Under the Spotlight

Good morning everyone, Hector here from the Roundup.

This week served up yet another round of uncomfortable truths. The kind most of the traditional crypto media won't expose because it doesn't align well with their world view.

Fortunately for you, we’re not driven by the same biases and are here to keep you informed.

This week we’ve got:

• Bitcoin failed its first "digital gold" test.

• Ethereum's founder admitted that DAOs don't work.

• The never ending hunt for real Bitcoin yield.

Let's get to it!

1. Bitcoin Failed the “Safe Haven” Test

On Saturday, President Trump announced 10% tariffs on eight European countries: Denmark, Norway, Sweden, France, Germany, the UK, Netherlands, and Finland. The tariffs start on February 1st and escalate up towards 25% by June of this year.

Gold responded exactly how you'd expect a safe haven asset to respond. It hit a new record of $4,700 / ounce.

Bitcoin? It dropped from $98,000 to $92,000 and over $875M in crypto positions were liquidated within 24 hours.

What’s noteworthy is that the Bitcoin-to-gold ratio still sits at 20x - exactly where it was five years ago. Despite everything, Bitcoin hasn't gained ground on gold as a store of value even as Gold prices surged in recent months.

When the flight-to-safety trade kicked in, institutions sold Bitcoin alongside tech stocks. Not instead of them.

This isn't a knock on Bitcoin's long-term thesis though, but rather a reality check on where we are in the broader adoption curve. The "digital gold" narrative assumes that Bitcoin consistently trades as a risk-off asset. Right now, it doesn't. It trades as a risk-on asset, correlated with equities and sensitive to the same macro forces.

The good news? This changes as adoption deepens and holding patterns mature. But pretending we're already there doesn't help anyone.

The first hard truth? Bitcoin will become digital gold over time. It just isn't there yet.

2. Vitalik Admitted DAO’s Don’t Work

Ethereum's founder published a rather remarkable confession this week.

"We built the wrong kind of DAOs" Vitalik Buterin wrote on X. Current structures are "inefficient, vulnerable to capture, and fail utterly at the goal of mitigating the weaknesses of human politics".

Let that sink in. The governance model that was supposed to make crypto “better than traditional institutions”? Well, the founder just admitted it failed.

Buterin blames things like "decision fatigue" and "capture vulnerabilities". He says DAOs need zero-knowledge proofs for private voting and AI assistants to reduce cognitive load (apparently AI is going to help fix Ethereum?).

But there's a simpler explanation. Perhaps the reality is that nobody really cares about Ethereum enough to vote on chain?

Apathy towards on-chain voting is the market’s signal telling us that ETH has failed to sufficiently capture peoples time and attention. When participation requires monetary bribes or AI assistants, maybe there's just nothing worth voting on.

Hard truth #2? DAOs are a solution in search of a problem.

Major DAOs like Aave and Uniswap have been accused of having little actual control over their protocols. Others have mismanaged hundreds of millions of dollars of capital. The pattern isn't "we need better DAOs", but rather it’s "DAOs don't have a real use case".

Bitcoin solved this by not having governance at all (except for the miners and node operators).

No DAO or foundation admitting failure. No founder proposing fixes or whales swaying votes. No decision fatigue because there are no decisions to make.

Just 21 million coins, a fixed schedule, and code that does exactly what it says.

P.S If you’d like to invest in something that has no “foundation” or DAO structure, you can get started today. Get the lowest fees when you buy Bitcoin through Rhino.

[Start Buying Bitcoin Today]

3. Bitcoin Yield is (Mostly) a Lie

As Bitcoin becomes increasingly institutional in nature, more firms are marketing "BTC Yield" products. Corporate treasuries, hedge funds, DeFi protocols etc. Everyone's promising ways to make your Bitcoin more “productive”.

Alexander Blume, CEO of Two Prime, wrote a sobering piece in Forbes this week that cuts through all the noise (we’d encourage everyone to give it a read here).

His thesis is simple: "To gain more bitcoin, someone else must lose it". Makes sense right?

There is no risk-free BTC yield. Period.

Let's break down the traps he lays out in the article:

DAT "Yield" (Strategy, etc.): When these companies talk about "yield," they mean Bitcoin-per-share is increasing. But shareholders have zero claim on the actual Bitcoin. The stock price moves independently based on supply and demand, CEO statements, regulatory news, and macro factors. You can end up in situations where Bitcoin "yield" is up and you've lost money in USD.

Hedge Fund "Yield": Usually short volatility strategies like covered calls. They work great until they don't. As Blume puts it, "Any static, short strategy on a high-volatility asset like Bitcoin will eventually blow up."

Unsecured Lending (3-6% APR): Remember Genesis? BlockFi? Celsius? All promised "safe" Bitcoin yield. All went bankrupt. Investors took equity-style risk while being paid credit-style returns, with limited visibility into what borrowers actually did with their Bitcoin.

DeFi "Yield": Often just manual lending to institutions on the backend, wrapped in smart contract complexity. The technology creates a sense of safety where none exists.

What actually works? Investing approaches such as Delta-neutral arbitrage strategies with controlled downside, full transparency, and assets held off-exchange with qualified custodians. But that requires accepting complexity and active management.

If someone's promising you simple, guaranteed Bitcoin yield without explaining exactly who's on the other side of the trade, run.

The Final Word

This week we covered three hard truths.

Bitcoin isn't acting like digital gold yet. That changes with time, but pretending we're already there helps no one.

Ethereum's founder just admitted the governance model is broken. Meanwhile, Bitcoin keeps producing blocks without asking anyone's permission.

And "Bitcoin yield" is mostly yield theater. The lenders who promised safety are now all bankrupt and the strategies that promise consistency always end up blowing up. The only honest answer is that earning more Bitcoin requires taking real, educated risk.

The sooner we accept what Bitcoin actually is today, and what it isn't, the better positioned we'll be for where it's going in the future.

The spotlight doesn't lie when shining on the cold hard truths.

Chat next week,

- Hector