Crypto and NFTs: A Lifeline in the Struggling Fiat System – Redefining Finance
This week, risk appetite surged in both traditional and cryptocurrency markets, allowing United States cryptocurrency funds to recuperate the capital lost during the February and March downturn, with over $7.5 billion in weekly inflows.
Bitcoin (BTC) shot past its previous all-time high on May 21, just two days after President Donald Trump confirmed ongoing ceasefire negotiations between Russia and Ukraine via a post on X on May 19.
Simultaneously, renowned analyst and CEO of Global Macro Investor, Raoul Pal, cautioned about potential further fiat currency debasement, advising investors to increase their holdings in cryptocurrencies and non-fungible tokens (NFTs), as these assets “will never be this cheap again.”
Exponential Currency Debasement: “You Don’t Own Enough Crypto, NFTs”
Industry leaders and analysts assert that cryptocurrencies and NFTs can be valuable tools for investors looking to safeguard their diminishing purchasing power amid a period of rapid currency debasement.
Investing in digital assets is becoming increasingly significant in the “era of exponential age and currency debasement,” as stated by Raoul Pal, founder and CEO of Global Macro Investor.
“You don’t own enough crypto. When you do, you don’t own enough NFTs, as art is upstream of wealth. Both will never be this affordable again,” emphasized Pal.
He further remarked that NFTs represent “the best long-term store of wealth I know, allowing you to purchase before network effects kick in.”
Nicolai Sondergaard, research analyst at Nansen, noted that while there is merit to the idea that NFTs—and art by extension—become vehicles for the wealthy as they reach a certain wealth level, it is a “natural move” for asset diversification.
“For traders and investors lower on the wealth curve, NFTs are partially about speculating on future returns,” Sondergaard explained to Cointelegraph, adding that these assets benefit from strong community engagement beyond mere wealth generation.
US Crypto Funds Exceed $7.5 Billion in Inflows in 2025 as Investor Demand Grows
Crypto investment products in the United States have attracted over $7.5 billion in investment in 2025, marking a fifth consecutive week of net positive inflows and indicating increasing investor interest in digital assets.
US-based crypto investment products garnered $785 million last week, raising the year-to-date total to over $7.5 billion, according to a report from digital asset management firm CoinShares released on May 19.
This latest statistic reflects the fifth consecutive week of net positive inflows, following nearly $7 billion in outflows recorded during February and March.
The United States was responsible for the majority of the inflows at $681 million, with Germany following at $86.3 million and Hong Kong at $24.4 million.
Investor demand for risk assets such as cryptocurrencies saw a notable rebound following the White House announcing a 90-day halt on additional tariffs on May 12, resulting in a 24% reduction in import tariffs for both the US and China.
The day following this announcement, Coinbase recorded a withdrawal of 9,739 Bitcoin, worth over $1 billion, marking the largest net outflow in 2025 and indicating a surge in institutional interest, according to Bitwise’s European research head, André Dragosch.
VanEck to Introduce Avalanche Ecosystem Fund
VanEck is set to launch a private digital assets fund in June, focusing on tokenized Web3 projects based on the Avalanche blockchain, according to a statement shared with Cointelegraph.
The VanEck PurposeBuilt Fund, which will be accessible only to accredited investors, aims to invest in liquid tokens and venture-backed projects spanning various Web3 sectors, including gaming, financial services, payments, and artificial intelligence.
Idle capital will be allocated to Avalanche (AVAX) real-world asset (RWA) products, as noted by VanEck.
The fund will be managed by the team overseeing VanEck’s Digital Assets Alpha Fund (DAAF), which manages over $100 million in net assets as of May 21.
“The next wave of value within crypto will stem from real businesses, not just infrastructure,” remarked Pranav Kanade, portfolio manager for DAAF.
Yield-Bearing Stablecoins Surge to $11 Billion, Now 4.5% of Market: Report
Yield-bearing stablecoins have reached $11 billion in circulation, making up 4.5% of the total stablecoin market—an increase from just $1.5 billion and a mere 1% market share at the beginning of 2024.
Among the standout performers is Pendle, a decentralized protocol that allows users to lock in fixed yields or speculate on variable interest rates. Pendle now constitutes 30% of all yield-bearing stablecoin total value locked (TVL), approximately $3 billion, according to a report from Pendle compiled by analysts at Spartan Group and Modular Capital that was shared with Cointelegraph.
The report indicated that stablecoins account for 83% of Pendle’s $4 billion total value locked, a pronounced increase from less than 20% just a year prior. Conversely, assets like Ether (ETH), which previously contributed 80%—90% of Pendle’s TVL, have dwindled to below 10%.
Traditional stablecoins such as USDt (USDT) and USDC (USDC) do not offer interest to holders. With more than $200 billion in circulation and US Federal Reserve interest rates at 4.3%, Pendle estimates stablecoin holders are forgoing over $9 billion in annual yield.
Tether Surpasses Germany’s $111 Billion US Treasury Holdings
Tether, the $151 billion stablecoin powerhouse, has overtaken Germany in its holdings of United States Treasury bills, exemplifying the advantages of a diversified reserve strategy that has enabled the company to maneuver through the volatile cryptocurrency market.
Tether, the issuer of USDT, the world’s largest stablecoin, has exceeded Germany’s $111.4 billion in US Treasurys, as per data from the US Department of the Treasury shows.
Tether’s holdings of Treasury bills have surpassed $120 billion, as confirmed in its quarterly attestation report for Q1 2025. This achievement positions Tether as the 19th largest entity globally in terms of T-bill investments.
“This milestone not only affirms the company’s prudent reserve management strategy but also emphasizes Tether’s expanding role in distributing dollar-denominated liquidity on a large scale,” stated Tether in the report.
Throughout 2024, Tether ranked as the seventh-largest buyer of US Treasurys among all countries, exceeding Canada, Taiwan, Mexico, Norway, Hong Kong, and several others, as Cointelegraph highlighted in March 2025.
DeFi Market Overview
According to data from Cointelegraph Markets Pro and TradingView, most of the top 100 cryptocurrencies by market capitalization ended the week positively.
Worldcoin (WLD) emerged as the top gainer within the top 100, surging over 32%, while the Hyperliquid (HYPE) token followed closely, up over 30% for the week.
Thank you for reading our overview of the week’s most significant DeFi developments. We invite you to join us next Friday for more insights, stories, and education regarding this dynamically evolving sector.
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