Firi Weekly: Low Volatility

Crypto Market Drops 23% Year-to-Date:
- The total cryptocurrency market capitalization has fallen about 23% to $2.32 trillion in 2026, with recently unusually low volatility despite substantial geopolitical risks, suggesting reduced selling pressure but continued market uncertainty, as much depends on developments in the Middle East.
BNP Paribas Opens Crypto ETP Trading:
- The major French bank BNP Paribas now offers 6 Bitcoin and Ethereum exchange-traded products (ETPs) to clients, reinforcing a broader trend of European, including Nordic, banks enabling indirect crypto exposure through traditional financial products.
Crypto Accepted as Mortgage Collateral:
- Fannie Mae now accepts Bitcoin and USDC as mortgage collateral, allowing borrowers to fund down payments without selling holdings, marking deeper integration of crypto into U.S. housing finance. The risks may seem substantial, but are partly mitigated as borrowers are not forced to sell if prices fall, as long as payments are maintained.
Quantum Threat to Crypto Security Grows:
- Recent research on quantum computing indicates crypto encryption could be broken much easier than previously expected, increasing urgency for quantum-resistant upgrades ahead of potential breakthroughs. This remains a key risk if not addressed, although some protocols are already working on solutions.

Last Week’s Big Three

BNP Paribas Allows French Clients to Trade Crypto ETPs: The major French bank BNP Paribas announced last week that it will allow clients to trade six crypto exchange-traded products (ETPs) that track the prices of the two largest cryptocurrencies, Bitcoin and Ethereum. These instruments provide indirect exposure to crypto via traditional stock exchanges, similar to the widely adopted U.S. Bitcoin and Ethereum exchange-traded funds (ETFs). Trading for BNP clients began earlier this week, on Monday.

This development adds to a growing trend not only among European banks but also among Nordic banks. Both Nordea and Danske Bank have introduced similar offerings over the past six months, highlighting that traditional banks want to offer crypto exposure to their clients, albeit still through traditional means.

Crypto Accepted as Mortgage Collateral: Fannie Mae, a key institution in the U.S. mortgage market, announced last week a partnership with Better Home & Finance and Coinbase to accept cryptocurrencies as collateral for home loans. Borrowers can now use their crypto holdings to fund down payments without selling them.

At this moment, only Bitcoin and USDC are eligible, though additional assets may be included over time. The structure may raise concerns given crypto’s volatility. However, loan terms remain unchanged even if the value of the pledged collateral declines, as long as borrowers continue making payments.

That said, falling crypto prices could still indirectly affect a borrower’s ability to meet those payments—but this would, to a large extent, be true whether crypto functioned as collateral or not.

Is the Quantum Computing Threat to Crypto Real? Concerns around quantum computing resurfaced this week following new research from Caltech and quantum startup Oratomic. The study suggests that the cryptography securing Bitcoin and Ethereum wallets could be broken using as few as 10,000 physical qubits—far below earlier estimates in the hundreds of thousands. The researchers estimate such an attack could take around ten days. In quantum computing, qubits effectively measure computational capacity.

At the same time, a white paper by Google also concluded that the computational threshold required for quantum computing to compromise Bitcoin may be lower than previously thought.

As Google, for instance, maintains a 2029 timeline for meaningful quantum advancements, the implications for crypto are not only significant but likely also closer than they may seem. While quantum-resistant solutions are technically feasible, implementation is critical. Efforts are already underway, including by the Ethereum Foundation, but recent findings underscore the urgency.

Behind the Charts

Chart 1: Total Cryptocurrency Market Capitalization

Year to date, the total crypto market capitalization has declined by approximately 23% to around $2.32 trillion.

Since the start of the war in the Middle East at the end of February, involving the U.S. and Israel on one side and Iran on the other, the market has traded largely sideways. The limited downside reaction may reflect the sharp sell-off earlier in February, which likely cleared out weaker hands that were already close to exiting their crypto positions. As a result, recent price action in the crypto market has been characterized by low volatility, with limited price swings.

Last week, U.S. President Donald Trump postponed a proposed strike on Iranian energy infrastructure until April 6, contingent on the reopening of the Strait of Hormuz. This shipping route is critical for global oil and gas flows, and its disruption has already pushed energy prices significantly higher.

Sustained increases in energy prices could drive inflation higher, which typically weighs on risk assets, including crypto. As such, further developments in the Middle East remain a key driver for the crypto market in the near term.

A Number to Remember

$1.32 billion

After four consecutive months of net outflows, U.S. Bitcoin ETFs recorded net inflows in March totaling $1.32 billion. This means that these instruments were effectively bought for $1.32 billion more than they were sold. This suggests renewed demand from traditional investors, who are the primary clients of these products.

On Our Radar

On our radar for the week ahead:

Will Trump’s Threat Be Extended Again? Trump has repeatedly delayed his proposed strike on Iranian energy infrastructure. The current deadline is April 6, but further extensions may be possible. That being said, markets appear to be reacting less to each extension, as they seem to assign less importance to them over time.
Risk of Further Escalation in the Middle East: What the market, however, may react strongly to is a meaningful escalation of the war in the Middle East. For example, U.S. ground troop involvement to reopen the Strait of Hormuz would likely have a clear negative impact on crypto markets. The risk of such a scenario appears to have increased, although it remains uncertain.
Is It Time for the U.S. Clarity Act? There are ongoing reports that the U.S. Clarity Act is slowly but surely moving forward, with potential publication of the bill in the second half of April. The bill aims to establish a comprehensive regulatory framework for crypto in the U.S. and would most likely be viewed positively if passed.

Mads Eberhardt

Written 02/04/2026

Should not be considered financial advice. Crypto may involve high risk.