STS Digital CEO sees three major headwinds for crypto markets

Much of the adoption, however, benefits established financial institutions rather than token holders, Seiler said. As traditional finance integrates blockchain tech into existing workflows, less value accrues directly to crypto assets than investors 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.

AI, 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.

He also pointed to delays in U.S. market structure legislation, including the Clarity Act, as another factor weighing on sentiment.

Regulatory certainty would help to accelerate traditional finance’s shift toward 24/7 trading and settlement, while creating a more constructive backdrop for digital assets, he says.

Options selling caps volatility

Seiler also said the rapid growth of the institutional crypto options market is 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 in recent months, among its lowest levels of the current cycle, before beginning to edge higher in July.