The Great Rotation: As Vanguard and Goldman Wade In, Crypto’s Public Champions Face a
A seismic shift is underway in the digital asset market, and it’s not just about price. As Wall Street titans like Vanguard and Goldman Sachs make stunning reversals to embrace crypto products, the very crypto-native pioneers who championed the digital asset treasury model are facing a brutal economic test. This isn’t merely a market dip; it’s a changing of the guard, happening under extreme duress.
The convergence of TradFi’s entry and the crypto-native deleveraging signals a pivotal maturation of the market, where the old playbook of simple balance sheet accumulation is being stress-tested to its limits.
The Floodgates Creak Open: Wall Street Reverses Course
Vanguard’s Surprising Pivot
In a landmark policy shift, Vanguard, the world’s second-largest asset manager with over $11 trillion in AUM, is set to allow its clients to trade crypto ETFs starting this week. This move represents a complete reversal of its previous hardline stance, where former CEO Tim Buckley famously argued Bitcoin was a “speculative asset” that didn’t belong in a long-term retirement portfolio.
The decision, spurred by “persistent retail and institutional demand,” is a massive signal that traditional finance is fully stepping into digital assets. The potential for a “wall of money” to enter the ecosystem is now more tangible than ever, with some analysts predicting “trillions incoming” as Vanguard’s 50 million-plus clients gain access.
Goldman Sachs Acquires a Strategic Foothold
Not to be outdone, Goldman Sachs is deepening its commitment by acquiring Innovator Capital Management, an ETF issuer with a defined-outcome Bitcoin fund. This isn’t just about offering products; it’s a strategic acquisition of the infrastructure that creates them, bringing about $28 billion in assets under Goldman’s supervision.
This follows a pattern of increasing engagement, with SEC filings showing Goldman has already invested heavily in Bitcoin ETFs from BlackRock and Fidelity. The bank’s evolution from a crypto skeptic in 2020 to a key institutional player underscores a fundamental change in its long-term view of the asset class.
The Great Deleveraging: Crypto’s Public Pioneers Face the Pain
Digital Treasuries Under Water
While Wall Street prepares its on-ramp, the publicly traded companies that pioneered the crypto treasury strategy are navigating a storm. The sharp market correction has decimated their stock prices. Shares in Solana treasury company Forward Industries have collapsed nearly 80% from their peak, while others like Solana Co. (HSDT) and DeFi Development Corporation (DFDV) have plunged around 40% in the last month alone.
This pain is not isolated to one ecosystem. Bitcoin mining stocks have been hit just as hard, with MARA Holdings (MARA) down roughly 50% from its October high and HIVE Digital Technologies (HIVE) plummeting 54%. The business model of leveraging public equity to stack crypto is facing its most severe test to date.
Strategy’s Defensive Play
Even the titan of the space, Michael Saylor’s Strategy Inc., is making defensive maneuvers. The company just announced the creation of a $1.44 billion USD reserve funded by stock sales. While still adding to its 650,000 BTC stash, this move is explicitly designed to “navigate short-term market volatility” and cover dividend and debt payments for at least 12 months.
This marks a significant evolution from a pure accumulation strategy to a more robust, all-weather financial approach. It’s a tacit acknowledgment that in a volatile market, a war chest of dollars is as crucial as a treasury of Bitcoin.
The Mining Margin Squeeze
Underpinning this financial pressure is a crisis at the production level. According to a report from TheMinerMag, the Bitcoin mining industry has entered what may be its “most severe economic downturn” ever. Hashprice—the revenue earned per unit of computing power—has fallen to a level described as a “structural low.”
Miners are now operating in the “harshest margin environment of all time,” with new-generation machines requiring over 1,000 days to break even. This extreme economic pressure on the network’s core security providers ripples up to the treasury companies that hold the assets they produce.
Why It Matters
The simultaneous arrival of Wall Street’s giants and the painful deleveraging of crypto-native public companies is no coincidence. It marks the end of the market’s adolescent phase. The simple, bull-run strategy of “number go up” via leveraged balance sheets is being replaced by a demand for more sophisticated, risk-managed financial products—the very kind that Vanguard and Goldman Sachs specialize in.
This transition is brutal but necessary. The “Great Rotation” is underway, bringing institutional-grade liquidity and validation at the cost of intense competitive pressure. The crypto-native firms that survive this downturn will emerge battle-hardened and validated, but the playbook for institutional crypto adoption has been irrevocably changed. The suits are here, and they’ve arrived just in time for the storm.
