Is Strategy’s Model Unraveling? What is Driving the Recent Rout and Where It Can Go From Here

Is the Strategy flywheel stalling? Two market experts debate the company’s outlook as its valuation tanks.

Michael Saylor’s Strategy has not had the year it hoped for. Amid an explosion of copycats and Bitcoin price weakness, the company has seen its valuation and so-called mNAV crash.

In this special episode of Unchained, Praxos co-founder Vinny Lingham and The Benchmark Company Analyst Mark Palmer join Unchained Executive Editor Steve Ehrlich to debate Strategy’s outlook.

They discuss the impact of new preferred stocks on common shareholders, the company’s new cash reserve and the potential impacts of MSCI exclusion.

They also delve into what the Bitcoin digital asset treasury ecosystem could look like in the future and whether Strategy could have employed a better acquisition model.

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform.

Now, let’s get into this week’s news! In today’s edition:

• 🏦 Vanguard finally opens its doors to crypto ETFs

• 💹 Markets bounce back as traders eye Vanguard’s big pivot

• ⚙️ Ethereum’s Fusaka upgrade supercharges blob capacity

• 📱 Polymarket returns to the U.S. as Kalshi goes onchain with Solana

• 📑 Citadel urges tougher DeFi rules, sparking industry backlash

• 🚀 SEC fast tracks a new “innovation exemption” for token launches

• 💰 Strategy builds a $1.44B cash reserve amid index pressure

• 🌍 Binance taps Yi He as co CEO to guide global expansion

• 🪙 Tether fires back after Arthur Hayes questions USDT’s solvency

Vanguard Opens Crypto ETF Trading as Markets Rebound

Vanguard Group has reversed years of resistance to digital assets, announcing that ETFs and mutual funds primarily holding cryptocurrencies such as bitcoin, ether, XRP, and solana are now eligible for trading on its brokerage platform. 

The change, which took effect Tuesday, extends access to more than 50 million customers and follows months of internal review prompted by persistent demand from both retail and institutional investors. “Cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, performing as designed while maintaining liquidity,” said Andrew Kadjeski, head of brokerage and investments.

The shift comes as spot bitcoin ETFs continue to amass significant assets despite recent market pullbacks. 

Just last week, BlackRock revealed that its Bitcoin ETFs—led by the U.S. product IBIT—have unexpectedly become its biggest revenue engine, pulling in billions of dollars and even capturing over 3% of all bitcoin.

Vanguard’s move is seen as a major psychological marker for the industry, especially after hiring CEO Salim Ramji, a longtime blockchain advocate, earlier this year.

On the day of the rollout, crypto markets staged a broad recovery, fueling speculation that the rally was buoyed in part by Vanguard’s long awaited pivot into digital asset products.

In related news, Bank of America also shifted its stance on digital assets by telling its 15,000+ Merrill and Private Bank advisers they can now recommend a 1%–4% crypto allocation and will begin formally covering four bitcoin ETFs starting January 2026, opening the door for mainstream portfolio inclusion.

Ethereum Activates Fusaka Upgrade to Expand Data Capacity

Ethereum completed its Fusaka upgrade on Wednesday, marking its second major network update of the year and ushering in a significant boost to the data capacity used by layer 2 rollups. 

The upgrade introduces Peer Data Availability Sampling, known as PeerDAS, a technique that allows individual nodes to store only a portion of blob data while still verifying the full dataset. Developers say this approach supports Ethereum’s long term scaling goals without compromising decentralization.

Fusaka initiates an eightfold increase in blob throughput, though the expansion will be phased in through smaller follow up upgrades. The first adjustment is planned for December 9, raising maximum blob capacity to 15, followed by another increase to 21 on January 7. “We could say here, in just a few minutes, dial this knob up 8x,” Ethereum Foundation researcher Alex Stokes said during a livestream, adding that a slower rollout is safer for the network.

Ethereum co-founder Vitalik Buterin noted that PeerDAS has been in development for years, saying on X that “sharding has been a dream for Ethereum since 2015.” He added during the livestream that the new system could eventually lower costs on the main chain itself.

Ethereum Core Developer Preston Van Loon joined Protocol Watch founder Christine D. Kim to unpack what Fusaka means for users and projects. 

Polymarket and Kalshi Advance Prediction Markets With U.S. App Rollout and Solana Launch

Prediction market rivals Polymarket and Kalshi each announced major expansions this week as competition accelerates in the fast growing event forecasting sector. 

Polymarket began rolling out its regulated U.S. iOS app on Wednesday to waitlisted users after receiving approval from the Commodity Futures Trading Commission. The launch marks the platform’s return to the American market following a 2022 ban and a $1.4 million settlement tied to operating an unregistered derivatives exchange. “Against all odds. Polymarket’s U.S. app is now being rolled out to those on the waitlist,” the team said on X, adding that sports markets will appear first.

The move lands amid heightened activity from Kalshi, which this week introduced tokenized versions of its event contracts on the Solana blockchain. Through partnerships with DFlow and Jupiter, Kalshi is connecting its regulated off chain orderbook to Solana based liquidity pools in a bid to offer faster execution and deeper market depth. The update pushes Kalshi into more direct competition with Polymarket, whose onchain design has helped drive annual volumes to $18.5 billion compared to Kalshi’s $16.4 billion.

Citadel Presses SEC to Rein In DeFi, Triggering Industry Backlash

Citadel Securities is urging the U.S. Securities and Exchange Commission to apply stricter oversight to decentralized finance platforms that handle tokenized U.S. equities, arguing in a formal letter that some protocols function much like traditional exchanges. The firm told the agency that smart contract systems bringing together buyers and sellers could meet statutory definitions of an exchange or broker dealer, and warned that broad exemptions for DeFi would create uneven standards across markets. “Granting broad exemptive relief to facilitate the trading of a tokenized share via DeFi protocols would create two separate regulatory regimes,” the letter stated.

The filing, submitted on December 2 as part of the SEC’s ongoing consultation, sparked immediate criticism across the crypto sector. Uniswap founder Hayden Adams said the letter misrepresented open source developers as intermediaries, accusing Citadel of “coming for DeFi.” Blockchain Association CEO Summer Mersinger also pushed back, calling the proposed approach “overbroad and unworkable” and arguing it would misclassify software builders as financial custodians.

SEC Prepares “Innovation Exemption” to Speed Crypto Launches

SEC Chair Paul Atkins said the agency is preparing to introduce a fast track “innovation exemption” for digital asset issuers, with the goal of rolling it out in January. The measure would allow crypto firms to bring certain tokens and products to market without completing full SEC registration, a shift Atkins described as part of a broader effort to modernize federal oversight. He noted that an October government shutdown delayed the initial timeline but confirmed the exemption remains on track for early 2026.

The planned framework marks a clear departure from the stricter posture held under former Chair Gary Gensler. According to Atkins, the new approach is intended to offer clearer pathways for Web3 companies seeking to operate in the United States.

Strategy Builds $1.44 Billion Cash Reserve as Index Pressure Mounts

Strategy, the bitcoin treasury company formerly known as MicroStrategy, has established a U.S. dollar reserve of $1.44 billion to cover dividend payments on its preferred stock and interest on its outstanding debt. 

The reserve was funded through recent at the market share sales and is intended to provide at least twelve months of coverage, with a goal of eventually extending that to twenty four months. “Establishing a USD Reserve to complement our BTC Reserve marks the next step in our evolution,” Executive Chairman Michael Saylor said in a filing, noting the buffer is designed to help the firm manage short term market volatility.

The announcement comes as investors assess Strategy’s standing ahead of a January 15 decision on whether MSCI will remove the company from major equity indices. JPMorgan analysts estimate an exclusion could trigger outflows of up to $8.8 billion if other providers follow. Despite the scrutiny, Saylor said the company is “engaging” with MSCI and maintains that its long term mission remains unchanged.

Binance Appoints Yi He as Co-CEO to Strengthen Global Expansion

Binance has introduced a dual leadership model by naming co-founder Yi He as co-CEO alongside Richard Teng. The announcement was made during Teng’s keynote at Binance Blockchain Week, marking a significant shift for the exchange as it continues to rebuild following recent legal and regulatory challenges. Yi He, who has been with the company for more than eight years and serves as Chief Customer Service Officer, is expected to help guide Binance’s global growth and reinforce its compliance framework. “Yi has been an integral part of the executive leadership team since the launch of Binance,” Teng said.

Teng assumed leadership in 2023 after former CEO Changpeng Zhao pleaded guilty to violating U.S. anti money laundering laws. Zhao, who served nearly four months in prison and was later pardoned, has not yet clarified whether he plans to return to the exchange.

Tether Defends Solvency After Arthur Hayes Warns of Risk Exposure

Tether is pushing back against renewed questions about its financial stability after BitMEX co-founder Arthur Hayes argued the company’s growing allocations to bitcoin and gold could leave USDT vulnerable. In a recent post, Hayes described those positions as a large interest rate bet, claiming that a drop of roughly 30 percent could erase Tether’s equity and “in theory” render the stablecoin issuer insolvent.

Tether CEO Paolo Ardoino rejected the claim on X, calling it recycled fearmongering and pointing to the firm’s reported excess equity. Analysts also countered Hayes’ assessment. Joseph Ayoub, former head of crypto research at Citi, said Tether’s published reserves align with its liabilities and do not include a separate equity balance sheet that holds additional assets such as mining investments and extra bitcoin. He added that the company generates about $10 billion in annual profits and maintains strong liquidity, concluding that its financial position remains robust.

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