Bitcoin, Warsh, the impending AI rotation and Alts

Bear running out of steam

Over the past 30 days Bitcoin staged a meaningful test of the $60k level — a zone that has acted as structural support through multiple cycles. The sell-off was swift and sentiment turned decisively negative as leveraged longs flushed out, but price held. That hold matters.

The RSI Picture

The weekly RSI is telling a clear story. After the sell-off, the indicator has compressed into territory that has historically marked either a local bottom or the early innings of a re-accumulation phase. Momentum divergence, where price makes a lower low but RSI does not, is typically the first sign that selling pressure is exhausting itself. That divergence is present and replicated at the end of previous bear markets.

The $60k level absorbed significant supply. Bears had every opportunity to press lower and could not. Weekly RSI divergence is appearing. The macro read-through to risk assets is improving. This looks more like a coil than a breakdown.

Warsh’s first meeting

Warsh arrived slightly more hawkish than we expected, but the nuance is in how he is orienting the institution rather than in the near-term rate path. The signal is process-level, not policy-level, and that distinction matters for how we think about the next 12–18 months.

Key Takeaways from Warsh

– No more forward guidance. This is the correct call given ZIRP is firmly in the past, forward guidance made sense when the only move was zero, but in a normalised rate environment it creates unnecessary rigidity and stale commitments. Expect more volatility as a result; markets will re-learn to price uncertainty rather than front-run Fed communication.

– Task forces to optimise data. This reads as groundwork for cuts, reassessing the data frameworks that inform rate decisions could justify a pivot even without a dramatic change in the headline numbers. Watch this space.

– Not a Trump stooge, but not an adversary either. Warsh is clearly establishing institutional independence while simultaneously laying the plumbing for a more accommodative stance when conditions allow.

The Tailwinds Building for a Dovish Pivot

Warsh's hand is being played into a set of converging geopolitical and macro tailwinds that make the case for cuts stronger over the coming quarters:

Iran conflict resolution. The wind-down of hostilities and the opening of the Strait of Hormuz will bring a material volume of oil supply to market. Sanctions relief on Iranian crude layered on top of this could push energy prices below pre-conflict levels. Disinflation from energy is the Fed's best friend and gives Warsh political cover for the pivot without it looking politically motivated.

US debt rollover imperative. The Treasury faces a significant refinancing wall. Lower rates reduce the carry cost and make the fiscal arithmetic less alarming. This is a structural incentive to lean accommodative that exists independently of any political pressure.

The AI race. Winning the AI race against China is a geopolitical priority that requires abundant, cheap capital. A high-rate environment chokes the investment cycle. Rate cuts are not just macroeconomic, they are strategic infrastructure for the technology competition.

Hyperscaler Equity Issuance Is Off the Charts

The JPMorgan data is stark: net US equity issuance in 2026 is projected to hit ~$1.2 trillion, the fastest pace since the dot com era. That is not a coincidence. The hyperscalers and AI-adjacent names are rushing to market at scale, and the reasons for that urgency warrant scrutiny.

Why the Rush?

Companies with access to equity markets at elevated valuations have a rational incentive to issue. But when issuance hits levels not seen in a quarter century, the question becomes: what do insiders know that equity buyers do not? History suggests that peak issuance often marks, or shortly precedes, peak valuations. The dot-com analogue is imperfect but uncomfortable to ignore.

The AI infrastructure build is capital-intensive at a scale that even cash-generative hyperscalers cannot fund purely from operations. Equity issuance provides the incremental capital. But it also dilutes existing holders and signals that the issuers believe their stock is either fairly valued or overvalued at current levels.

What This Means for the AI Bull Market

The supply surge creates a headwind. More equity chasing the same pool of institutional capital compresses multiples at the margin. The incremental IPO marginal buyer is increasingly a passive fund or retail momentum buyer, neither of which is known for disciplined valuation work at the top of a cycle. We expect a rotation out of AI, and an oversold digital asset sector is set to be one of the biggest beneficiaries.

Alts: HYPE, Zcash & the Privacy Narrative

While Bitcoin consolidated and broader alt market sentiment was subdued, a handful of names delivered standout performance driven by specific catalysts. Three deserve close attention.

HYPE — Outperforming in a Bear Market

HYPE continues to be one of the clearest examples of protocol fundamentals driving price. As a revenue-sharing token tied to a high-velocity DEX, when token holders receive a direct share of protocol economics, the token behaves more like an equity instrument than a pure speculative asset. In a risk-off environment, that distinction matters. Relative performance has been strong (+164% YTD).

Zcash — White Hat Exploit & the Mythos Connection

Zcash experienced a significant event over the period, a white-hat exploit connected to Mythos that exposed a vulnerability, but crucially was handled responsibly, and the protocol patched. The market reaction was initial sharp selling followed by a meaningful bounce. And the privacy foundation cuts both ways, we cant tell if any ZCash was minted in the sheilded pool, and we’ll have to wait until the next protocol upgrade to confirm with certainty.

The more interesting read-through is structural. Privacy protocols are increasingly in demand as global surveillance infrastructure improves and regulatory pressure on transparency grows. Zcash's episode may prove to be the first of a series of stress tests across all chains, and protocols that survive them with their credibility intact will likely emerge stronger. The Mythos connection also raises the possibility of deeper ecosystem linkages that could be positive for longer-term adoption.

NEAR — Privacy Narrative Spillover

NEAR has seen renewed interest partly as a beneficiary of the broader privacy narrative and partly from its own ecosystem developments. As users and developers look for platforms that offer greater data sovereignty, NEAR's architecture positions it well. The performance in recent weeks suggests the market is beginning to price this in (+40% YTD).

Outlook: What to Watch

ETF Flows — The Swing Factor

Bitcoin spot ETF flows are the single most important near-term variable. The institutional bid that drove the initial ETF-era rally has softened. For the bear exhaustion thesis to play out, flows need to reverse, specifically we need to see sustained net inflows from the major US products. Watch daily flow data closely. A return to consistent net positive weeks would be the clearest signal to increase exposure.

Debasement trade setting up another run

Central bank gold reserve survey data (World Gold Council, YouGov) shows 89% of central banks expect to increase gold reserves over the next 12 months, the highest reading on record. This is contextually significant: the macro environment that is driving gold accumulation (USD reserve diversification, geopolitical uncertainty, real rate uncertainty) is the same environment that provides a structural bid for hard assets including Bitcoin. The correlation is not mechanical, but the direction is consistent. The debasement trade is not over, just reseting for another run.