become more valuable as prices fall. However, if deflation leads to a severe economic crisis, even government bonds could face risks.

Stocks and real estate

Equities and property typically struggle during deflation because:

• Corporate profits decline as prices fall
• Real estate values drop while mortgage debt remains unchanged
• Dividend payments may be reduced as companies conserve cash

Defensive investment strategies

Some approaches that might help protect portfolios include:

• Focus on companies with strong cash positions and minimal debt
• Prioritise businesses selling essential goods with inelastic demand
• Consider some allocation to Treasury bonds as a hedge
• Look for companies with pricing power that can maintain margins even in challenging environments

The bottom line

While falling prices might sound appealing at first glance, deflation presents serious economic challenges that can affect everyone from homeowners to business owners to workers. Understanding these dynamics helps explain why economists and policymakers go to such lengths to maintain a small but positive inflation rate.

Rather than hoping for prices to fall, most experts suggest that the healthiest economy is one with stable, low inflation, allowing for gradual price increases while avoiding the deflation trap that can be so difficult to escape.

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Hey Tap community
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If you’ve been wondering why things have seemed a little quiet lately, it’s because we’ve been hard at work behind the scenes — and today, We are excited to finally share the full story and what’s coming next.

Laying the groundwork for the next wave of features

Over the past five years, Tap’s fast-paced, lean approach helped us grow quickly. But growth brought challenges.
Our infrastructure, built for a much smaller platform, was starting to hold us back — especially during big launches or promotions. It wasn’t scaling the way you, our community, deserved.

Rather than continue patching and stretching it, we made the bold decision to rebuild Tap’s core systems from the ground up — upgrading to a modern, flexible architecture built for real growth.

 It wasn’t easy. It meant months of intense work, rewriting large parts of our platform. That’s why new features slowed down — because we were laying a much stronger foundation for the future.

Now, we're Ready to start the rollout

After months of development and testing, we’re kicking off Phase 1 of the migration to our new infrastructure.

📅 Maintenance Window

• Starts: Wednesday, May 7, 2025 at 21:30 UTC
• Ends: Thursday, May 8, 2025 at 07:30 UTC
• Impact: Tap services will be temporarily unavailable for about 10 hours

This maintenance allows us to move our internal Tap team to the new system — a critical step before we start migrating you, our users.
We've scheduled it overnight to minimise disruption, and our team will be working around the clock to ensure everything runs smoothly.

What happens after this?

Once internal testing is complete, we'll begin carefully moving users over in phases:

• Phase 2: Migrate select groups of users, monitor closely, fine-tune.
• Phase 3: Roll out to all users, officially retiring the old system.

Each phase brings us closer to a faster, more reliable Tap — one that’s ready to scale with our growing community and deliver new features faster than ever.

The future starts now

This upgrade unlocks a future where downtime, failed sign-ups, and app slowdowns are things of the past. Thank you for sticking with us through this transition.

Your patience means everything. We can't wait to show you what’s coming next. The quiet period is ending — and Tap’s next chapter is just beginning.

Stay tuned,
The Tap Team.

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Near Protocol represents a new generation of blockchain platforms focused on usability and scalability. Launched in 2020, it offers a faster, more efficient alternative to earlier blockchain networks while maintaining robust security.

After several years of implementation, Near Protocol has established itself as a notable player in the layer-1 blockchain space.

TLDR

Scalable & developer-friendly: Near Protocol is a decentralised, layer-1 blockchain designed for high scalability and user-friendly dapp development.

Sharding & low fees: It uses a unique sharded Proof-of-Stake mechanism (Nightshade) to process transactions efficiently while keeping costs low.

Cross-chain interoperability: The Rainbow Bridge enables seamless asset transfers between Near and Ethereum, enhancing blockchain connectivity.

Native token (NEAR): NEAR powers the ecosystem, used for transactions, staking, and governance, with a total supply cap of 1.23 billion tokens.

What is Near Protocol (NEAR)?

Near Protocol is a decentralised blockchain platform designed to be user-friendly and highly scalable. The platform supports the development of dapps (decentralised applications) with a particular focus on usability for both developers and end users. 

The platform utilises a Delegated Proof-of-Stake (DPoS) consensus mechanism called "Nightshade," which implements a technique known as sharding to significantly improve transaction throughput. This approach allows Near to process thousands of transactions per second while maintaining low transaction costs and reducing the environmental impact compared to Proof-of-Work blockchains.

A distinctive feature of Near Protocol is its human-readable account names, eliminating the need for users to interact with long, complex wallet addresses. The platform also incorporates a developer-friendly environment with WebAssembly (WASM) support and tools that make building dapps more accessible.

The platform has gained significant attention for its cross-chain interoperability solutions, particularly through the Rainbow Bridge, which enables asset transfers between Near and Ethereum. The platform has attracted numerous projects across DeFi, NFTs, gaming, and social applications.

Who Created Near Protocol? 

Near Protocol was founded by Erik Trautman, an entrepreneur whose background includes experience on Wall Street and founding Viking Education. 

Trautman partnered with two technical co-founders: Illia Polosukhin, a seasoned software developer with over a decade of industry experience including a three-year tenure at Google, and Alexander Skidanov, a computer scientist whose career path led from Microsoft to memSQL, where he rose to become Director of Engineering. 

This founding team combined financial market knowledge, machine learning expertise, and distributed systems experience to address the scalability challenges facing blockchain technology.

The project was conceptualised in 2018 when the founders recognised the scalability limitations of existing blockchain networks. They set out to build a platform that could deliver the performance needed for mainstream adoption while maintaining security and decentralisation.

The Near team has expanded to include numerous contributors from around the world, with the protocol's development being overseen by the Swiss-based Near Foundation, which provides governance and supports ecosystem growth.

How Does Near Protocol Work? 

Consensus Mechanism and Architecture

Near Protocol operates on a sharded architecture called Nightshade, which divides the network into multiple segments (shards) that process transactions in parallel. This design allows the network to scale horizontally as demand increases and enhances transaction throughput.

This design allows the network to process a high number of transactions per second while maintaining low fees and reducing environmental impact. 

Additionally, Near utilises a mechanism called "Doomslug" for block finalisation, achieving near-instant transaction finality. This means that once transactions are confirmed, they are immediately considered final, unlike some other blockchains that require multiple confirmations.

Near achieves consensus through its unique sharded Proof-of-Stake mechanism, where token holders can stake their NEAR or delegate it to validators who help secure the network. 

Smart Contract Support

The platform supports smart contracts written in Rust and JavaScript, compiled to WebAssembly (WASM) through the AssemblyScript framework. This flexibility enables developers to build complex applications with familiar programming languages.

User-Friendly Features

Near's account model features human-readable account names, simplifying interactions by eliminating the need for complex wallet addresses. The platform also offers account abstraction, allowing for recoverable accounts, multi-signature control, and the ability for users to cover transaction fees on behalf of others, facilitating gasless transactions.

Cross-Chain Interoperability

Near has developed the Rainbow Bridge, enabling seamless asset transfers between Near and Ethereum. This cross-chain interoperability expands the utility of assets and enhances the interconnectedness of the blockchain ecosystem.

What Is NEAR? 

NEAR is the native token of the Near Protocol ecosystem. It serves multiple purposes within the network, including:

• Paying for transaction fees and storage on the blockchain
• Staking to participate in network security and earn rewards
• Voting in governance decisions to determine the future direction of the protocol

The token follows an inflationary model with a maximum supply cap of 1.23 billion tokens, of which approximately 1.18 billion are already in circulation at the time of writing. 

Imagine you have euros in your wallet but need to spend dollars at a store. You'd need to exchange your currency first, right? Wrapped crypto works in a similar way, but for blockchain assets.

Wrapped cryptocurrency is a tokenised version of another crypto asset that lives on a different blockchain. Think of it as your original crypto asset wearing an outer layer that lets it work on another blockchain network. For example, Bitcoin can't naturally function on the Ethereum network because they're separate systems with different rules. 

But by "wrapping" Bitcoin, you get a token that represents Bitcoin's value while being compatible with Ethereum's ecosystem.

This seemingly simple innovation has become a cornerstone of decentralised finance (DeFi), allowing assets to move between otherwise isolated blockchain ecosystems and unlocking billions of dollars in cross-chain liquidity.

How wrapped crypto works

The wrapping process involves three key elements: custodians, merchants, and smart contracts.

Here's how it typically works:

1. Deposit: You send your original cryptocurrency (like Bitcoin) to a custodian—an entity or smart contract that holds your assets safely.
2. Minting: Once the custodian confirms receipt of your deposit, they mint an equivalent amount of wrapped tokens (like WBTC) on the target blockchain.
3. Release: These newly created wrapped tokens are then sent to your wallet on the new blockchain, ready to use.

When you want your original tokens back, you simply reverse the process—a procedure called "unwrapping" or "burning":

1. Return: You send your wrapped tokens back to the custodian.
2. Burn: The wrapped tokens are destroyed (burned).
3. Release: The equivalent amount of the original cryptocurrency is returned to your wallet.

This process ensures a 1:1 backing between wrapped tokens and their underlying assets, similar to how stablecoins maintain their value through reserves. For every wrapped Bitcoin (WBTC) in circulation, there's one real Bitcoin held in reserve by a custodian.

Benefits of wrapped crypto

Cross-chain compatibility

The most obvious benefit is interoperability. Wrapped tokens allow assets from one blockchain to participate in activities on completely different networks. Bitcoin holders can participate in Ethereum-based DeFi without selling their Bitcoin, while Ethereum users can access the value and liquidity of Bitcoin without leaving their preferred ecosystem.

Expanded DeFi possibilities

Before wrapped tokens, assets like Bitcoin were essentially locked out of the booming DeFi space. Now, billions of dollars worth of previously idle assets can earn yields, serve as collateral for loans, or provide liquidity to trading pools.

Enhanced functionality

When assets like Bitcoin get wrapped as ERC-20 tokens on Ethereum, they gain new capabilities:

• Smart contract interaction: Bitcoin doesn't natively support complex smart contracts, but wrapped Bitcoin on Ethereum can interact with any Ethereum smart contract.
• Faster settlements: Bitcoin transactions typically take about 10 minutes to confirm, while Ethereum transactions complete in seconds or minutes, making wrapped Bitcoin potentially more practical for everyday transactions.

Liquidity boosts

By making assets usable across multiple blockchains, wrapped tokens significantly increase market liquidity. The same value can now participate in various ecosystems without being split across different platforms.

Common types of wrapped tokens

Wrapped Bitcoin (WBTC)

The most popular wrapped token by market cap, WBTC brings Bitcoin's massive value onto the Ethereum blockchain. Each WBTC is backed by one Bitcoin held in reserve. This has allowed billions of dollars worth of Bitcoin to participate in Ethereum's DeFi ecosystem.

Wrapped Ether (WETH)

Interestingly, even Ethereum's native currency (Ether) has a wrapped version. Why? The original Ethereum token (ETH) predates the ERC-20 standard that most Ethereum tokens follow. WETH makes ETH compatible with dapps that require the standard ERC-20 format.

Other Notable Wrapped Assets

As cross-chain functionality becomes increasingly important, we're seeing more wrapped versions of various assets:

• Wrapped AVAX (WAVAX) on Ethereum
• Wrapped UST (Terra stablecoin) on various chains
• Wrapped tokens of various layer-1 cryptocurrencies

How to use wrapped tokens in DeFi

Lending and borrowing

Platforms like Aave, Compound, and MakerDAO allow users to deposit wrapped assets as collateral to borrow other cryptocurrencies. This means you can leverage your Bitcoin holdings to access stablecoins or other tokens without selling your BTC.

Liquidity provision

Decentralised exchanges like Uniswap and SushiSwap rely on liquidity providers to enable trading. By providing wrapped tokens to these liquidity pools, users can earn trading fees and additional rewards.

For example, the WBTC/ETH pool on Uniswap has consistently been one of the largest liquidity pools, enabling billions in trading volume between Bitcoin and Ethereum.

Yield farming

Many DeFi protocols offer incentives for users who provide liquidity or lend assets. Wrapped tokens allow users to participate in these "yield farming" opportunities across multiple blockchains, potentially maximising returns.

Risks involved

Custodial risks

Most wrapped tokens rely on custodians to hold the original assets, introducing an element of centralisation and trust. If the custodian is compromised or acts maliciously, your wrapped tokens could become worthless.

For instance, WBTC relies on BitGo as its primary custodian. While BitGo maintains high security standards, this represents a potential single point of failure in an otherwise decentralised system.

Smart contract vulnerabilities

Wrapped tokens, like all blockchain assets involving smart contracts, face potential security risks. Bugs or exploits in the smart contracts governing wrapped tokens could lead to fund losses.

Minting and redemption friction

The process of wrapping and unwrapping tokens often involves fees, waiting periods, and minimum amounts. These friction points can make wrapped tokens less practical for smaller transactions or quick trades.

Bridge attacks

Cross-chain bridges, which facilitate the creation of many wrapped tokens, have been frequent targets for hackers. Several high-profile attacks have resulted in millions of dollars in losses.

The future of wrapped tokens

Decentralised wrapping mechanisms

The industry is moving toward more decentralised wrapping processes that reduce reliance on centralised custodians. Projects like tBTC and renBTC are exploring new models where custody is distributed among multiple parties or managed entirely by smart contracts.

Multi-chain integration

As blockchain ecosystems evolve toward greater interoperability, wrapped tokens are likely to play a crucial role in creating seamless experiences across multiple chains. Users may eventually interact with different blockchains without even realising they're using wrapped assets behind the scenes.

Standardisation and regulation

As wrapped tokens become more integrated into mainstream finance, we can expect more standardised practices and potentially increased regulatory attention, particularly around reserve verification and consumer protection.

Bridging the blockchain islands

Wrapped tokens have essentially built bridges between previously isolated blockchain islands, creating a connected DeFi landscape where assets flow freely across networks. They give users remarkable flexibility – allowing them to use Solana's speed while accessing Ethereum's rich application environment.

While these tokens solve major interoperability challenges, it's worth remembering their trade-offs. The centralized custody model goes against blockchain's decentralization principles, and security risks exist.

Though we'll eventually see more sophisticated cross-chain solutions emerge, wrapped tokens currently serve as the vital connectors powering our increasingly interconnected crypto economy.

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Sure, crypto markets reacting negatively to macroeconomic policy shifts is nothing new, but these “worse than expected” Liberation Day tariff announcements have been particularly brutal. 

Looking at the numbers, the sweeping tariffs introduced by U.S. President Donald Trump have resulted in mass liquidations. Almost a week later, $8.27 trillion has been wiped from global stock markets and $233 billion from crypto markets, bringing the overall crypto market cap down 8.5%.

But how exactly do tariffs influence crypto? The immediate reaction was a sharp downturn, with big names like Bitcoin falling below $82,000, and later $74,700, and Ethereum dropping to lows of $1,400. 

In the long term, could these economic policies position crypto as a safe haven? Let’s explore the interplay between trade policy, traditional finance, and crypto prices.

Firstly, what are tariffs, and how do they affect the markets?

In a nutshell, tariffs, or taxes on imported goods, create ripple effects across various financial markets. Historically, they have had an impact on:

• Foreign exchange (FX) markets: The USD typically strengthens when tariffs are imposed, as more global investors seek stability, and in response, a stronger USD often puts downward pressure on Bitcoin and altcoins.
• Equities: Stocks, particularly in sectors reliant on global trade, tend to decline as tariffs increase business costs and disrupt supply chains.
• Inflation & interest rates: Tariffs can contribute to higher consumer prices, influencing Federal Reserve policy and liquidity conditions, which in turn affect investment in risk assets like crypto.

The interconnected nature of these macroeconomic factors proves once again that digital assets are not insulated from traditional market turbulence. Let’s explore the damages.

Trump’s “Liberation Day” tariff announcement

So, what happened? On 3 April, Trump announced a 10% baseline tariff on U.S. imports, with 60 countries, including Cambodia, China, Vietnam, Malaysia, and Bangladesh, facing tariffs of up to 50%. Companies in the EU will see 20% tariffs, all taking effect a week later. 

Previously announced 25% tariffs on steel, aluminum, and foreign-made cars remain in place.

How the crypto market responded

Never missing a beat, the crypto market reacted swiftly to the tariff announcements:

• Bitcoin has dropped ~10% since February. On 3 April, the price fell from $87,106 to $82,526 in a matter of hours, falling to lows of $74,700 days later. 
• Ethereum followed a similar trajectory, dipping to lows of $1,430.
• Altcoins were hit harder, with SOL dropping nearly 25% to $97.52 - its first dip below $100 since February 2024.
• Crypto-related equities tanked, with Strategy (formerly MicroStrategy) down 15%, and mining firms like MARA Holdings and Riot Platforms losing 11%.
• Correlation with equities strengthened, as the Nasdaq and S&P 500 also experienced sharp declines.

According to technical analysis, the overall market cap formed a bear flag pattern, signaling potential price declines (this pattern appears after a sharp drop, followed by a temporary upward channel). If the price breaks below this channel, a further decline is likely.

Source: Emmaculate, published on TradingView, April 3, 2025

Why Bitcoin might bounce back

A note from the bears. Despite the initial sell-off, Bitcoin could see a rebound for several reasons:

• Bitcoin as "digital gold": During economic uncertainty, BTC has historically been viewed as a hedge against inflation and fiat devaluation.
• Institutional movements: Exchange outflows suggest that institutions are holding rather than panic-selling, reducing BTC liquidity and potentially driving prices higher in the future.
• Monetary policy shifts: If the Federal Reserve pivots toward rate cuts or quantitative easing (QE), Bitcoin could benefit from increased liquidity.

BitMEX co-founder Arthur Hayes has argued that such macro conditions could push BTC toward $150,000 in the next cycle.

Do tariffs + the U.S. Dollar = a crypto opportunity?

The impact of tariffs on the U.S. dollar has direct implications for crypto:

• Reduced exports and lower bond demand could weaken the USD over time.
• A weaker dollar typically boosts Bitcoin, as investors look for alternative stores of value.
• Grayscale suggests that Bitcoin could benefit from a fragmented monetary landscape, particularly as central banks diversify reserves away from USD.

Tariffs, regulation & crypto’s role in the financial system

Trump’s policies could indirectly accelerate crypto adoption by:

• Increasing the use of crypto for trade settlements due to currency uncertainties.
• Encouraging alternative reserve assets beyond the U.S. dollar.
• Aligning with a potentially pro-crypto regulatory stance under a second Trump administration.

What should crypto investors do now?

Crypto investors should watch a few key things closely:

• When and how the new tariffs are rolled out, and if any changes are made along the way
• How other countries respond, especially with their own tariffs
• Changes in crypto regulations, as governments adjust to the new economic climate
• How money moves between traditional markets and crypto, which can impact prices and sentiment

• Consider long-term portfolio strategies, as crypto’s role in a shifting financial landscape could strengthen.

Conclusion: Tariffs may hurt now, but crypto could emerge stronger

While recent tariffs triggered a downturn across both traditional and crypto markets, it’s worth noting that this was driven more by uncertainty than fundamentals. As has previously been the case, crypto’s response is often tied to macro trends, with Liberation Day tariffs being no exception. 

The bottom line is that market dynamics are changing. As liquidity patterns shift and capital moves differently, crypto’s role within broader portfolios continues to evolve. While this can have both a positive and negative impact on portfolios, continuing to stay informed is the wisest step one could take. 

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