For the past week, U.S. equities have moved in a fairly tight range. Meanwhile, bitcoin broke its May high and reached roughly $86,000, continuing its recovery from summer lows near $58,000. Alex Thorn highlighted bitcoin’s first close above its 50-week moving average in 45 weeks. Who, at this point, doubts that the bear market is behind us?
Benjamin Cowen admitted his call was wrong. He had expected an October cycle low and no break of the May high this year. Instead of moving the goalposts, he owned the miss.
In a bull market, even bad news is good. For example, Wednesday’s correction elicited the observation that open interest had been flushed, removing “unhealthy” leverage without much price damage. Bitcoin ETF flows were positive, with Eric Balchunas wondering whether the U.S. Treasury’s troubles were helping. Bad news is good?
The macroeconomic picture is largely the same as last week’s. Rising long-term Treasury yields prompted another round of debate over the cause, and over whether the higher rates are good or bad. Perhaps it is bullish because “the market expects tremendous growth, equities to skyrocket and investors are demanding higher returns from bonds.”
Others concluded that “there is little that is benign about the increase in yields.” The National Financial Conditions Index (NFCI) indicates the financial conditions it measures are as loose as they’ve been since the Fed began hiking in 2022.
AI demand and capital expenditure also show little sign of slowing. As discussed last week, government bonds are competing with some of America’s largest companies that are borrowing significantly for the first time in 20+ years. One other confounding factor is that, despite higher yields, the dollar has defied expectations of weakness.
On the other hand, Europe looks weak. France’s credit rating was downgraded, and Arthur Hayes highlighted the widening French-German sovereign-bond spread. Mr. Hayes expects eventual money printing in response. His separate U.S. watchpoint is a MOVE Index reading of 130, which he thinks could bring some form of U.S. money printing too.
In crypto, CLARITY’s failed advance attracted critical mainstream coverage, but SEC and CFTC activity has quickly taken up the slack. On a tangent, Hester Peirce, who is one of the most effective, forward-thinking bureaucrats in government, called for rethinking financial surveillance and data collection, with Haseeb Qureshi supporting much of her argument.
Europe, by contrast, showed that its governmental organizations are still moving far slower. The ECB announced it’s going forward with a digital euro for banks, nothing for consumers yet. Paolo Ardoino also reiterated Tether’s refusal to seek MiCA authorization, citing the 60% bank-deposit reserve requirement.
The business of tokenization keeps ramping up. Token Terminal’s seven-day DEX-volume comparison showed week-on-week increases of $193.3 million for Backpack-issued stock tokens, $106.1 million for Coinbase’s, and $38.6 million for st0x’s.
This early in the tokenized-stock race, the leadership is changing quickly. Robinhood Chain’s memecoin-stock trading is cooling, while attention shifts toward Solana. By Friday, Solana had overtaken Robinhood in tokenized-asset spot DEX volume.
A separate comparison put Solana’s trading volume above the NYSE’s, though that comparison requires care about what each side is counting. Raoul Pal’s argument that everything will be tokenized sounds more real than it ever did in previous cycles.
Substantive partnerships with tradfi and web2 companies are commonplace now. This week Chainlink announced one with Infosys ($40 billion global IT infra provider), and both Apple and Google advertised senior blockchain and stablecoin roles. Tradfi juggernauts are publishing reports on crypto, like Blackrock’s research paper on the AI-blockchain connection.
This set of slides gives a nice overview of the current crypto market. Some highlights:
- ETH retains the lion’s share of stablecoin TVL.
- Solana could be undervalued.
- Coinbase too.
2026 thus far has been the ZEC and HYPE show.
In defi, Hyperliquid passed Solana in USDC balances. NEAR is enjoying its fair share of attention, and even pitching itself as programmable money, an apparent incursion into Ethereum’s territory. Variational announced The VAR TGE and airdrop, which was largely well received on CT (Crypto Twitter). The revenue-generating-token narrative is reaching the level of consensus where soon Uber drivers will steer passengers away from valueless memes and toward revenue-accruing tokens.
A more robust framework is laid out in this X article, which separates revenue plays (HYPE and PUMP) from monetary assets (BTC and ZEC), and from rentals (the universe of shitcoins). The first two categories are candidates for holding through a cycle; the rentals are meant to be returned sooner rather than later. The same author wrote six bull cycle predictions worth reading.
Kalshi was under attack this week. The U.S.-based prediction market faced an initial accusation of fabricated crypto activity, followed by analysis of repeated trade sizes, further scrutiny, and more questions about its statistics. IcoBeast disputed the claims in a rebuttal, and in a later message apologized for “being a dick.”
Polymarket had a different problem. The Wall Street Journal reported that fraudsters used stolen debit cards to fund bets and sought withdrawals to accounts they controlled. People familiar with the events said Shayne Coplan told staff to prioritize growth and deal with fines later. Polymarket says it has controls for suspicious activity and works with authorities.
On Solana, launchpads waged war this week. Pump.fun supporters attacked Stonkfun.xyz’s “reward token” mode for being an exorbitant extractive tax that rewards insiders. There are more thoughtful criticisms that seem aimed at genuinely improving Stonkfun.xyz. Several accounts fired back that PUMP is once again paying KOLs to FUD a competitor.
Others pointed to Pump’s callout rewards, The stats show KOLs losing money on their trades while earning from callout rewards. Whatever happens between PUMP and STONK, it’s wise to beware of KOLs, especially ones dabbling in memecoins. They are openly bragging about extracting from other users.
Speaking of extracting, Zcash’s rally has attracted ordinal grifters selling NFT collections on the blockchain. Nearly a decade after the Bitconnect scam, the SEC wants Trevon James, a prominent Bitconnect KOL, to repay $3.2 million in ill-gotten gains. He claims the BTC he received was stolen. Perhaps it was lost in a boating accident.
Finally, security. Bitget was hacked for roughly $351 million. Bitget CEO Gracy Chen said the exchange’s protection fund covers the loss, though the exchange temporarily suspended withdrawals. Jeff Yan, founder of Hyperliquid, called out what he described as Bitget’s shady market-making practices and warned that Bitget might be the next FTX. Others resurfaced Gracy Chen’s warning that Hyperliquid might be the next FTX after the JELLYJELLY incident. Zing!
Mr. Yan isn’t alone in enjoying the Bitget hack. Monero supporters are too because XMR tends to rise after major hacks, presumably because the hackers swap into the private coin. Still other Monero supporters celebrated hackers’ supposed preference for Monero over Zcash. This seems like bad optics for privacy.
And a report of an iPhone Safari remote-code-execution vulnerability provided another reminder not to treat an everyday browsing device as a vault. Use a hardware wallet, and pay attention to what you’re signing.
Stay safe out there.
-David Sencil
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