Institutional options selling, AI capital rotation, and delayed U.S. regulation are suppressing cryptocurrency prices, according to Maxime Seiler.
Maxime Seiler, CEO of STS Digital, a Bermuda-regulated crypto options market maker, has identified three factors constraining bitcoin’s price recovery despite record institutional adoption of blockchain technology. The barriers are institutional options selling, capital diversion to artificial intelligence, and delayed U.S. cryptocurrency regulation.
Bitcoin has dropped more than 25% this year, even as banks, exchanges, and brokers have increasingly adopted blockchain infrastructure to operate traditional financial markets around the clock. “The last four years have seen record institutional adoption of crypto and digital asset technology,” Seiler said. “What has changed over the past two years is that institutions are increasingly using blockchain to upgrade traditional financial markets to operate 24/7.”
Options selling creates a volatility feedback loop
STS Digital, founded in 2021, has quadrupled its bitcoin option notional volumes over the past 12 months, positioning the firm to observe institutional trading patterns closely. Seiler attributed price suppression to a structural imbalance in options markets. “There’s much less interest in directional bitcoin trading than there was several years ago. The growth in institutional options selling is compressing the range,” he said.
Bitcoin has remained trapped in a $60,000 to $66,000 trading range over the past month. The BVIV Index, which tracks bitcoin implied volatility, has remained in the mid-30% range in recent months. According to Seiler, record levels of institutional options selling create a self-reinforcing cycle. “When you have a volatility sell imbalance, this creates a reflexive loop,” he explained.
AI and regulatory delays divert institutional capital
Seiler identified two additional headwinds. AI developments at OpenAI, Anthropic, and SpaceX’s recent IPO have made artificial intelligence the market’s dominant growth narrative, redirecting institutional capital away from digital assets. Additionally, the Clarity Act, U.S. market structure legislation intended to clarify crypto regulation, remains delayed.
Much of the institutional blockchain adoption occurring today benefits established financial institutions rather than token holders. Banks, exchanges, and brokers are working through operational challenges of around-the-clock markets, including clearing, settlement, and margining.
STS Digital received its full Class F license this year, removing previous constraints on the firm’s growth. Seiler did not specify a timeline for when these three headwinds might ease or when conditions could align to trigger a bull market.
