While the S&P 500 racked up its ninth consecutive weekly gain and the Nasdaq soared 8% in May, crypto markets are being left behind. Top market maker Wintermute released its June 2 market update, highlighting an extreme capital rotation: spot Bitcoin ETFs saw net outflows of roughly $1.4 billion — the longest streak of redemptions since their launch. Ethereum fell below $2,000, and both major coins lost over 4% in May. Wintermute attributed the divergence to AI earnings propping up equities, while crypto lacks a similar fundamental catalyst and remains fully exposed to macro headwinds — a classic bear-market behavior.
Decoupling in Plain Sight: AI Demand Skips Crypto
The report zeroes in on the decoupling dynamic. In May, capital shifted from semiconductor hardware to software names like Dell and Salesforce as AI delivery validated earnings. Crypto missed the risk-on party entirely: not only ETFs bled, but even the largest corporate holder Strategy began selling. Without AI's umbrella, crypto is absorbing the full brunt of inflation and rate uncertainty.
Macro Clouds: Oil Plunge Fails to Cool Sticky Core Inflation
Macro conditions remain challenging. April's PCE rose to 3.8% overall, with core PCE at 3.3% — still hot. A ceasefire in the Middle East sent Brent crude tumbling 20% to $91, which could lower headline inflation in coming months. However, core inflation remains sticky as energy savings have not yet passed through to services and wages. The 10-year Treasury yield fell to 4.45%, and the probability of a December rate hike dropped to 35-40% — but stagflation risk could reignite in Q3.
Whales Quietly Accumulate, HYPE Leads Paradigm Shift
Despite near-term pain, Wintermute strikes a cautiously optimistic tone for the longer term. The report reveals that long-term holders have begun accumulating through OTC desks via TWAP orders, finding current prices attractive on an 18-month horizon. This looks more like a cycle reset than a bubble burst. Meanwhile, altcoins show a clear paradigm shift: infrastructure tokens from the previous two bull runs are lagging, while niche tokens focused on privacy, AI, and perpetuals — the "application and platform" category — are bucking the trend. Hyperliquid ($HYPE) broke past $70, with Grayscale raising $115 million in seed capital for its ETF, and even the CEO of Intercontinental Exchange publicly praised the project. Wintermute predicts that if dApps become the next cycle's winners, the top 100 crypto rankings will face dramatic reshuffling.