As ETFs and DATs gradually become normalized, Wintermute believes RWAs are poised to become the next channel for incremental capital, bringing traditional asset funds on-chain and channeling them further into the crypto market.
Author: Jasper De Maere
Compiled by: TechFlow
TechFlow Summary: Standing on the doorstep of a potentially new bull market, Wintermute believes what’s truly missing isn’t capital, but new channels to absorb money into crypto assets. Stablecoins, ETFs, and DATs have each carried past cycles, and are now routine conduits; on-chain tokenization (RWA) attracted roughly $16 billion over the past 12 months. Though still small in scale, if regulatory and collateral frameworks align, it could channel funds traditionally used to “buy Apple stocks or Treasury bonds” into the same wallets for stablecoin settlement, making it easier for capital to flow into BTC and altcoins.
As we face a potentially incoming new bull market, the question is: this time, which channel will bring in pent-up liquidity? We believe RWA is the top candidate.
Bull markets are shaped by liquidity, and liquidity requires an entry point. The crypto market never automatically joins global liquidity cycles just because “money exists”; it only truly participates when a sufficiently compelling new channel emerges to pull capital into this asset class.
In the past, channels like stablecoins, ETFs, and DATs (digital asset/corporate treasury accumulation) emerged sequentially, bringing unidirectional capital inflows, driving market repricing, and eventually becoming normalized everyday pipelines—where money flows in and out with equal ease.
Today, the most recent channels—ETFs and DATs—are fully normalized. The market is waiting for the next catalyst to drive the subsequent bull market.
In every bull cycle, different channels grow, peak, and normalize during the cycle reset:
– VC & ICO (2017/18): Fund capital and token sales spearheaded the first wave of institutional inflows.
– Stablecoins (2020/21): With annual net issuance exceeding $120 billion, they built the on-chain USD foundation funding DeFi and altcoin cycles.
– ETFs & DATs (2024/25): ETF net inflows reached $63 billion, with treasury accumulation surpassing $115 billion. These primarily repriced majors, while other assets saw limited spillover benefits.
In Chart 1, the dotted line represents the fifth channel currently taking shape. Although its net growth remains smaller relative to previous channel peaks, it is the only line continuing upward while others recede. Below, we explain why we believe it can become the next significant conduit.
During every bear market, channel inflows dry up. Chart 2 shows that each cycle was largely driven by a single channel, with total inflow peaks reaching approximately 12% of market cap (2021) and 10% (2025).
Once a channel normalizes, inflows collapse toward zero. At the recent trough, total inflows were only about 2.4% of market cap: ETFs turned net negative, many DAT trades occurred at or below NAV, financial leverage appeal was withdrawn, and stablecoin supply experienced its steepest contraction since the Terra crash. These flows have started recovering from their lows over the past two weeks, but remain only a fraction of previous cycle levels.
This contraction is typical. Historically, the next channel began scaling up as the old one receded. This time, the forming channel is still an order of magnitude smaller and cannot bear the entire load alone. Whether it grows will determine the character of this current cycle.
RWA is often described as “moving assets on-chain.” We argue it equally serves to “bring liquidity in.” On-chain tokenized value has tripled in roughly a year to exceed $30 billion, growing even as the stablecoin base contracted over the same period. The barrier between tokenized assets and native crypto assets is thinning as capital moves more freely between them.
Today, tokenized stocks, tokenized funds, and crypto assets increasingly coexist in the same wallet, settled via the same stablecoin rails (which act as the exchange mechanism). This interoperability transforms tokenization from “asset migration” into a “liquidity conduit,” and we believe it may serve as the vessel for the next cycle.
The difference from previous cycles lies in how capital enters. Earlier channels delivered buyers directly to specific assets: VC/ICO for new tokens, stablecoins for DeFi and altcoin ecosystems, ETFs/DATs for majors and blue-chip alts.
Tokenization works differently. Capital buys Apple shares or a Treasury fund, not crypto assets. But once that capital sits on-chain, moving it into BTC or alts becomes significantly easier.
Previous channels pushed capital into specific assets; tokenization places fresh capital inside the system first, allowing freer reallocation later. The short-term impact will be quieter than the surges seen on ETF launch days. Over time, these balance sheets will deploy across the ecosystem, and as connecting infrastructure matures, friction will continue to drop.
Over the past 12 months, RWA attracted roughly $16 billion, about one-tenth of the best 12-month combined inflow for ETFs and DATs in the last cycle. This channel remains in its ramp-up phase.
Chart 3 shows that from the moment each channel first reached measurable scale, peak inflows typically occur 20 to 60 months after inception: ~20 months for ETFs, ~33 months for stablecoins, and ~54 months for VCs & ICOS. By this measure, the RWA channel is about 18 months old. Its trailing 12-month inflows account for roughly 0.9% of market cap—aging faster than DATs but slightly slower than ETFs. This is early stage, not failure.
To date, most tokenized assets remain cash management products, Treasuries, and money market funds, sitting within permitted wrappers. Infrastructure linking them to the rest of the system has only recently begun opening up.
Catalysts span both regulation and mechanics:
– Regulation: Market structure legislation and tokenization frameworks are expanding who can hold tokenized securities and how they transfer, pulling them out of closed, permissioned pools.
– Mechanics: Tokenized Treasuries and funds are increasingly accepted as collateral by major venues and DeFi, transforming “idle cash balances” into usable working capital.
In 2024/25, liquidity entered via wrappers—ETFs and DATs holding majors and blue-chip alts. BTC, ETH, and a select few alts saw repricing. Outside of those narratives, the rest of the system largely missed out on this capital.
Tokenization changes the entry point, not the destination. Funds first buy wrappers, sit on-chain, and get reallocated once friction drops. Two key questions now matter most:
– Once RWA capital goes on-chain, will it flow elsewhere beyond the wrappers?
– If it does move, where does the value land? Which assets benefit, and which settlement rails, collateral infrastructure, and DeFi primitives capture the activity?
It’s crucial to understand that tokenized assets are held more by balance sheets than traders. This makes liquidity—and any cyclical effects—more likely to accumulate gradually rather than hit as sudden shocks. The rhythm resembles the stablecoin channel more than ETF launch day surges.
Over the past two weeks, inflows into established channels have recovered somewhat, including ETFs and stablecoin minting. This can support a rebound, but full cycles typically require a new channel to carry the load. RWA remains the only currently expanding candidate.
We are closely watching whether tokenized balance sheets begin exiting these wrappers, appearing more frequently as collateral, and continuing to enter DeFi, thereby generating measurable volume in secondary markets and lending activities. That will signal the channel transitioning from “potential” to “operational.”