Where There is Smoke

“How did you go bankrupt? Gradually, and then suddenly.”

Hemingway did not have crypto on his mind in 1926. A hundred years on, and it is the best description I have for what is happening to crypto.

When I wrote that Mythos is where crypto ends, some evidence was already in hand.

Ledger’s CTO had warned publicly that AI is making crypto hacks cheaper and easier. The OECD had begun classifying AI-driven cyberattacks on crypto infrastructure as a distinct incident category. And a $45 million exploit involving AI trading agents had already shaken confidence in autonomous crypto systems.

None of these were enabled by a Mythos-class AI. But near-chain exploits resulting in theft at scale will be the sudden event. And the conditions are arriving faster than the market is pricing them.

Crypto-enabled fraud overtook ransomware as the number one executive security concern in 2026. AI-enabled fraud surged 450% year over year. Stolen funds totaled $3.4 billion in 2025 from fewer but more sophisticated attacks. That is the signature of a capability curve steepening, not flattening.

The market cap has lost $2 trillion since October. Institutions are pulling back. Bitcoin ETF outflows hit $1.7 billion in a single week. But not yet for the reason I suggested. They are responding to tariffs. To macro fear. To the same cyclical triggers they always respond to.

They are not yet repricing for the structural security risk. That repricing comes later, after the first major AI-enabled theft that cannot be reversed and cannot be contained. The question is not whether that event occurs. It is when.

Gradually, and then suddenly. The gradual part is now measurable.

BTC’s Run Out