The End of Single-Factor Encryption
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The End of Single-Factor Encryption
Cryptocurrency trading has long been one of the most sensitive factors affecting Bitcoin’s price—but this situation is coming to an end.
Navigating Web3 tides with focused insightsBy: Charlie
Translated by: Block Unicorn
Recently, our conversations have increasingly moved away from cryptocurrency. We’ve ended up discussing lending businesses, AI subscription models, and the payment rails that Stripe and Mastercard are competing for. Last Friday, we debated how upcoming trillion-dollar IPOs from OpenAI, SpaceX, and Anthropic might impact broader financial markets. Even when cryptocurrency projects came up, halfway through the discussion you’d realize—no one had mentioned “token price.”
This shift is also evident in our recent reporting. Over the past two weeks, our coverage has pivoted toward stories on the periphery of the crypto space—for example, fintech companies using blockchain as infrastructure; consumer goods where tokens serve as distribution mechanisms rather than products themselves; and infrastructure companies acquired at valuations decoupled from market cycles. These developments continue regardless of whether Bitcoin trades at $100,000 or $70,000.
This article was originally published by Hepworth Iron Capital. This week’s piece constructs a framework around this phenomenon. Charlie Booth argues that the era of cryptocurrency as a single Bitcoin-sensitive variable is ending—and a new cycle is emerging, driven not by crypto prices but by non-crypto factors.
Historically, crypto trading has been one of the most Bitcoin-sensitive activities. But that era is coming to an end.
The crypto economy is bifurcating into two categories: endogenous and exogenous economies.
The former represents traditional crypto: token and project values depend directly on crypto prices. The latter merely bears the label “crypto,” yet its value is increasingly decoupled from crypto prices.
Bitcoin’s value stems from its properties—and is reflected in its price. Price appreciation reinforces perceptions of those properties. At bull-market peaks, Bitcoin is seen as interstellar money—the scarcest digital credential known to humanity. At bear-market troughs, it’s viewed as a digital collectible with no cash flow.
Hyper-liquidity sits between the endogenous and exogenous groups. Most of its business remains tied to crypto prices, yet both supply and demand are expanding. Much of the onchain financial infrastructure resides here, with underlying assets shifting toward tokenized real-world assets.
HIP-3 open interest roughly represents non-crypto-related open interest. HIP-3 accounts for about 30% of total hyper-liquidity open interest—up from roughly 4% in November 2025. HIP-4 (outcome markets) is expected to further increase this share while attracting new demand (traders) and new supply (markets, assets).
From a purely exogenous perspective, projects like Venice are driven entirely outside the crypto market. Though user profiles overlap, its business model resembles consumer-facing AI—not Uniswap. Uniswap still relies primarily on users trading assets with endogenous value, tying its business closely to their prices. Venice packages private multimodal inference into a “use + subscription” model.
Venice’s only link to crypto lies in choosing tokens as a unit of commercial value measurement—and the fact that some of its derivatives providers happen to carry crypto branding. Perhaps Venice’s founder Erik Voorhees’ deep understanding of crypto also contributed: he believes tokens, when deployed thoughtfully, can be excellent marketing tools.
Figure 1 offers a simple example from the public equity space: a fintech lending firm uses its proprietary blockchain to approve home equity loans in under five minutes. Blockchain is incidental; the business model is central.
The emergence and growth of exogenous categories across both public equities and token markets is significant. Historically, pure bottom-up investing proved difficult because most business models were highly sensitive to crypto prices. Crypto has seen exogenous narratives before—every “blockchain, not Bitcoin” cycle promised one. Yet in most cases, those narratives ultimately reverted to crypto beta, as demand never truly materialized, revenue failed to arrive (or, if it did, wasn’t captured by tokens), and once token prices stopped rising, there was nothing left underneath.
What’s different this time is that you can answer who pays—and why. Demand is measurable in many cases, less reflexive, and tokens as tools are gradually improving (more on this shortly). Venice’s registered revenue is hard cash paid by users for inference. When crypto prices fall, there’s no obvious reason for reversal—it was never a function of price to begin with. You now possess two things missing in prior cycles: sustained usage, and buyers investing based on fundamentals—not just narrative.
Take the private-market stablecoin sector as another example. In March 2026, Mastercard agreed to acquire BVNK for up to $1.8 billion—just 15 months after BVNK closed its Series B round at a $750 million valuation. According to Stripe’s annual letter, Bridge (acquired by Stripe in February 2025 for $1.1 billion) grew fourfold year-on-year within Stripe. All these gains are uncorrelated with crypto cycles.
This is not a bearish forecast for endogenous asset classes. Just as gold—and even small gold miners—have distinct roles in portfolios, so too do Bitcoin and endogenous assets have their place and timing. Fundamentally, however, different drivers may continue to shape their performance and correlations. You can see both relationships in the data:
This analogy becomes concrete: small gold miners’ correlation with gold has rarely exceeded ~0.75. Today’s crypto trading looks similar—small miners correlate with Bitcoin like gold, while leveraged trading bets on the same underlying asset. The blue line represents another relationship: gold and the S&P 500 share some macroeconomic correlation, yet trade on distinct drivers. That’s precisely where exogenous assets ultimately belong. Over time, these assets should migrate from the gold-correlated line toward the blue line—from leveraged proxy assets to independent assets occasionally linked to macro conditions.
These “foreign” names serve both as illustrations—and exceptions—to this point.
Many “endogenous” assets still track Bitcoin closely. Some exogenous assets have declined—but the time window is too short to draw conclusions. Fundamentals shift first; correlations follow.
This changes analytical frameworks. Exogenous categories require underwriting like ordinary enterprises: Who pays for the product? How do unit economics work? Where is the moat? Bitcoin price is no longer the dominant variable—your analysis sounds like that of a fintech investor holding unusually custodied assets.
Some exciting “exogenous” categories—listed in no particular order—with assorted notes:
- Onchain exchanges and broker-dealers
- Credit/redemption solutions targeting long-tail tokenization (Grove Basin looks promising here)
- Real crypto x AI (private inference, distributed open-source model training—e.g., Psyche by Nous Research)
- Neo-banks (I’m partial to privacy-forward platforms like Payy and Raycash; programmable privacy infra like Aztec and Zama supporting them is also intriguing)
- Lending (Morpho is becoming the institutional standard akin to repo markets; smaller firms like Valinor and 3jane target interesting niches in private credit)
- Stablecoins and real-world asset / tokenization issuers
- Payment rails (for broad payment rails, Stripe and Tempo are currently the benchmarks to beat; for proxy payments, Coinbase leads today)
- Non-financial consumer crypto (e.g., Venice and Collector Crypt—these edge cases show how assigning tokenized value to non-crypto-native businesses can boost market value and adoption)
- Proxy economies (the crux lies in coordination between access-layer agents and suppliers/creators—a role far less substitutable than railroads. Cloudflare occupies a strong position, though it remains unclear whether it taxes traffic or simply sells toggle switches.)
For now, equity—not tokens—is the most durable way to invest in this theme. High-quality tokens remain the exception; they’ll only play a larger role if tokens themselves improve—and that requires joint effort from regulators and industry. Progress is underway on both fronts: regulatory clarity via bills like the CLARITY Act, and transparency initiatives led by firms like Blockworks. Tokens still have a long way to go.
None of this changes the core point. Drivers are shifting from monofactor to multifactor; the work is no longer reading Bitcoin charts—it’s financing enterprises. Don’t spend the next decade wondering why “crypto” no longer moves as one.
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