Essential Insights:
- Elon Musk’s deliberate distancing from Donald Trump’s political sphere alleviates a significant concern weighing on cryptocurrency market sentiment.
- Vandell, a prominent figure at Dusky Swan Capitalist, announces the commencement of Phase 3 in the ongoing bullish cycle of cryptocurrencies.
- Indicators such as altcoin activity, institutional capital inflows, and Ethereum-specific metrics are all signaling a renewed acceleration in market momentum.
The recent move by Elon Musk to publicly dissociate from Trump’s political influence has sent shockwaves through financial markets, with cryptocurrencies experiencing notable impacts. Industry analysts and blockchain experts, including Vandell from Dusky Swan Capitalist, interpret this as the onset of a vigorous new chapter in digital asset growth. Let’s explore what this development entails and how the third phase of the crypto bull run is beginning to unfold.
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Decoupling from Political Ties: A Catalyst for a New Crypto Era
When Elon Musk makes a strategic move to distance himself from a political figure or entity, the market tends to react strongly. This time, however, the timing coincides with broader shifts in market sentiment. According to Vandell, founder of Dusky Swan Capitalist, Musk’s disassociation from Trump’s camp acts as a psychological catalyst-particularly for institutional investors who had previously hesitated due to fears of regulatory repercussions linked to political favoritism.
With Elon Musk officially stepping away from the Trump administration’s influence, the pathway opens for the crypto market to advance into its third phase of the bull cycle.
It was an inevitable progression, both anticipated and natural.
Lock in your positions. pic.twitter.com/4ad6TY8Kvy
– Vandell | Dusky Swan Capitalist (@vandell33) May 29, 2025
This development comes at a time when the crypto market is already demonstrating signs of resilience and growth:
- Bitcoin (BTC) has briefly surged past $71,000.
- Ethereum (ETH) staking participation has surpassed 33 million ETH, reflecting strong network engagement.
- Whale accumulation in prominent altcoins like Solana (SOL) and Avalanche (AVAX) is accelerating, indicating institutional interest.
Musk’s strategic withdrawal amplifies this momentum. Freed from the influence of partisan politics, institutional investors are increasingly comfortable re-engaging with digital assets, especially as regulatory clarity begins to take shape across the U.S. and Europe.
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Institutional Confidence: The Foundation of the Bullish Surge
Resurgence of Institutional Capital
Recent on-chain data reveals a notable uptick in institutional participation:
- Wallets holding over $100,000 in Bitcoin have increased by 9% within just three days.
- Bitcoin ETF inflows have exceeded $870 million in the third week of May, marking the third-largest weekly influx of 2025.
- Layer-1 blockchain ecosystems such as Sui, Near, and Aptos are experiencing double-digit price increases, reflecting a shift toward long-term narratives.
The primary driver? Diminished macroeconomic uncertainty. As inflation cools and U.S. Treasury yields decline, risk-on assets, including cryptocurrencies like Ethereum and select altcoins, are regaining favor.
State Sovereign Funds Enter the Market
Another significant yet less visible factor is the increasing interest from sovereign wealth funds, particularly from the Middle East and Asia. According to sources close to Dusky Swan, these funds are gradually accumulating high-cap cryptocurrencies. Once committed, their investments tend to be substantial, signaling a long-term strategic interest. Bitcoin and Ethereum are expected to be the primary beneficiaries, with spillover effects into liquid staking platforms and decentralized finance (DeFi) protocols.
Strategic Rotation Among Altcoins: From Hype to Infrastructure
Emerging Trends in Altcoin Investment
The third phase of the bull market isn’t solely about Bitcoin dominance; it’s about diversification and sector rotation. While Bitcoin’s market share has dipped below 52%, altcoins are experiencing explosive growth in both market cap and wallet addresses:
- Solana (SOL): Up 18% this week, driven by ecosystem expansion and developer activity.
- Avalanche (AVAX): Whale inflows suggest bets on real-world asset (RWA) integrations.
- Memecoins like SHIB and PEPE: Although meme coins often lead early in cycles, this time, a broader diversification indicates sustained interest beyond hype, hinting at longer-term positioning.
The market is shifting focus from speculative hype toward infrastructure and utility-driven projects. Protocols such as EigenLayer, Celestia, and LayerZero are attracting attention from both retail and institutional investors, as they explore innovations like modular blockchains, AI-powered consensus mechanisms, and tokenized RWAs-elements that promise scalability, interoperability, and compliance.
Key Metrics Confirming Market Revival
Several vital indicators affirm the strengthening of the current bull cycle:
- Ethereum Staking: Over 33 million ETH staked, nearly 28% of the total supply, with platforms like Lido, Rocket Pool, and Coinbase reporting record delegation levels.
- On-Chain Activity: Active addresses on Ethereum, Solana, and BNB Chain have increased by 12-15% month-over-month.
- Total Value Locked (TVL): DeFi’s TVL approaches $110 billion, a level not seen since early 2022, with EigenLayer alone adding over $2 billion in the past month.
These metrics highlight a renewed confidence in on-chain protocols, driven by genuine capital flows, attractive yields, and increasing network utilization-marking a departure from speculative-driven rallies of the past.
Driving Forces Behind the Third Phase
According to Vandell, three macroeconomic and market factors are shaping this new cycle:
- Growing Institutional Trust: The launch of BlackRock and Fidelity Bitcoin ETFs has paved the way for traditional finance to deploy capital into staking, tokenized treasuries, and Web3 infrastructure projects.
- Favorable Macro Environment: Lower inflation rates and a dovish Federal Reserve are reducing risk aversion, encouraging investment in tech and crypto assets as treasury yields decline.
- Innovation-Driven Market Dynamics: Unlike the 2021 mania, today’s cycle emphasizes blockchain infrastructure, next-generation financial primitives like liquid restaking, zk-rollups, and modular Layer-2 solutions-projects that prioritize utility, scalability, and compliance are gaining prominence.
What to Watch Next: Key Assets and Trends
Market participants are closely monitoring:
- Volume Growth: Increasing trading volumes in Ethereum and Solana, indicating deeper accumulation.
- Breakouts in Layer-2 Solutions: Platforms like Arbitrum, Optimism, and zkSync are gaining traction, reflecting Ethereum’s scaling roadmap.
- Shifts in Account Holdings: Growing interest in AI-integrated chains such as Bittensor and modular architectures like Celestia.
While institutional investors, sovereign funds, and hedge funds are primarily focusing on these assets, retail traders remain engaged with memecoins, albeit with signs of more strategic and calculated participation emerging.
