Market update | June 5th, 2026

A sharp turn in sentiment, not in fundamentals

Sentiment has taken a clear turn for the worse over the past month. Across the last three weeks and the current week, we have seen US$5.8B of outflows from digital asset investment products — among the largest run of weekly outflows in well over a year. It is worth keeping this in perspective: even after these moves, the asset class remains close to flat for the year. This is a sentiment shock, not a structural one.

The most immediate driver is geopolitics. The gyrations around the Iran conflict are proving harder to resolve than markets had hoped — the two sides remain far apart — and that uncertainty has fed directly into the rate outlook. Two months ago the market was pricing one to two cuts this year, an environment that would have been supportive for Bitcoin. That has now flipped: the curve is implying roughly 40bps of hikes. This repricing is doing much of the damage to Bitcoin right now.

I would expect this to weigh on US growth eventually, but I want to be precise: that is not yet visible in the data. Macro prints have held up well, and while tomorrow's payrolls could disappoint, the hard data has so far been robust.

The second force is AI, which is quite simply drawing liquidity out of everything else. Flows into AI exposure remain strong — harder to quantify than crypto flows, but unmistakable — and with the market's full attention on the theme, Bitcoin is being left behind. You can see the same effect in US software and services names, which are struggling precisely because the market now questions how much of that spend AI displaces.

On the AI "bubble"

It is time to use the word bubble a little more freely on AI — with one important caveat. A bubble, properly defined, is an inefficient allocation of capital, and that inefficiency will not be evident for a couple of years. The mechanism to watch is the revenue trough: an enormous wave of capital expenditure is being deployed now, and there is a gap between that spend and the revenue needed to justify today's multiples. SpaceX is a useful illustration — at its core a relatively simple business, now carrying a great deal bolted on top, AI included, which is pushing valuations to quite extreme levels. There is always a zeitgeist in markets, and right now it is unambiguously AI.

Michael Saylor’s Strategy: symbolic, not systemic

Strategy (formerly MicroStrategy)’s selling has been symbolically damaging to sentiment, and little more than that. Even in a worst-case scenario its holdings represent around 1% of Bitcoin, this is not systemic, any more than Satoshi's dormant holdings are. The recent sale appears designed to cover dividend obligations and to test the waters, and it is not the first time he has sold, having also done so in December 2022 for tax-loss purposes. It does not help sentiment, but it changes nothing fundamental.

Bitcoin: beaten up, not broken

I would be surprised to see Bitcoin make new cycle lows from around the US$60k level. Sentiment is clearly bruised, and we are likely on course for the largest weekly outflows in over a year. But none of this damages Bitcoin's longer-term trajectory — and by longer term I mean one year and beyond. What I will not do is call a genuine breakout until the Iran situation resolves and the rate outlook turns. When Bitcoin reached US$80k we were already cautious that it would struggle to break decisively higher given these overhangs, and that caution has been borne out.

What comes next: tokenisation

If AI is the current zeitgeist, I believe tokenisation is the next one — and the evidence is already building. Stablecoin supply has grown from US$300B to US$360B in six months. Assuming the CLARITY Act is signed into law — optimistically, around 4 July — I would expect adoption to accelerate, with banks and financial institutions stepping up their own initiatives to capture the efficiencies on offer. Scott Bessent has suggested stablecoins could reach US$2T by 2028; coming from a sitting official, that is a figure worth taking seriously.

The week ahead

Two central bank meetings are in focus — the ECB next Thursday and the Fed the week after. The Fed meeting is notable as the first under Kevin Warsh. Warsh has already signalled he intends to offer less forward guidance than his predecessor, which leaves the market doing more of the guesswork. We will publish a short comment around the decision and what it means for digital assets.