Odaily Weekly 110: Major Policy Shifts and Capital Rotation Dominate the Agenda

The past week has been nothing short of pivotal for the cryptocurrency ecosystem. As we wrap up week 110, several macro trends are crystallizing—from institutional capital finally entering after years of hesitation, to regulatory frameworks undergoing fundamental transformation. The week that saw Bitcoin breach the $97,000 mark also witnessed policy announcements that could reshape how traditional finance interfaces with digital assets. Let’s break down what’s actually moving markets and which narratives are gaining substance.

Institutional Capital Flooding In: The Trump Effect and 2026 Bull Run Architecture

The divergence between offshore and onshore capital flows is perhaps the most structurally significant development this cycle. As Primitive Ventures founder Dovey Wan outlined, onshore institutions are now the primary buyers in spot markets while offshore entities remain sellers on rallies—a reversal of previous patterns that speaks to where conviction truly lies.

What changed? Two regulatory catalysts in early 2025 laid the groundwork: the repeal of SAB 121 and the effective date of FASB fair value accounting standards. These weren’t headline-grabbing announcements, but they fundamentally altered the capital allocation playbook for traditional institutions. The coming tokenization infrastructure—particularly the launch of SFT clearing services and DTCC’s 24/7 tokenization capability—will further accelerate this shift.

The Trump administration’s pivot toward pro-crypto policy has accelerated this timeline. Facing pressure on multiple policy fronts, there’s a visible determination to leverage every available growth catalyst, including digital asset markets. This creates a peculiar dynamic: while retail investors remain conspicuously absent, institutional deployment is accelerating precisely when the narrative euphoria has cooled. This often presages significant repricing.

MrBeast’s recent valuation moment offers a telling case study. BMNR’s investment in Beast Industries (valued at $400 million in annual revenue) wasn’t a bet on content creation economics—it was positioning around what the firm sees as programmable attention gateways. The willingness to deploy capital into illiquid, founder-heavy assets suggests institutional players are looking beyond commodity trading into structural wealth creation.

Privacy Coins Face Reckoning While DeFi Reaches Inflection Point

The privacy sector saw significant repricing this week, with Monero reclaiming narrative momentum after eight years of relative dormancy. What’s interesting is not the price movement, but the underlying thesis: regulatory-compliant selective privacy is winning mindshare over absolute anonymity.

Monero remains at #15 by market cap, Zcash at #28 amid governance turbulence, while smaller players like Railgun (#331)—positioned as a DeFi private layer—and Pirate Chain (#488) occupy niche positions. The broader pattern suggests financial institutions increasingly recognize that full anonymity (the Monero model) and regulatory compliance are irreconcilable. Instead, they’re exploring transaction privacy that maintains KYC/AML compatibility.

This creates an interesting bifurcation: ideologically pure privacy projects attract hobbyist and privacy-native users, while institutional capital gravitates toward compliance-friendly variants. Tornado Cash’s continued operation despite sanctions indicates the market’s determination to maintain privacy optionality, but the institutional migration toward regulated alternatives suggests long-term structural headwinds for purely anonymous models.

Simultaneously, Uniswap’s fee switch went live, marking a watershed moment for DeFi tokenomics. The protocol is now generating approximately $26 million in annualized fees, with a 207x revenue multiple baked into its $5.4 billion valuation. The mechanism is elegantly simple: fees now reduce UNI token supply through burns rather than accumulating in treasuries. This transforms governance tokens from pure coordination devices into direct economic participators.

The broader DeFi ecosystem is converging on similar models: token burns, staker profit distribution, and vote-escrowed (ve) locking mechanisms increasingly define protocol value capture. This represents genuine economic innovation—moving beyond first-generation DeFi’s “governance theater” toward actual stake-linked returns.

Prediction Markets Heat Up, But Institutions Rewrite the Game Rules

Prediction markets have become a fascinating bellwether for where institutional capital flows next. Polymarket’s ecosystem expansion—170+ tools now building infrastructure—indicates the space has matured beyond novelty into systemic importance.

However, Eleanor Terrett’s analysis on CLARITY legislation suggests institutional entry is fundamentally restructuring prediction market dynamics. When retail participants relied on fragmented information for single-event predictions (essentially sophisticated gambling), they enjoyed arbitrage opportunities. The moment market makers enter and spreads narrow, those opportunities evaporate.

Wall Street’s entry into prediction pricing carries a deeper implication: these markets are transitioning from retail-dominated speculation to institutional pricing mechanisms. The revenue implications are substantial—if CLARITY advances, we could see prediction markets absorb billions in institutional capital currently deployed in traditional derivatives.

Tennessee’s order for Kalshi, Polymarket, and Crypto.com to halt sports prediction operations suggests regulatory bodies are moving simultaneously toward legitimization (CLARITY pathway) and containment (state-level restrictions). This creates opportunity for well-positioned platforms but headwinds for unregulated competitors.

Major M&A Moves Signal Ecosystem Evolution

Polygon’s $250 million acquisition spree—snapping up Coinme and Sequence—reveals the strategic calculation underlying public chain positioning. Coinme’s money transmitter licenses across multiple jurisdictions provide the compliant on-ramp; Sequence’s wallet and developer infrastructure supply the user gateway.

The transaction crystallizes a broader pattern: successful Layer-1 and Layer-2 ecosystems are consolidating around regulatory-compliant infrastructure. Polygon’s transition from “crypto infrastructure” to “financial infrastructure” mirrors moves we’re seeing across Solana and other mature chains. It’s infrastructure building for institutional adoption, not growth-at-all-costs.

The short-term boost from Polymarket’s revenue contribution to Polygon will fade. What matters for this cohort is whether infrastructure consolidation translates into sustainable institutional integration.

This Week’s Hottest Debates and Market-Moving Events

South Korea’s lifting of its nine-year corporate cryptocurrency ban on January 14 created immediate ripple effects. The Financial Services Commission’s decision to allow listed companies to deploy up to 5% of net assets into digital assets opened a new capital category. Whether this ignites “Kimchi Premium 2.0” depends on whether Korean institutions actually deploy or simply gain optionality without exercising it.

The concurrent investigations and leadership transitions in U.S. monetary policy—including federal prosecutors’ criminal investigation into Fed Chair Powell and speculation around Rick Rieder’s potential appointment—signal broader instability in traditional monetary frameworks. This indirectly benefits digital asset optionality positioning.

Vitalik’s vocal defense of Tornado Cash developers against criminalization charges may seem rhetorical, but it signals the Ethereum community’s commitment to resisting regulatory creep into code-as-speech issues. These philosophical commitments become legally significant as regulatory precedent develops.

China’s CCTV disclosure regarding Yao Qian’s bribery case involving 2,000 ETH and project public sale facilitation offers a cautionary tale: even early central bank digital currency innovators aren’t immune to capital-diversion temptations.

Key Takeaways: What Markets Are Pricing In

The divergence between what’s happening in prediction markets, what’s happening in institutional capital flows, and what’s happening in traditional financial leadership transitions suggests markets are repricing around a substantially different policy regime than existed 18 months ago.

This week 110 consolidated several multi-month trends: institutional capital entering not from excitement but from regulatory enablement, privacy solutions bifurcating along compliance lines, DeFi protocols evolving genuine economic designs, and prediction markets migrating toward institutional pricing. The retail investor remains notable by absence, which historically presages the most significant repricing periods.

Bitcoin’s passage through $97,000 matters less than the underlying capital composition shifts. Watch not just price discovery but the specific flows—onshore vs. offshore, institutional vs. retail, compliant vs. anonymous—for clues about which narratives will maintain pricing power through cycle turns.