Crypto Faces Three Barriers to Next Bull Run, STS Digital CEO Says

Institutional options selling, AI investment, and delayed U.S. crypto regulation are suppressing digital asset prices, according to STS Digital CEO Maxime Seiler.

Institutional options selling, capital rotating into artificial intelligence, and delays to U.S. crypto legislation are three powerful headwinds restraining price gains in digital assets, even as Wall Street steadily embraces blockchain technology, according to STS Digital CEO Maxime Seiler.

Bitcoin (BTC), the largest cryptocurrency by market capitalization, has struggled in recent months despite record institutional adoption of blockchain infrastructure, declining more than 25% year-to-date. The pullback stands in contrast to the spot bitcoin ETF launches of early 2024, which helped drive BTC to a record high above $73,000 and were widely expected to usher in a sustained institutional bid. Seiler argued that markets have yet to fully price in the rapid integration of the technology across traditional finance.

"The last four years have seen record institutional adoption of crypto and digital asset technology," Seiler said in an interview with CoinDesk. "What has changed over the past two years is that institutions are increasingly using blockchain to upgrade traditional financial markets to operate 24/7."

Banks, exchanges, and brokers are working through the operational challenges of around-the-clock markets, including clearing, settlement, and margining, he said. Companies such as Kraken and Coinbase (COIN) are accelerating that transition as they expand beyond crypto into broader financial services. Coinbase, for instance, acquired derivatives clearing organization FairX in 2022 and has since built out its own futures and options infrastructure, positioning itself to serve institutional clients across both crypto and traditional asset classes.

Much of this adoption, however, benefits established financial institutions rather than token holders, Seiler noted. As traditional finance integrates blockchain technology into existing workflows, less value accrues directly to crypto assets than investors had expected several years ago.

Founded in 2021, STS Digital is a Bermuda-regulated crypto options market maker that provides 24/7 liquidity and pricing for institutional clients trading digital asset derivatives. The firm specializes in over-the-counter (OTC) trading. Bermuda has positioned itself as one of the more proactive jurisdictions for digital asset regulation, having introduced a comprehensive Digital Asset Business Act in 2018 and subsequently licensing a growing roster of crypto firms under its tiered regulatory framework.

AI and Regulation Add to Crypto Headwinds

Another barrier to growth is artificial intelligence. Investor enthusiasm for AI has diverted both attention and capital away from crypto, Seiler said. High-profile developments around companies such as OpenAI, Anthropic, and the SpaceX (SPCX) IPO have made AI the market's dominant growth narrative, according to Seiler. The broader AI sector has absorbed hundreds of billions in capital commitments, including multi-billion-dollar funding rounds for leading model developers and massive infrastructure buildouts by hyperscale cloud providers, intensifying competition for the risk capital that previously flowed heavily into digital assets.

He also pointed to delays in U.S. market structure legislation, including the Clarity Act, as another factor weighing on sentiment. The bill is intended to establish a federal framework defining which digital assets fall under securities versus commodities regulation and to set rules for trading venues and intermediaries—clarity that market participants across the industry have cited as a prerequisite for broader institutional engagement. Regulatory certainty would help accelerate traditional finance's shift toward 24/7 trading and settlement while creating a more constructive backdrop for digital assets, he said.

Options Selling Caps Volatility

Seiler said the rapid growth of the institutional crypto options market is also suppressing bitcoin's price volatility. Bitcoin's implied volatility has remained unusually subdued in recent months, with the BVIV Index—a measure of expected 30-day volatility derived from bitcoin options—falling into the mid-30% range, among its lowest levels of the current cycle, before beginning to edge higher in July. In previous bull cycles, bitcoin's implied volatility routinely traded above 60%, and frequently spiked above 80% during major price moves, making the current compression a notable departure from historical norms.

"When you have a volatility sell imbalance, this creates a reflexive loop," he said.

Record levels of options selling by funds, market makers, and other institutional participants have created a feedback loop in which collecting option premiums encourages further volatility-selling, compressing both implied and realized volatility, he explained. The expansion of listed crypto options on regulated venues such as the Chicago Mercantile Exchange, alongside the growth of OTC desks serving institutional clients, has materially deepened the market since 2023.

That dynamic has effectively capped bitcoin's trading range, limiting the outsized rallies that characterized previous market cycles while leaving the cryptocurrency more exposed during broader market selloffs. Bitcoin has been trapped in a relatively tight $60,000–$66,000 trading range over the past month, with repeated attempts to break above resistance or below support failing to generate sustained momentum.

"There's much less interest in directional bitcoin trading than there was several years ago," Seiler said. "The growth in institutional options selling is compressing the range."

Despite the subdued market, STS Digital is expanding. The Bermuda-regulated firm received its full Class F license this year after progressing through the jurisdiction's regulatory framework. The license allows it to grow without the limits imposed by previous licenses. The company has quadrupled its bitcoin option notional volumes over the past 12 months, Seiler said, attributing the growth to its expanded regulatory status and increasing institutional participation.

Catalysts Needed

Looking ahead, Seiler said meaningful upside for crypto markets will require several catalysts to align: regulatory clarity, broader institutional deployment of 24/7 financial infrastructure, and a more supportive macroeconomic backdrop, potentially including interest-rate cuts or renewed monetary easing.

While he does not expect those conditions to emerge in the next few months, Seiler said the market is underpricing both the pace of institutional adoption and the speed at which traditional finance is integrating crypto infrastructure into global capital markets.

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