Tech companies are running hot, with Wall Street investors sustaining multi-trillion dollar valuations despite subdued earnings. Companies heavily invested in AI are particularly challenged on that front, thanks to heavy data center spending that isn’t yet — and may ever — result in sizable profits.
The gap between those companies’ valuations and their ability to actually make money continues to grow at a breakneck pace, terrifying analysts. The S&P is up a whopping nine percent so far this year, wrapping up its best quarter since 2020 at the end of last month, as Fortune reports.
But what comes up must come down. In a Tuesday note, Bank of America warned that “speculation is hitting extreme levels as high multiple stocks have gapped up demonstrably, an event that has historically preceded a valuation ‘snapback.’”
In other words, Wall Street could be in for a nasty reality check.
Meanwhile, experts warn that the US economy could be in an even worse shape than right before the Great Depression of the late 1920s. As the Telegraph‘s economics columnist Russ Mould pointed out, US stocks are currently priced on average 41 times their average earnings over the last decade, an indicator called the Shiller CAPE ratio. To put that number into perspective, the ratio was just 32.5 on Black Tuesday, the day of the worst financial disaster in modern history almost 100 years ago.
The fretting comes after some major turbulence. A major sell-off rocked the S&P 500 towards the end of June, wiping out hundreds of billions of dollars in market value. Even Musk’s SpaceX, which had gone public mere weeks earlier and is now top-heavy with AI spending itself, was caught up in the downturn, plummeting back down to its starting price of $150.
International markets have also seen massive swings, particularly in Asia, which could indicate troubling days ahead.
“This volatility is, in our view, evidence of excessive froth and calls into the question the sustainability of this rally,” Capital Economics analysts told Fortune.
Expect turbulence. For the time being, many investors are as optimistic as ever. Just this week, SpaceX received extremely bullish ratings from Morgan Stanley and Goldman Sachs, with price targets of $300 — twice the space company’s current share price — and $205, respectively.
TeraWulf (NASDAQ: WULF) shares jumped 17% on Monday after the former Bitcoin miner announced it had signed a 20-year lease with Anthropic.
The company expects to bring in roughly $19 billion from the deal. This deal hands one of the most closely watched AI-infrastructure players a marquee tenant and two decades of contracted revenue.
WULF traded around $24.14 by late Monday morning, up from Friday’s close of $21.18, with an intraday range of $23.38 to $25.15, according to Google Finance. The move continues an upward trend that has seen WULF grow more than 117% since the start of the year.
The deal means Anthropic will occupy a purpose-built AI campus at TerraWulf’s Justified Data site in Hawesville, Kentucky, near Louisville. The build-out is in different stages: with the first services slated for H2 of 2027, while the full 401 megawatts of critical IT capacity will go live in early 2028. That’s enough power to run large-scale AI training workloads.
Anthropic is the brain behind the Claude family of AI models. For TeraWulf to lock in a customer of that magnitude for two decades, it means the company’s pivot is not just speculative but has the potential to build a strong revenue base.
Effectively, the lease is betting on Anthropic being a key player in the field of AI two decades from now, as Contellation Research noted.
Two deals on the same day
TeraWulf paired the lease with an exit. The company agreed to sell its 50.1% stake in an AI data center joint venture in Abernathy, Texas, to an investor group led by Fluidstack, its partner in the project.
While TeraWulf did not disclose terms, the company claimed it had earned a premium on the ~$450 million it sunk into the venture. The next step is to redeploy that capital into sites fully owned and controlled by TeraWulf.
“Collectively, the transactions enhance TeraWulf’s long-term revenue visibility, strengthen its financial position, and further align the Company’s capital with infrastructure platforms where it maintains direct ownership, customer relationships, and operational control,” the company said in its announcement.
From Bitcoin mining to AI data centers
The company started as a Bitcoin mining business, with facilities in New York and Pennsylvania. In Q1 of 2026, TeraWulf generated $21 million in revenue from its high-performance computing hosting and passed the ~$13 million mark from its mining operations, for the first time ever.
That transition to AI data centers has not come cheap. In Q1, TeraWulf posted $427.63 million in losses. Q1 ended with TeraWulf having about $3.1 billion in cash and roughly the same amount in long-term debt.
TeraWulf is not the only company making a pivot. Plenty of mining companies are leasing power and ready-built space to AI firms, as this provides a stable income stream compared to the volatility of Bitcoin mining.
Demand for data centers is sky high: the International Energy Agency projects data center electricity use will nearly double to about 945 terawatt-hours by 2030, with AI the main driver.
Constellation Research believes there is a greater subtext to the deal, with Neoclouds and smaller providers moving quickly ahead of Meta’s cloud-computing launch, and TeraWulf sits among the companies most exposed to that shift.
Kentucky has become a key part of TerraWulf’s plans. The company already has hundreds of megawatts of grid-connected capacity in the Hawesville area and has a separate 285-acre site in Kentucky that can support more than a gigawatt.
What to watch next is delivery. The first phase of the Anthropic campus is more than a year out, and the $19 billion figure depends on capacity coming online through 2028 and a tenant that stays the course.
Don’t just read crypto news. Understand it. Subscribe to our newsletter. It’s free.
A reported Coinbase announcement about a World Cup result, likely using AI, created a problem bigger than a flawed alert. It showed how quickly exchange-run prediction markets can blur the line between tradable outcomes and unverified automated content inside the same consumer app.
The episode surfaced on July 5, when a user posting as jay_drainjr said on X that Coinbase had sent a breaking-news-style alert claiming Norway had won a World Cup game, with Erling Haaland scoring, before the match had been played.
Coinbase CEO Brian Armstrong replied later that day, saying he was looking into it with the team.
Coinbase has not published a full public postmortem as of press time. The public record also does not yet show how many users saw the notification, whether anyone traded after seeing it, or which system generated it. Those unanswered facts are material, but they do not erase the design problem the alert surfaced.
Exchanges are moving toward a product mix in which AI-generated alerts, sports-event contracts, and retail trading interfaces can sit within the same user journey. That means users need to see exactly what has been verified, what is automated, and what remains unresolved before market-adjacent content reaches them.
The timing made the episode sharper. Armstrong had already framed prediction markets as a breakthrough in how markets discover truth, saying in January that Coinbase users in the US could trade outcomes across sports, politics, culture, news, and more through the app’s Predict tab.
Coinbase’s own prediction markets page presents the product as focused on real-world outcomes, while its sports page shows event markets tied to World Cup, goalscorer, correct-score, and other sports outcomes.
That creates a basic tension for any exchange operating this kind of product. If a prediction market is meant to let prices reflect what participants believe will happen, the app also has to preserve the difference between an unresolved event, a live update, and a verified result.
A bad alert becomes market infrastructure when trading is one tap away
A mistaken pre-match alert would be a content failure in most consumer apps. In a trading app, it can become more serious because information and action sit side by side.
Prediction markets are contracts whose value can move as users react to new information. A notification that an event has already occurred can change a user’s understanding before the user sees the market, places a trade, exits a position, or decides to wait.
Even if no trades later show they relied on the alert, the product design has exposed the pressure point.
The reported Coinbase incident therefore belongs in a different category from a generic AI hallucination story. A wrong sentence from a model is embarrassing. A wrong sentence near a tradable event market can appear to be market-relevant information if the app does not indicate whether the event has been resolved.
The later outcome of the match does not settle that risk. If an alert reports a result before a reliable source has resolved the event, it has crossed the key boundary.
In prediction markets, the boundary is between pre- and post-resolution as much as between true and false.
That distinction will become more important as exchanges add more event markets to retail apps. Sports markets are especially sensitive because they produce constant live data, user attention is close, and the line between commentary, odds movement, and outcome confirmation can be thin.
A product can disclaim that users bear risk, but the interface still teaches users what to treat as settled.
Coinbase’s own pages already contain the legal and risk framing that makes the question of standards hard to avoid. The sports prediction market page says prediction markets are offered by Coinbase Financial Markets, a CFTC-registered futures commission merchant and National Futures Association member.
The same disclosure warns that event contracts can result in the loss of the full investment.
The product pages also state that information is provided for informational purposes and is not investment advice. They include language saying Coinbase is not responsible for third-party content errors, delays, or actions taken in reliance on that content.
That kind of disclosure may help allocate legal risk, but it cannot replace product-level clarity.
Users experience one app. If that app shows an event market, pushes a breaking alert, and presents a price that moves with new information, users will naturally treat the information environment as part of the product.
That is where provenance becomes more than a label. A trading app that uses automated alerts around event markets may need to show the source of the claim, the time it was verified, the status of the underlying event, and whether the alert was generated, summarized, or approved by a human.
A simple AI label would be too weak if it does not say whether the event itself has been resolved.
A practical standard would separate at least four states: rumor or social report, scheduled event, live event, and officially resolved result. The user should not need to infer those states from the wording of a push notification.
The app should make the state visible before the user can mistake commentary for settlement.
Latency is also a risk control. Prediction markets can move on seconds-old information. If the app’s alert pipeline is faster than its verification pipeline, the product can push users toward a claim before the market has a reliable basis to treat it as fact.
Speed is valuable only if proof travels with it.
Proof controls have to sit above the contract
The CFTC’s June 12 Federal Register proposal discusses prediction markets as registered venues offering event contracts and frames the category around public-interest determinations, market integrity, manipulation prevention, clear settlement terms, and objective information that can be publicly verified.
Those concepts are usually discussed in relation to the contract itself: what event is being traded, how the outcome is determined, and what conditions trigger settlement.
The Coinbase alert episode points to the layer above the contract. If the market’s settlement criteria are objective but the app’s surrounding content pipeline lacks the same discipline, users can still receive a misleading signal before settlement.
That is the gap exchanges will have to close as prediction markets move from specialist venues into mainstream crypto apps. The settlement rule may say one thing. The app notification may imply another.
The user experiences both as part of the same financial interface.
CryptoSlate has already covered how sportsbooks and prediction markets are converging as event contracts draw more trading interest. That trend raises the stakes for Coinbase because the company’s advantage is distribution.
If event markets live in the same app as spot crypto trading, wallets, alerts, and consumer finance tools, a content failure can travel faster and feel more authoritative than it would on a smaller market-only platform.
The regulatory context also explains why a disclaimer alone is incomplete. Prediction markets depend on clear evidence of what happened and when.
If the content layer can race ahead of that proof, the market still has a trust problem even when the contract’s final settlement criteria are objective.
For consumer exchange apps, verification has to cover both layers. The contract can have objective settlement terms while the surrounding feed still creates confusion if an alert uses final-result language too early.
Controls around content, data vendors, and push timing therefore become part of the same trust system that supports the market.
The next standard is operational
The core Coinbase question is operational. Did the alert come from a model-generated summary, a data vendor, a third-party feed, a human-entered story card, or a mix of those systems?
What source marked the event as resolved? What check should have stopped a pre-match result from being pushed? Could users distinguish a generated alert from an official result?
Those details remain unresolved without a Coinbase postmortem, but the most likely conclusion is clear: exchange-run prediction markets will need visible proof standards before AI-generated alerts can scale alongside tradable outcomes.
Those standards should be measurable. A market operator can log the data source for every event alert, the timestamp when a result becomes eligible to be described as final, separate the generated commentary from the official settlement language, and retain an audit trail for any push notification tied to a tradable market.
It can also prevent content systems from using final-result language until a verified source has crossed a predefined threshold.
The hard part is that these controls may slow down the very alerts that make consumer apps feel timely. That is the tradeoff.
If an exchange chooses speed over provenance, it risks turning the alert layer into an unpriced part of the market structure.
The Coinbase incident is therefore a preview of a larger fight over the credibility of prediction markets. Market prices can serve as useful signals only when users can distinguish among a forecast, a report, and a resolved fact.
As exchanges add AI summaries and real-time alerts, the next competitive standard may shift from who lists the most markets first to who can show the fastest proof without asking users to trust a black box.
Until Coinbase explains the alert pipeline, the unanswered facts remain important. How many users saw the notification, whether anyone traded because of it, and what system generated it are all material details.
The broader lesson is already visible: prediction markets sold as truth-seeking tools need proof infrastructure before automated content becomes part of the trading experience.
Gwynne Shotwell, the president of SpaceX (NASDAQ:SPCX), said on Monday that she will give away company stock to help fund the new Trump Accounts program, adding her name to a growing line of companies and rich business owners who are backing the children’s savings plan.
The gift comes from stock owned by Shotwell and her husband. It will be split among close to 2 million Trump accounts. In a post on X, Shotwell said the money would go a little more toward kids living near her home in central Texas. “We have been fortunate in our careers and hope this gift encourages the next generation to continue the journey of enabling humanity to live and fly amongst the stars,” she wrote.
Shotwell also works as SpaceX’s chief operating officer and owns one of the biggest individual stakes in the company, worth close to $2.4 billion after its IPO broke records last month. As reported by Cryptopolitan previously, the stock has since seen sharp swings.
Just days before her announcement, on Thursday, President Trump told CNBC host Joe Kernen that he believed SpaceX chief Elon Musk would also give stock to the program.
Other companies have already joined in
The accounts with the tax code of 530A began on July 4th. They are for the children born between 2025 and 2028. They will receive $1,000 initially from the U.S. Treasury.
There are other big companies as well, before SpaceX. Intel, Robinhood and Micron have all said that they will add their own money. Micron has even announced a one-time payment of $250 million divided among all the children’s accounts in the towns where it does business.
Michael and Susan Dell stood beside Trump on Monday, marking their $6.25 billion pledge.
Other billionaires, including investor Ray Dalio, have made their own separate promises. Trump even joked that kids had missed out on recent stock gains simply because the accounts took so long to launch.
Trump rings the bell from the Oval Office
Trump himself marked the day by ringing the opening bells for the New York Stock Exchange and the Nasdaq, all from inside the Oval Office. The moment showed just how closely he has linked his time in office to how stocks are doing.
With prices still running high and hurting his standing with voters, Trump has pushed Americans to pay more attention to their 401(k) accounts, saying his policies deserve the credit for any gains, especially with the November midterms coming up.
“It’s going to go up, I think the market’s going to go through the roof,” Trump said once trading began.
Yet only 33% of American adults say they approve of how Trump is handling the economy, based on a June survey from The Associated Press-NORC Center for Public Affairs Research. That number may explain why ringing the bell might not do much for his party’s chances with voters this fall.
The S&P 500 climbed 17.9% in 2025. That followed even bigger jumps of 25% in 2024 and 26.3% in 2023, both under President Biden. So far this year, the index is up about 10%. But like Biden before him, Trump has watched his approval ratings slide as prices keep climbing.
He won in 2024 partly by promising to lower costs, yet his tariffs and the start of fighting in Iran have added new pressure on prices. The consumer price index has risen 4.2% over the last year, up from 3% when Trump began his second term in January 2025. Even so, Trump is counting on these new investment accounts to give younger Americans a real stake in the economy going forward.
Separately, SpaceX is set to officially join the Nasdaq-100 on Tuesday. That means investors holding money in funds tied to the index will end up owning SpaceX shares, whether they meant to or not.
Funds managing a combined $800 billion, including the well-known Invesco QQQ ETF, will buy SpaceX shares at Monday’s closing price to keep in step with the index. This follows new rules that let large, newly public companies join the Nasdaq-100 faster than before.
FIFA cleared United States striker Folarin Balogun to face Belgium in the World Cup Round of 16, suspending his automatic one-match ban. On Polymarket, odds that he would play jumped to about 97%.
The FIFA Disciplinary Committee invoked Article 27 of its code, placing the ban on a one-year probation instead of enforcing it. The move reversed a red card that many US fans called unfair.
Odds Balogun Will Play Against Belgium. Source: Polymarket
Why FIFA’s Article 27 Call on Balogun Was Rare
Balogun was sent off in the 64th minute of the USA’s 2-0 win over Bosnia and Herzegovina on July 1. A VAR review flagged him for stepping on defender Tarik Muharemović’s ankle, ruling it serious foul play.
US Soccer had no way to appeal the automatic ban. Red cards at the World Cup almost never get reversed.
Article 27 gave the committee another route. It lets FIFA suspend a punishment on probation, so the ban applies only if Balogun reoffends within a year. FIFA set out the terms in its ruling.
“By operation of Article 27 FDC, the implementation of the automatic match suspension for USA player Folarin Balogun is suspended for a probationary period of one (1) year.”
FIFA used the same power weeks earlier on Cristiano Ronaldo. He was sent off in a World Cup qualifier, his first red card in 226 internationals. FIFA deferred two games of his three-match ban on probation, keeping him available for 2026.
The reprieve also moved crypto-based prediction markets, which have tracked lucrative World Cup trades all tournament.
Polymarket Jumps as Trump Hails the Balogun Ruling
Traders have priced everything from match outcomes to FIFA’s mystery halftime act. The World Cup has been a windfall for the sector. It pushed Polymarket to a record $10.8 billion in monthly volume in June, CNBC reported.
On Polymarket, Yes shares on Balogun playing Belgium sat near zero for days. They jumped to about 97% within hours of the ruling, on roughly $19,000 in volume.
Most contracts never get that busy. Roughly 70% of the platform’s closed prediction markets have traded under $10,000, and Balogun’s stayed dormant until the news gave traders something to price.
“Thank you to FIFA for doing what was right, and reversing a great injustice!” President Donald Trump wrote, welcoming the outcome on Truth Social.
Several sports outlets reported that the White House called FIFA and asked President Gianni Infantino to review the card.
🚨 Exclusive: The White House made a direct call to FIFA to ask Gianni Infantino to review Folarin Balogun’s red card.
FIFA approached for comment and referred to the findings of its independent committee.
BeInCrypto could not verify whether this appeal happened.
However, FIFA pointed to its independent committee and said Article 27 gave the panel full authority, denying outside influence.
Balogun is the United States’ leading scorer with three goals. He is now free to face Belgium on Monday in Seattle, the side that ended the US run in 2014. The winner reaches a quarterfinal the Americans last saw in 2002.
JPMorgan Chase & Co. is concerned that Strategy’s new policy of selectively selling its Bitcoin holdings will introduce new risk to the crypto market.
On Monday, Strategy announced a BTC monetization program through which the company can sell a portion of its 847,363 BTC holdings to support its preferred dividend payments and buybacks.
The so-called Digital Credit Capital Framework followed months of criticism of Strategy’s capital position amid declines in the price of BTC and MSTR.
JPMorgan said the policy adds avoidable “two-way” flow risk to crypto markets.
In a Wednesday report, JPMorgan analysts led by Nikolaos Panigirtzoglou said Strategy has spent years as one of Bitcoin’s most consistent buyers, accounting for about 70% of total net digital asset inflows this year.
The policy, as such, introduces a new risk that the biggest BTC buyer could sell off its holdings at any moment.
Strategy should raise 24 to 36 months of cash reserve
JPMorgan suggests that Strategy raise its cash reserve by issuing common equity to shore up investors’ confidence that it won’t need to sell its Bitcoin holdings.
Strategy currently holds $2.55 billion in cash, enough to cover about 17 months of preferred dividend and interest obligations. The analysts believe the buffer is not wide enough.
They said, “a higher coverage of 24-36 months would be needed to make investors more comfortable with the idea that Strategy would not need to sell bitcoins in the foreseeable future.”
Analysts split on what comes next
Not everyone at the research desks shares JPMorgan’s caution. Benchmark Equity Research reiterated a Buy rating on MSTR with a $570 price target, implying more than 500% upside from recent levels, following the sales policy.
Analyst Mark Palmer called the capital framework “formal permission” to put Strategy’s capital machine into reverse during periods of market stress, framing it as a net positive for shareholders, as Cryptopolitan reported.
Meanwhile, the MSTR price has made gains since the policy. The shares rose 12.6% to $92.68 on Monday, while STRC gained roughly 10% to around $83.67 after trading below $75 the previous week.
By Wednesday, MSTR had pushed past $100, adding $5 billion in market cap and climbing 27% from Friday’s low.
At the time of writing, MSTR was trading at $100.83, a 7.93% increase on the day.
DeFi lending protocol Edel disclosed a $403,000 exploit that hit the layer where tokenized stocks are trying to become DeFi collateral.
Edel said no depositor would bear losses, and the team would absorb the bad debt, restore affected balances one-to-one, and rebuild the protocol’s oracle architecture for a version two release.
The attack manipulated the exchange rate between wGOOGLx, a wrapped version of Edel’s tokenized Google stock, and GOOGLx, the token it wraps. Edel said the manipulation pushed wGOOGLx’s collateral value to roughly 78 times its correct level.
SlowMist traced the root cause to Edel’s price source, which used latestAnswer() to return an ERC-4626-style vault’s convertToAssets() rate. That conversion rate can be manipulated when an attacker controls enough of the underlying flow, and Edel’s price feed reads it directly.
CertiK described the same flaw from the lending side: the attacker manipulated wGOOGLx’s collateral price, which tracked its GOOGLx balance, then borrowed against the inflated value.
GoPlus noted that the attacker used a flash loan to repeatedly supply and borrow, distorting the wGOOGLx/GOOGLx conversion rate. The inflated collateral then supported real borrowed assets, including 384,215 USDC and wrapped positions in SPYx, QQQx, MSTRx, NVDAx, and TSLAx.
Security firms published different estimates. Cyvers put the loss at roughly $353,000, GoPlus cited about $403,000 in losses and roughly $305,000 in attacker profit, and CertiK put the drained funds at roughly $204,000.
The gap appears to reflect different measurements, including bad debt, gross loss, and net attacker profit.
The disconnect probably comes from each firm measuring something different, such as bad debt, gross loss, or net profit.
The critical failure sat in the exchange rate between the wrapped token and its underlying counterpart, a relationship that Edel’s lending market priced as though it were stable. Alphabet’s share price did not drive the exploit.
Infographic outlining the Edel exploit’s five steps, from a flash loan to wrapper mispricing that inflated wGOOGLx collateral roughly 78x before real assets were borrowed.
The market in numbers
RWA.xyz puts tokenized stocks’ onchain value at $1.7 billion, up 2.17% over the past 30 days. Monthly transfer volume sits at $8.92 billion, and holders at over 396,000.
xStocks alone lists more than 100 stocks and ETFs across more than 50 integrated platforms, with over $25 billion in total transaction volume. It describes itself as fully backed and open to plugging into any DeFi protocol without permission.
Backed, the issuer behind xStocks, markets the tokens explicitly for DeFi use: lending tokenized Apple shares or borrowing against them without selling.
Kamino says it became the first major lending protocol to accept tokenized equities as collateral, allowing users to deposit tokens such as SPYx, QQQx, GOOGLx, AAPLx, NVDAx, TSLAx, MSTRx, and HOODx to borrow stablecoins or earn yield.
Robinhood launched stock and ETF tokens for EU customers in June 2025, then opened a public testnet for Robinhood Chain. The network is an Ethereum layer-2 built on Arbitrum, designed around tokenized real-world assets including equities, ETFs, and private assets.
The selling point across all of this is the same: tokenized stocks should move and connect like any other crypto asset. Edel is a reminder that once they move like crypto, they can also break like crypto.
Market layer
What it enables
Examples from the article
Risk Edel exposed
Access
Users gain exposure to stocks and ETFs onchain.
Robinhood stock and ETF tokens for EU customers; xStocks’ 100+ stocks and ETFs.
Legal and issuer-level backing are necessary, but not sufficient.
Trading
Tokenized stocks move across venues, chains, and DeFi platforms.
xStocks across 50+ integrated platforms; $25B+ total transaction volume.
More integrations create more pricing and liquidity dependencies.
Wrapped versions, vault exchange rates, and oracle paths can become attack surfaces.
Future derivatives
Tokenized equities become inputs for structured products and leverage.
Implied next phase as collateral markets mature.
A wrapper or oracle failure can spread beyond one lending market.
The disconnect between backing and safety
A lending market prices several layers, such as the tokenized equity itself, the wrapped version built on top of it, and the exchange rate a vault uses to convert between the two.
It also prices the oracle path that reports a value, the lending market’s own borrowing limits, and whether that collateral can actually be sold during a period of stress. Edel’s exploit sat almost entirely in the wrapper and oracle layers.
Using a tokenized stock as collateral adds a second pricing problem on top of the equity itself. A protocol also has to price every on-chain representation built around that stock, including how a wrapper’s exchange rate behaves under stress. That exposure comes from the collateral integration built around a tokenized stock.
Flash loans, collateral manipulation, and ERC-4626 exchange-rate attacks have all shown up in DeFi exploits before. This exploit’s novelty lies in the asset class these techniques target, and it appears to be one of the first clear tokenized-stock-collateral exploits on record.
How this plays out
In the bull case, protocols spend the next year isolating wrapper risk. That means capping how much collateral in a lending market can come from wrapped tokenized stocks, separating issuer-level prices from wrapper exchange rates, and building oracle paths that a single flash loan cannot move.
Tokenized equities then become credible collateral for conservative borrowing against liquid names like Apple, Nvidia, Tesla, and Google. Edel ends up remembered as the early failure that forced better design before the category scaled.
In the bear case, listings outrun the risk work. More venues accept tokenized stocks as collateral before oracle design and wrapper isolation catch up.
The number of wrapped tokens, bridges, and vaults built around each ticker keeps multiplying faster than anyone can audit them.
Along that path, more exploits in the low hundreds of thousands of dollars continue to surface involving exchange-rate manipulation and thin liquidity. Tokenized stocks have become a security flashpoint over how DeFi protocols use them as collateral.
The first phase of tokenized stocks was access: letting eligible users hold tokenized exposure to names such as Apple or Google. The second phase was trading, which involved making that claim move across chains around the clock.
Scenario
What has to happen
Market outcome
What Edel becomes in hindsight
Bull case: safer collateral markets
Protocols isolate wrapper risk, cap collateral exposure, separate issuer prices from wrapper exchange rates, and harden oracle paths.
Tokenized equities become credible collateral for conservative borrowing against liquid names like Apple, Nvidia, Tesla, Google, SPY, and QQQ.
An early failure that forced better design before the category scaled.
Base case: slower collateral adoption
Lending markets keep tokenized stocks in isolated pools with conservative loan-to-value ratios and tight caps.
Tokenized stocks grow mainly as trading assets, while borrowing use cases expand gradually.
A warning label that slows leverage but does not stop the market.
Bear case: listings outrun risk controls
More venues accept tokenized stocks and wrapped variants before oracle design and wrapper isolation improve.
More small-to-mid exploits appear around exchange-rate manipulation, thin liquidity, bridges, and vault accounting.
The first visible sign that tokenized-stock collateral became a security flashpoint.
Edel arrived at the start of the third phase, collateral, where holding a tokenized stock also allows borrowing against it.
The first two phases of tokenized stocks rewarded whoever listed the most tickers or reached the most chains. The next one rewards whoever can price a wrapped stock correctly under stress, every time.
Michael Saylor pitted Strategy (MSTR) against the Magnificent 7 (Mag 7) on July 2, branding his company the “MoST inteResting” stock on Wall Street as shares recover from last week’s lows.
The comparison rests on derivatives positioning rather than price performance. According to a chart Saylor shared, MSTR options open interest equals 71.9% of the company’s market capitalization, several times higher than any Mag 7 member.
Michael Saylor Pits MSTR Against Mag7 Members as MicroStrategy Stock Stages July Recovery. Source: Saylor on X
MSTR Options Interest Dwarfs the Mag 7
Saylor’s post capitalized select letters in “MoST inteResting” to spell out the MSTR ticker. His chart put Tesla (TSLA) closest at 15.8% and Meta (META) at 10.8%, with the remaining Mag 7 members lower still. Notably, the numbers are Strategy’s own presentation and capture one snapshot in time.
The ratio captures how traders treat the stock. With a beta of 3.54, per S&P Global data, MSTR moves like a leveraged proxy for its $64 billion Bitcoin bet. Options remain the preferred vehicle for that exposure.
MicroStrategy’s latest filing shows 847,363 Bitcoin (BTC), over 4% of the circulating supply. The company paid $64.1 billion, an average of $75,646 per coin.
MSTR jumped 12.5% on Monday after unveiling its capital management overhaul. It then slid 6.2% to $86.93 on Tuesday as TD Cowen cut its target to $260 from $400.
On Thursday, shares climbed more than 7%, effectively recovering above $1009 to suggest a July recovery that is still pending confirmation.
The June 29 framework set aside a $2.55 billion cash reserve, covering 17.4 months of preferred dividends and interest. It also authorized up to $1.25 billion in Bitcoin sales and $2 billion in buybacks. Company leadership cast the change as deliberate.
“Strategy is evolving from one-way capital issuance to active capital management,” Phong Le, CEO of Strategy, said in the announcement.
Meanwhile, Wall Street’s response captures the tension. Citi kept its Buy rating but slashed the price target from $260 to $136, saying the plan buys time for Bitcoin to stabilize.
TD Cowen and BTIG also kept Buy ratings while lowering targets. Separately, Rosen Law Firm opened a securities probe into Strategy.
Saylor also reiterated the $100 STRC target as the preferred stock recovers from its June 26 record low of $71.25.
Supporters read the options dominance as conviction. In contrast, critics counter that the same leverage dragged the stock from a 52-week high of $457.22 to $81.81.
Whether derivatives fervor converts into durable equity performance still hinges on Bitcoin holding above $60,000. Strategy reports earnings on July 30, the first test of the new playbook in action.
Tesla (NASDAQ: TSLA) surpassed Wall Street’s sales expectations and shipped 480,126 vehicles in the second quarter of 2026.
The EV company shipped 74,000 more units than expected but still failed to outsell BYD. That relative underperformance could be part of the reason the EV maker’s stock has failed to follow the positive news it delivered in its own report.
Are customers buying Tesla’s EVs?
Tesla (NASDAQ: TSLA) delivered 480,126 vehicles in the second quarter of 2026, 25% higher than the same time last year, despite Wall Street predicting that Tesla would only deliver about 406,000 vehicles. The company beat the forecast by around 74,000 cars.
Tesla’s Model 3 and Model Y made up most of the sales, accounting for 467,762 deliveries. Other models, including the Cybertruck and the higher-end Model S and X, made up just 12,364 units.
The company only produced 451,758 vehicles during the quarter, meaning about 28,000 of the shipped cars were from its existing inventory.
In the first quarter of 2026, Tesla delivered 358,023 vehicles. These Q2 figures represent a 34% increase in just three months. Only three quarters in Tesla’s history have been bigger: Q3 2025 (497,099), Q4 2024 (495,570), and Q4 2023 (484,507).
Tesla registrations across Europe reached 28,610 in May, a nearly 108% increase in the number from the same month last year. Year-to-date registrations through May reached 118,068 vehicles, a 57% increase. Within the European Union alone, May registrations more than doubled, climbing 152%.
However, in the United States, sales dropped. The federal EV tax credit expired, which made electric cars more expensive for many buyers. Cox Automotive said Tesla’s domestic sales fell 20% because of this change.
Deutsche Bank analyst Edison Yu said Tesla’s international sales in both Europe and China helped a lot. The company’s growth in Europe happened due to the competitive deals buyers were offered. Some buyers disagree with CEO Elon Musk’s political views, but the pricing was good enough for them to look past the controversy.
Tesla also deployed 13.5 gigawatt-hours (GWh) of energy storage in Q2, representing a 53% increase from the 8.8 GWh in Q1 2026. This number missed the mark on analysts’ expectations of 13.8 GWh.
Why is BYD still outselling Tesla?
BYD retained its position as the world’s top electric car seller, reporting 557,090 fully electric vehicle sales for Q2 2026. BYD announced its numbers one day before Tesla released its results.
BYD’s lead over Tesla is roughly 77,000 vehicles. BYD’s quarterly volume dropped 8% year over year from a higher peak, but its overseas sales are growing fast. About 43% of BYD’s sales in Q2 came from outside China.
On July 2, 2026, BYD’s stock closed at 83.57 Chinese Yuan (CNY) on its Shenzhen listing (SHE: 002594), up 3.61%. Its Hong Kong-listed shares (HKEX: 1211) closed at 78.30 Hong Kong dollars (HKD).
Meanwhile, Tesla’s stock (NASDAQ: TSLA) traded around $391 on July 2, down nearly 8% on the day. Tesla’s Q2 earnings call on July 22 will reveal whether Tesla kept its profit margins or sacrificed them with aggressive pricing.
Bitcoin is entering the second half of the year with its support system, which powered its last rally, under pressure.
Data from CryptoSlate shows that the largest digital asset has fallen about 33% this year and more than 50% from its October record high above $126,000, trading near its weakest level since September 2024 at around $58,600 as of press time.
Bitcoin Price Performance in H1 2026 (Source: Tradingview)
That makes July a test of whether the market is nearing exhaustion or beginning another leg lower. The next four weeks bring three pressure points: whether exchange-traded fund outflows slow, whether the Federal Reserve signals another rate increase, and whether Congress can move the CLARITY Act before the August recess.
The outcome could determine whether Bitcoin rebounds toward $100,000 by year-end or retests the $50,000 to $55,000 area, which analysts now see as the next major structural support zone.
ETF demand has flipped from cushion to pressure
ETF flows have become one of the clearest signs that Bitcoin’s institutional support is weakening.
Data from SoSoValue show US spot Bitcoin ETFs posted about $4.5 billion in net outflows in June, their worst month since the products began trading in January 2024.
BlackRock’s IBIT accounted for most of the withdrawals, underscoring how the largest regulated demand channel for Bitcoin has become a source of sustained selling pressure.
The weakness was spread across the month rather than concentrated in a single trading session. Spot Bitcoin ETFs recorded only three days of inflows in June, with those positive days totaling less than $100 million combined.
Bitcoin ETFs Daily Flows in June 2026 (Source: SoSoValue)
The rest of the month was dominated by redemptions, including several sessions in which hundreds of millions of dollars left the products.
That pressure followed Bitcoin below the $60,000 area and challenged one of the central assumptions behind the ETF-led phase of the market: that regulated funds would provide a steadier base of demand during drawdowns.
Ecoinometrics, a Bitcoin analysis platform, said the decline was consistent with the pressure visible in fund flows, noting that:
“Bitcoin below $60K shouldn’t surprise anyone watching ETF flows. The last 30 days have seen some spectacular days of selling. But they’ve really been defined by relentless selling.”
The firm said nearly every recent trading session had seen capital exit spot Bitcoin ETFs, creating one of the most persistent stretches of outflows since the funds launched. It added:
“That’s the kind of demand shock that keeps pushing prices lower.”
However, the withdrawals do not necessarily point to panic selling.
This is because many ETF investors entered the market at lower prices and may be taking profits or cutting exposure after Bitcoin’s sharp advance last year. But the persistence of the outflows shows that institutional investors are not yet stepping in to absorb the decline.
That marks a clear shift from the earlier stage of the cycle, when ETF demand helped pull Bitcoin deeper into mainstream portfolios and supplied a visible stream of new capital. In June, the same structure showed how quickly large allocators can retreat when prices weaken, macro conditions tighten and momentum fades.
The market is now treating ETF flows as a better gauge of confidence in the top crypto.
So, a return to steady inflows would suggest institutional buyers are willing to rebuild exposure after the drawdown.
But continued redemptions would leave Bitcoin more dependent on long-term holders and less protected by Wall Street demand heading into the second half of the year.
The Fed has removed the rate-cut trade
The ETF retreat is happening just as the rate-cut narrative that carried much of the early-year optimism has broken down.
The Federal Reserve held interest rates steady at its June meeting, but the decision itself was not the market-moving part. The tone was.
Under Chair Kevin Warsh, policymakers have shifted toward a more hawkish stance as inflation remains above target and tariff-related price pressure continues to show up in consumer data.
That has forced traders to reprice the second half of the year. Rate relief, which many crypto investors expected to arrive under a Trump-appointed Fed chair, is no longer the base case. Markets are now considering the possibility that the next move could be a hike rather than a cut.
That shift matters for Bitcoin because the asset does not pay yield.
When Treasury yields rise and the dollar strengthens, investors have less incentive to hold assets whose value depends heavily on liquidity expectations. Bitcoin is absorbing that pressure even as its ETF channel sees redemptions.
The Fed’s change in tone also undercuts one of the market’s earlier assumptions about Warsh. Many crypto investors expected him to lean dovish because President Donald Trump had long pushed for lower rates.
However, that expectation was never as firm as the market treated it. Surveys had suggested only a narrow lean toward dovishness on rates, while many investors expected Warsh to take a tougher stance on the Fed’s balance sheet and preserve some independence from the White House.
The June meeting forced a reset. In March, policymakers were still leaning toward one or two cuts by year-end. By June, the median projection had shifted toward a possible hike, even though the committee remained divided.
That leaves Bitcoin without the macro support many investors expected heading into the summer.
Financial conditions are not easing, the dollar has firmed, and Treasury yields have moved back toward recent highs. For an asset still treated by many allocators as a high-beta liquidity trade, that is a difficult backdrop.
Strategy’s shift raises questions over BTC treasury demand
Meanwhile, market pressure has also spread to the corporate Bitcoin treasury trade, where Strategy’s first sale in years drew attention well beyond the transaction’s size.
Strategy (formerly MicroStrategy) disclosed in May that it sold 32 Bitcoins, worth about $2.5 million. The sale represented only a small fraction of its holdings and did little to alter the company’s overall exposure.
However, the larger concern was the signal it sent to a market that has long viewed Strategy as Bitcoin’s most committed corporate buyer.
For much of the cycle, Strategy stood for a straightforward trade: raise capital, buy Bitcoin and hold through volatility. That made the company an important reference point for investors, especially as spot ETF inflows and corporate treasury purchases reinforced each other.
The company later reinforced that shift, saying it could sell part of its Bitcoin holdings to strengthen its balance sheet, support its perpetual preferred securities and fund stock repurchases.
The statement gave investors a clearer view of how management could balance Bitcoin exposure against liquidity needs, financing costs and shareholder returns.
Strategy remains closely tied to Bitcoin. Its holdings remain large, and one small sale after years of purchases does not change the market’s supply balance.
Still, the company’s new flexibility has raised a broader question of whether Bitcoin treasury companies will continue to act as steady buyers if prices remain weak and funding conditions tighten.
That question has become more important as Strategy adjusts its financing structure, dividend commitments and reserve policy.
The framework could make the company more resilient by improving liquidity and reducing balance-sheet strain. It also gives management more room to prioritize financial discipline over constant Bitcoin purchases.
For a market already under pressure from ETF outflows, the shift adds another source of uncertainty. Stable corporate holders could help absorb weakness. Slower buying or further deleveraging would remove part of the demand base that supported Bitcoin’s previous advance.
Over the past year, hedge funds, asset managers and wealth advisers have poured into AI-linked stocks as investors search for exposure to one of the fastest-growing themes in global markets.
The demand has spilled into new listings, derivatives and exchange-traded products tied to companies seen as beneficiaries of the AI buildout.
That appetite has kept risk-taking alive across parts of Wall Street. But much of the money is moving toward chipmakers, data-center operators, software companies and other firms with a clearer earnings link to AI infrastructure, rather than into crypto.
The split complicates Bitcoin’s market signal. Its decline is not due to investors abandoning risk altogether. Capital is still moving into speculative areas, but Bitcoin is no longer the main destination.
AI offers investors a more immediate corporate growth story as large technology companies continue to spend heavily on chips, cloud capacity and data centers.
Bitcoin, by contrast, is entering the second half of the year with weaker ETF flows, policy uncertainty and renewed questions about corporate treasury demand.
That divergence has left Bitcoin outside a rally in other high-growth assets. If AI continues to absorb capital through the summer, Bitcoin may need a stronger catalyst than lower prices to regain investor attention.
CLARITY Act becomes July’s policy catalyst
After a first half shaped by ETF outflows, renewed rate pressure and questions over corporate Bitcoin buyers, the Senate calendar has become one of crypto’s few near-term openings for a shift in sentiment.
The CLARITY Act would create a federal market structure framework for digital assets and define the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Its passage would give exchanges, banks, asset managers and token issuers a clearer basis for building products and expanding services in the US.
A delay or failure would leave the industry facing the same regulatory uncertainty that has weighed on investment, product development and market confidence for years.
The timing is tight because US Senate leaders have only a narrow window before the August recess, while lawmakers still need to reconcile committee versions, address Democratic concerns over ethics and illicit-finance provisions, and secure enough votes to move the bill through the chamber.
That makes July a key test for the market. If the bill advances, Bitcoin could gain a policy catalyst at a time when ETF redemptions and macro conditions are weighing on risk appetite.
However, if the effort slips into the fall, one of the clearest sources of potential positive sentiment in the second half would fade.
In view of this, Thomas Perfumo, Kraken’s Chief Economist, described the CLARITY Act as the catalyst to watch over the next four weeks, saying passage could help restore sentiment and momentum.
Bitcoin’s Potential Price Path if CLARITY is Passed (Source: Grayscale)
Notably, Grayscale has also tied the bill to Bitcoin’s near-term path, placing it alongside Strategy’s balance-sheet decisions and the Fed’s rate outlook as factors that could determine whether BTC is nearing a low or remains exposed to further losses.
