The end of single-factor encryption

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Written by: Charlie

Translated by: Block unicorn

Recently, our discussions have involved cryptocurrencies less and less. We eventually talked about lending businesses, AI subscription models, and the payment channels that Stripe and Mastercard are competing for. Last Friday, we discussed how the upcoming trillion-dollar IPOs of OpenAI, SpaceX, and Anthropic might impact the broader financial markets. Even when someone mentioned crypto projects, halfway through the discussion you’d find that no one mentioned "token prices."

This shift is also reflected in our recent reporting content. Over the past two weeks, our coverage has shifted toward stories on the fringes of the crypto space. For example, fintech companies using blockchain as infrastructure, tokens as distribution mechanisms rather than consumer products themselves, and cases of infrastructure companies being acquired regardless of valuation cycles. Whether Bitcoin is at $100k or $70k, these developments continue to advance.

This article was originally published by Hepworth Iron Capital, and this week’s piece provides a framework for this phenomenon. Charlie Bus believes that the era of cryptocurrencies being driven solely by Bitcoin’s sensitivity is ending, paving the way for a new cycle driven by non-crypto factors rather than crypto prices.

Historically, crypto trading has always been one of the sensitive factors influencing Bitcoin’s price. But this situation is coming to an end.

The crypto economy is splitting into two categories: endogenous and exogenous.

The former is traditional cryptocurrencies: the value of tokens and projects depends on the price of cryptocurrencies. The latter is merely crypto in name only, with its value increasingly detached from crypto prices.

The value of Bitcoin stems from its characteristics, which are reflected in its price. Price increases reinforce the perception of its features. At the peak of a bull market, Bitcoin is seen as an interstellar currency, the most scarce digital credential known to humanity. During bear markets, it’s viewed as a digital collectible with no cash flow.

Super-liquidity lies between endogenous and exogenous groups. Most of its activities still depend on crypto prices, but both supply and demand sides are expanding continuously. Many on-chain financial infrastructures are in this space, with underlying assets shifting toward tokenized real-world assets.

HIP-3’s open interest roughly represents the open interest in non-crypto-related contracts. HIP-3 accounts for about 30% of total super-liquidity open interest, up from about 4% in November 2025. HIP-4 (result markets) is expected to further push this ratio and attract new demand (traders) and new supply (markets, assets).

From purely exogenous factors, projects like Venice are driven entirely independently of the crypto market. While user profiles overlap, their business models are more like consumer AI rather than Uniswap. Uniswap still mainly relies on users trading assets with intrinsic value, making its business closely tied to those asset prices. Venice packages private multimodal inference into a "usage + subscription" model.

The only connection Venice has to crypto is choosing tokens as a measure of business value, and some of its derivatives providers happen to carry a crypto label. Perhaps Erik Voorhees, Venice’s manager, has a deep understanding of crypto, believing that if used properly, tokens can be excellent marketing tools.

Figure 1 is a simple example from the listed equity space: a fintech mortgage lender using its proprietary blockchain to shorten home equity loan approval times to under five minutes. Blockchain technology is just an accessory; the business model is key.

The large-scale emergence and growth of exogenous categories in the listed stock and token markets are significant. Historically, because most business models are highly sensitive to crypto prices, pure bottom-up investing has been difficult. Crypto has not lacked exogenous narratives; every "blockchain, not Bitcoin" cycle has promised such a narrative. But in most cases, these narratives ultimately revert to Bitcoin’s beta category because demand never truly materialized, revenue was absent (or not absorbed by tokens), and once token prices stop rising, there’s nothing behind them.

What’s different this time is that you can answer who is paying and why, demand is often measurable, and it’s no longer so reflexive. The performance of tokens as tools is also gradually improving (more on this later). Venice’s subscription revenue is real money paid by users. When crypto prices fall, there’s no obvious reason for a reversal because it’s never been a function of price. You now have two points that were missing in previous cycles: sustained usage and investors basing their investments on fundamentals rather than narratives.

Take the stablecoin sector in private markets as an example. In March 2026, Mastercard agreed to acquire BVNK for up to $1.8 billion, just 15 months after BVNK’s Series B funding round, which valued it at $750 million. According to Stripe’s annual letter, Bridge (acquired by Stripe for $1.1 billion in February 2025) experienced annual growth rates four times higher within Stripe. These growths are unrelated to crypto cycles.

This is not a bearish forecast for endogenous asset categories. Just as gold and small gold mining companies have their place in portfolios, Bitcoin and endogenous assets also have their value and timing. But fundamentally, different drivers may continue to influence their performance and correlations. You can see these two relationships in the data:

This analogy can be visualized: the correlation between small gold miners and gold has rarely exceeded around 0.75. Today’s crypto trading roughly resembles this: small miners’ correlation with Bitcoin is like gold, while leveraged trading bets on the same underlying asset. The blue line represents another relationship. Gold and the S&P 500 have some macroeconomic correlation, but their trading is influenced by different drivers. This is the ultimate fate of exogenous asset categories. Over time, these assets should drift from the gold-related line toward the blue line, transitioning from leveraged proxy assets to occasionally correlated assets with economic conditions.

These external names are examples, illustrating this point and serving as exceptions.

Many "endogenous" assets still move closely with Bitcoin. Some exogenous assets have shown declines, but the timeframes are too short to draw conclusions. Fundamentals change first, and correlations follow.

This changes the analytical approach. Exogenous categories need to be underwritten like regular companies: who pays for the product, how unit economics work, and where the moats are. Bitcoin’s price is no longer the most important variable; your analysis starts to look like that of a fintech investor holding strange custody arrangements.

Some exciting "exogenous" categories, ranked without order and with various notes:

On-chain exchanges and brokers

Credit / redemption solutions targeting long-tail tokenized assets (Grove Basin looks interesting here)

True crypto x AI (private inference, distributed open-source model training, similar to Nous Research’s Psyche)

New banks (I prefer privacy-focused platforms like Payy and Raycash, supported by programmable privacy infrastructure like Aztec and Zama)

Lending (Morpho is becoming an industry standard for repurchase markets, while small firms like Valinor and 3jane target interesting niches in private credit)

Stablecoins and real-world assets / tokenized issuers

Payment channels (Stripe and Tempo are currently the most needing to surpass in broad payment channels; Coinbase is leading in agent payments)

Non-financial consumer crypto (e.g., Venice and Collector Crypt products, which show that assigning value to tokens from non-crypto businesses can boost market value and adoption)

Agent economy (key is coordination between access layer agents and providers/creators, which is less substitutable than railroads. Cloudflare is well-positioned, but whether it’s taxing traffic or just selling switches remains uncertain).

Currently, the most durable way to invest in this theme is equity, not tokens. Quality tokens are exceptions and only become more impactful if the tokens themselves improve, which requires joint efforts from regulators and industry. Progress has been made in regulation and transparency: on one hand, the CLARITY Act; on the other, companies like Blockworks working to improve transparency. Tokens still have a long way to go.

All of this does not change the focus. The drivers are shifting from a single factor to multiple factors; the work is no longer about interpreting Bitcoin charts but about providing financing for enterprises. Don’t be confused over the next decade why "cryptocurrency" no longer develops as a unified sector as it once did.