According to Hina Sattar Joshi, Director of Digital Assets at TP ICAP, the cryptocurrency market is exhibiting fragile sentiment, heavily anchored to the psychological pull of Bitcoin's traditional four-year cycle. Joshi stated that recent sharp price swings reflect a market struggling to detach from the historical pattern of rapid rallies followed by deep corrections, with traders reacting to narrative-driven expectations rather than underlying structural changes in liquidity and adoption.
Joshi highlighted a significant rotation in institutional capital flows. While Bitcoin-linked exchange-traded funds (ETFs) have experienced significant outflows over recent weeks, products tied to Ethereum and XRP have attracted notable inflows. "This trend points to a rotation in risk appetite, rather than a mass exit from the asset class," Joshi explained. This divergence suggests institutional investors are increasingly treating crypto as a multi-asset universe, with allocation decisions beginning to resemble broader portfolio rotation strategies common in traditional markets.
The analysis also notes a cautious market response to U.S. regulatory developments. Sentiment around the recently announced SEC and CFTC collaboration on "Project Crypto," aimed at unifying U.S. digital asset regulation, was muted. Joshi attributed this to concerns that the initiative could create a complex, dual-layered regulatory framework that might stifle growth, contrasting with the previous enthusiasm for milestones like the GENIUS Act.
In contrast, Joshi pointed to regulatory momentum in the UK and Europe. She cited the UK's HM Treasury-led DIGIT (Digital Gilt Instrument) programme, which will issue short-dated native government bonds (gilts) on blockchain infrastructure, as a meaningful step shifting engagement from exploratory to operational. This initiative could establish a blueprint for digitizing sovereign debt markets. Joshi suggested that progressive policies outside the U.S. raise questions about whether USD-backed stablecoins will remain the dominant use case or if other regionally-aligned stablecoins could capture market share.
