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    Exploring the Evolution of Crypto Wallet Technologies

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    Peter Zhang
    Nov 21, 2025 09:45

    An in-depth analysis of the evolution of crypto wallet technologies, highlighting self-custodial, embedded wallets, and Smart Accounts shaping the future of blockchain interactions.





    The landscape of cryptocurrency wallet technologies is undergoing a transformative shift, according to an article by Ryan Yi on Paragraph. With advancements in both blockspace and wallet infrastructure, the crypto ecosystem is poised for significant changes that could redefine user interactions within the next five years.

    Wallet Technology Overview

    Historically, self-custodial wallets have been the primary means for users to interact with blockchain networks. These wallets, such as Trust Wallet, Coinbase Wallet, and Metamask, require users to manage their keys and transactions independently. However, the introduction of new technologies like embedded wallets and Wallet-As-A-Service (WaaS) is set to revolutionize this space.

    Embedded Wallets and WaaS

    Embedded wallets, also known as Multi-Party Computation (MPC) wallets, allow users to log in using familiar web2 credentials, such as email or social media accounts. This system distributes key management between the user’s device, the decentralized application (Dapp), and potentially a third-party service. Embedded wallets promise a seamless user experience, crucial for onboarding non-crypto native users.

    Despite being in the early stages, the potential for embedded wallets to improve user experience is evident. They offer users the option to export keys, maintaining control over their wallets, and can link multiple Dapps under a single provider, enhancing user convenience and data integration.

    The Rise of Smart Accounts

    Smart Accounts, which utilize smart contract wallets with account abstraction features, represent another innovation in the wallet sector. These accounts allow users to authorize transactions executed by third-parties, offering flexibility and enhanced functionality.

    Smart Accounts are seen as complementary to existing trends, with potential to integrate with self-custodial and embedded wallet technologies. These developments could enable features like gasless transactions, further easing user interaction with blockchain applications.

    Impact on Adoption and Business Models

    The evolution of wallet technologies is expected to have significant implications for user adoption and business models in the crypto space. Embedded wallets, operating on a freemium or SaaS model, could lower onboarding friction and costs, potentially expanding the user base to include those unfamiliar with traditional crypto setups.

    Moreover, regulatory considerations and geographic factors might influence the adoption of different wallet types, with embedded wallets potentially facing classification as custodial services in certain jurisdictions.

    Conclusion

    The progression of wallet technologies marks a pivotal moment for the crypto industry, akin to an “iPhone moment” for blockchain interactions. As the ecosystem continues to develop, the integration of these advanced wallet solutions is expected to drive widespread adoption and enhance the utility of blockchain technologies across various applications.

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    Bitcoin implodes as volatility from Big Tech, AI bubble fears, spreads to crypto

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    Key takeaways:

    • Volatility and uncertainty in the Big Tech industry, along with concerns about Fed policy, pressured risk assets, driving Bitcoin’s correlation with the Nasdaq to its highest level in months.

    • Crypto traders expect improved liquidity ahead as US fiscal pressures grow and Trump pushes a tariff-focused stimulus agenda.

    The tech-heavy Nasdaq Index experienced a 4% intraday decline on Thursday despite strong earnings and forecasts from chipmaker Nvidia. Investors expressed concerns about surging spending in the artificial intelligence sector, and Bitcoin (BTC) followed suit, plunging below $86,000 for the first time since April.

    Despite investors’ concerns about excessive valuations in the market, billionaire investor Ray Dalio said there is no clear trigger for an imminent market crash. Dalio told CNBC that “the picture is pretty clear, in that we are in that territory of a bubble,” and recommended investors diversify into scarce assets such as gold.

    Dalio added that his biggest fear is higher wealth taxes rather than tighter monetary policy. However, contrary to Ray Dalio’s view, market sentiment shifted after the United States reported a stronger-than-expected jobs report for September, prompting traders to doubt that the US Federal Reserve would further ease its monetary policy.

    Nonfarm payrolls rose by 119,000 in September, reversing the prior month’s decline. Most FOMC participants noted that “further policy rate reductions could add to the risk of higher inflation becoming entrenched,” according to minutes from the October meeting released on Wednesday. On Thursday, traders trimmed the odds of two interest-rate cuts by January 2026, reflecting renewed caution among equity and Bitcoin investors.

    Fed target rate probabilities for Jan. 2026 FOMC. Source: CME FedWatch Tool

    Based on implied pricing in government bond markets, investors now assign a 20% chance that the FOMC will set interest rates at 3.50% on Jan. 28, down from 55% one month earlier. While the FOMC minutes show that many of the Fed’s policymakers do not favor an immediate rate cut, they offer little insight on how close October’s split decision actually was.

    AI build-out costs overshadow strong earnings and Walmart surprises

    Even with strong corporate earnings, including a positive surprise from Walmart, traders fear that the economy could weaken as AI developers, such as OpenAI, continue to spend heavily. Gil Luria, head of technology research at D.A. Davidson, told CNBC that “the concern is about companies raising a lot of debt to build data centers.”

    Cryptocurrencies, Government, Nasdaq, Bitcoin Price, Investments, Markets, United States, Stocks, Donald Trump, National Debt, Price Analysis, Market Analysis
    Data center construction spending, seasonally adjusted (millions). Source: Distilled

    Luria said data centers are “inherently speculative investments that could face a reckoning two or three years from now,” adding that Nvidia’s earnings are not a “reliable gauge of whether AI economics are truly maturing.” The tech-heavy Nasdaq Index has now dropped 7.8% since its all-time high on Oct. 29, wiping out gains from the previous 10 weeks. Investors responded by stepping back from risk markets.

    Related: Bitcoin slump to $86K brings BTC closer to ‘max pain’ but great ‘discount’ zone

    Cryptocurrencies, Government, Nasdaq, Bitcoin Price, Investments, Markets, United States, Stocks, Donald Trump, National Debt, Price Analysis, Market Analysis
    30-day correlation: Bitcoin/USD vs. Nasdaq CFD. Source: TradingView / Cointelegraph

    Amid the heightened uncertainty, Bitcoin’s price movement continued to mirror trends in the tech sector. The correlation between the two asset classes climbed to a six-month high of 80%, suggesting investors are paying less attention to Bitcoin’s strengths in decentralization and predictable monetary policy.

    Bitcoin traders are not necessarily bearish below $90,000 and are likely waiting for clearer entry points as broader macro conditions remain unstable. If Dalio is right, the panic sellers could end up regretting their exit, as liquidity conditions may improve while the US fiscal debt problem lingers and US President Donald Trump advances his “tariff dividend” proposal aimed at stimulating the economy.

    This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.