When BTC trading sideways is bullish: and how HYPE and ZCash are broadening the rally

In our April wire we asked whether the bounce off US$60k was a bear-market rally or the cycle low. After a choppy, sideways May, the most informative thing about the month is what didn't happen. Bitcoin spent most of May in a tight US$75-83k range, never seriously threatening the February lows. The tape absorbed a long list of things that, in a weaker market structure, would have triggered another leg down: ongoing Strait of Hormuz uncertainty, a Trump-Xi nothingburger, surprise overshoots on CPI and PPI, yields drifting higher. None of it stuck.

In late-stage bear markets, sideways is bullish. The marginal seller exhausts well before the breakout buyer arrives, and price stops responding to bad news. That is what May looked like, and it further validates the February low. BTC bounced off the bear market resistance line, turned it into support, then rejected off the 200-day moving average, and looks to be lining up another crack at it soon.

BTC bouncing off bear-market resistance turned support (blue) and rejecting the 200dMA (green)

The bear case 

The cleanest bearish read in May was ETF flows, which turned negative on a net basis (roughly -US$200m for the month). The instinct is to interpret that as fading conviction. We don't think it is.

The outflows were almost entirely concentrated in the last week, aligning precisely with perpetual funding rates flipping positive after a deeply negative regime through April. That flip changed the economics of the basis carry, players positioned long ETF / short perp to harvest the negative funding had their trade invert, and have been unwinding. This is de-leveraging, not directional selling. The positive funding regime is itself informative: April's deeply negative funding was a contrarian signal, the market was paying to be short. That setup has played out. Funding now reflects normalisation rather than capitulation-or-mania at either tail.

Underneath, the structural buyers have not stopped:

• MSTR added roughly 25,000 BTC, ~US$2 billion in May. The STRC mechanism continues to channel structurally counter-cyclical demand into BTC, particularly on weaker tape. This is the cleanest "doesn't care about funding" buyer in the market.
• The Clarity Act cleared the Senate Banking Committee 15-9 on a healthy bipartisan vote, with altcoins outperforming BTC into the print.
• HYPE ETF volumes have picked up meaningfully in the back half of May, only weeks into trading. The signal is not about HYPE specifically, it is about institutional appetite for crypto ETFs broadening beyond BTC, ETH, and the incoming SOL products. That demand is real, and developing earlier in the cycle than in previous cycles.

Where we are in the fifth cycle

It is worth zooming out, because the loudest commentary right now is still anchored to the 2018 and 2022 cycle troughs. That framing has been costing people money since February.

Every Bitcoin cycle since 2011 has rhymed without repeating. The constants, a four-year issuance halving, capital rotation from BTC into ETH and down the risk curve, peak-to-trough drawdowns that test conviction, show up reliably. What changes each cycle is who is buying.

The defining feature of this fifth cycle is the arrival of structural buyers who don't behave like crypto-natives. MSTR-style treasury programmes, ETF rebalancing flows from advisor platforms (Morgan Stanley, Charles Schwab, Goldman's product in the pipeline), and the early stages of sovereign-curious demand. These cohorts allocate 2-4%, rebalance into weakness, and don't liquidate on a 30% drawdown, they buy more. That is a different reflexivity equation to the one that defined 2018 and 2022. ETFs are also extending trusted exposure beyond BTC and ETH to SOL and now HYPE.

Map current price action against the equivalent point in the 2018-19 and 2022-23 cycles, roughly eight to ten months past the cycle peak, with bear capitulation behind you and the first structurally-bid base forming (exclude the FTX event as a black swan that should not be expected to repeat) and you are at the moment that has historically delivered the strongest forward returns of the entire cycle. Not the obvious moment. The boring one. We're in that moment now.

Forward returns from the equivalent 8-10 month post-peak base in the 2018 and 2022 cycles.  In 2018 a simple monthly DCA of $10,000 a month 8 months past the previous peak provided spectacular returns. 

And so to the same DCA 8 months post the cycle high through 2022.

The broadening: HYPE and ZEC are leading, not Bitcoin

The most useful signal in May was not the BTC price action, it was where capital chose to lead. In a normal early-recovery cycle, BTC dominance rises and the alt complex flatlines. This time it is the opposite. Two names in particular have done the work, and they could not be more different in what they tell us about the market.

HYPE: real revenue, no overhang, and a doubling since our last wire

We wrote up Hyperliquid in early March with HYPE around US$31. Two months on it has just crossed US$62, a clean double in a market where Bitcoin is roughly flat. The price action is welcome, but it is not the point. The thesis has hardened.

The Syncracy team (@defi_monk and @RyanWatkins_) published a long-form piece last week — "The Great Perpification" — making a case we strongly agree with: the perpetual swap is on track to become crypto's next great export to traditional finance, and decentralised exchanges are the natural home for it. The combined daily notional volume of global options, futures and CFDs is over US$8 trillion. Today perpetual DEXs do roughly US$20 billion. Even one percent of that complex is US$3-7 billion of annual revenue — and almost all of it drops through.

Why Hyperliquid is positioned to capture a disproportionate share of that:

• A US$1 billion annualised run-rate at 99% net income margins with twelve employees — roughly US$83 million in revenue per employee, among the most revenue-efficient organisations on the planet.
• HIP-3 has driven over US$100 billion in volume across third-party deployed markets in three months — equities, indices, commodities, pre-IPO names. On a record metals day in January, a single silver perp captured around 2% of global silver derivatives volume.
• The Dodd-Frank moat. U.S. equity and commodity perps are constrained by the Commodities Exchange Act and Dodd-Frank, which fragment the trading stack across brokers, exchanges and clearinghouses. To match Hyperliquid an incumbent needs a wholesale regulatory rewrite or a coordinated rebuild across multiple regulated entities they don't own. Both are multi-year projects.
• No VC overhang. Many of the last cycle's high-profile names carried large early-investor allocations whose unlock schedules created persistent supply pressure at exactly the moments momentum tried to build. HYPE's distribution simply doesn't have that problem.

HYPE is, in our view, the poster child for what this cycle's outperformers will look like: real product, real users, real revenue, tokenomics that align holders with protocol economics, and a clean cap table. That set of names is much smaller than the market seems to assume.

ZEC: privacy is having its moment

The second standout of May has been Zcash. For readers less familiar, Zcash (ZEC) is a privacy-focused cryptocurrency that uses zero-knowledge proofs (zk-SNARKs) to allow fully shielded transactions: the sender, receiver and amount can all be encrypted on-chain while remaining cryptographically verifiable. It is the most credible expression of the original "digital cash" thesis that motivated Bitcoin, narrowed to the privacy primitive.

For most of the last cycle ZEC was a forgotten name. That is changing for a reason that links directly to the rest of this wire: as the dollar tokenises and equities tokenise, every transaction begins to leave a permanent, public, auditable footprint. Stablecoin issuers can freeze addresses. Tokenised equity issuers can do the same. The financial-privacy primitive becomes structurally more valuable, not less, the more of the system moves on-chain.

The market is starting to price this. Shielded ZEC supply has been hitting record levels through the first half of 2026, ZEC has been one of the strongest performers in crypto year-to-date, and the conversation has shifted from "is this a dead project" to "what is the privacy primitive worth in a fully tokenised system." The Zashi mobile wallet release has materially lowered the user-experience friction that previously kept shielded usage low. Edward Snowden, who participated in the original Zcash trusted setup ceremony, has been notably more public on the thesis through this leg.

Positioning into the back half of 2026

Solana remains our highest-conviction undervalued risk asset, and the case got materially stronger in May. The SEC's announcement on tokenised equities was, in our view, the most significant regulatory development of the year for smart-contract platforms. Tokenising real, regulated securities onto public blockchains has been the white-whale use case for institutional adoption since 2018, and the SEC's framing now opens a credible path for it to scale.

The detail that matters for positioning: approximately 96% of current tokenised equity activity is already happening on Solana, not Ethereum, not the L2 ecosystem. That isn't a forecast; it is where the rails have been built and where the early issuers have deployed. Solana sits in a position where, if tokenised equities scale even modestly from here, it captures the dominant share of a use case institutional investors actually want.

The Messari Q1 deep dive is worth flagging:

• Daily real user transactions hit a record 112.6 million, up 50% quarter-on-quarter.
• Solana apps generated US$342 million in revenue even in a weak market.
• Tokenised real-world assets on Solana grew 43%.
• Solana captured ~95.6% of tokenised stock trading volume — the 50th consecutive week of dominance.
• Stablecoins on Solana hit a record US$15 billion; 77% of USDC transactions now happen on Solana.
• Payments rails activity expanded across Visa, Stripe, Worldpay, Western Union, PayPal and Mastercard.
• The Alpenglow upgrade is targeting finality from ~12.8 seconds today to ~150 milliseconds.

Combine that with SOL trading at roughly 17% of Ethereum's market cap, the FTX-estate overhang now small and shrinking, and the SOL ETF and structured-product pipeline lining up post-Clarity, and the asymmetry has only widened.

History says the moment that delivers the strongest forward returns of a Bitcoin cycle is not the obvious one. It is the boring one — eight to ten months past the peak, after capitulation, with structural buyers quietly building a base while the consensus is still anchored to the previous trough. We are in that moment now.

What is different this cycle is who is leading. History says BTC dominance rises first and the alts follow. But history didn't have HYPE compounding cash flows on a chain incumbents can't replicate, ZEC quietly bidding the privacy primitive into a fully tokenised system, and SOL sitting on 96% of the tokenised-equity stack. The broadening is already underway. The recovery is well underway. The names doing the heavy lifting are the ones the consensus is least watching.