What if a major custodian loses its multisig keys for good?
A top custodian losing multisig quorum permanently freezes billions — a hard, unrecoverable counterparty loss that hits ETH (-6.3%) and BTC on institutional-custody-trust fear, correctly framed RISK-OFF. This is the QuadrigaCX key-loss template (and Gox-adjacent), where assets became permanently inaccessible rather than merely stolen. Because regulated custody is the foundation of the ETF/institutional thesis, the event attacks the adoption narrative itself, not just one firm's balance sheet.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. A top institutional custodian loses quorum of multisig keys, permanently freezing billions in client crypto assets. The trigger decomposes into signed root‑shocks — Crypto confidence ▼ · Risk appetite ▼ — which propagate through our causal graph to the markets below.