Good morning everybody. Bitcoin is down. Ethereum is down. The market is sitting in Extreme Fear. And yet somehow, none of that feels like the most important story.
The biggest theme running through crypto right now isn’t Bitcoin. It’s capital.
Money is flowing. It’s just not flowing where crypto investors want it to.
Inflation Is High, But Nobody Seems to Care
Economists are expecting May CPI to come in at roughly 4.2% year-over-year, with core inflation hovering around 3%.
A few years ago, that would have been alarming. Today, it barely moves the needle.
The Federal Reserve has effectively abandoned the idea that 2% inflation is some sacred number. Jerome Powell has repeatedly suggested that inflation will fluctuate and that policymakers need flexibility. In practical terms, that means 3%, 4%, and possibly even higher inflation rates are becoming normalized.
That may be acceptable for policymakers, but it is not great for people holding cash.
Your savings account is still losing purchasing power. Your paycheck is still being inflated away. And investors are looking around asking the same question:
If cash is a losing proposition, where do you put your money?
For many, the answer has been short-term Treasury bills paying around 5%. Others have piled into stocks.
And increasingly, they’re piling into AI.
Bitcoin Is Competing Against AI
According to Bernstein, Bitcoin ETF flows have weakened throughout 2026 as investors rotate capital into AI-related opportunities. ETF outflows have totaled roughly $2.6 billion this year.
That sounds bad until you consider what Bitcoin is competing against.
Artificial intelligence has become the dominant investment narrative in the world.
NVIDIA. Anthropic. OpenAI. Compute infrastructure. Data centers. Robotics.
Even Bitcoin miners are starting to look at their hardware and ask a simple question:
Why mine Bitcoin when AI might pay more?
Some companies are already redirecting portions of their infrastructure toward AI compute.
At the same time, investors are preparing for what could become one of the largest IPOs in history.
The SpaceX Effect
Reports continue to circulate that investors are positioning themselves for a potential SpaceX IPO.
If that happens, it could become a major liquidity event.
The concern is straightforward: if investors need cash to participate in SpaceX and other high-profile AI and aerospace offerings, some of that money may come directly out of crypto markets.
That possibility is one reason Bitcoin breaking below its 200-week moving average matters.
Historically, Bitcoin has spent significant periods below the 200-week average during major bear markets. If history repeats itself, Bitcoin spending months around $45,000 is not some outrageous prediction.
It’s entirely possible.
That’s why I keep saying the same thing:
Have dry powder.
Stablecoins Were Always the Real CBDCs
For years, the crypto industry argued about central bank digital currencies.
I never thought CBDCs were the real story.
Stablecoins were.
And now we’re watching that prediction play out.
Japan’s three largest banks are exploring a joint stablecoin initiative. Major U.S. banks including JPMorgan, Bank of America, Citigroup, and Wells Fargo are working on tokenized deposit systems expected to launch in 2027.
The financial system is moving on-chain.
Just not in the way many crypto idealists imagined.
The dream was decentralized money.
The reality may be privately issued corporate dollars operating under terms of service agreements.
You don’t own the network.
You don’t control the rules.
And increasingly, you may not even control the money.
When people heard “you will own nothing and be happy,” they imagined housing, cars, and subscriptions.
Few people considered that money itself might become a rented product.
That’s where this appears to be heading.
The Stablecoin Gold Rush Hasn’t Started Yet
Some analysts argue the real opportunity is not stablecoins themselves but the infrastructure around them.
The wallets.
The custody providers.
The compliance tools.
The payment rails.
The settlement networks.
They’re probably right.
But don’t underestimate how profitable successful stablecoins could become.
Today, stablecoin issuers earn billions by holding reserves in Treasury bills and other short-term instruments.
Imagine what happens if regulators eventually allow fractional reserve structures.
Today, most major stablecoins require one-to-one backing.
Tomorrow?
Lobbyists exist for a reason.
And if reserve requirements ever loosen, the profits generated by stablecoin issuers could become staggering.
When Good Ideas Arrive at the Wrong Time
One story that stood out today was Botanix shutting down its Bitcoin Layer 2 network after years of development.
The project didn’t fail because the technology was necessarily bad.
It failed because the market didn’t show up.
That’s an important distinction.
A good idea launched at the wrong time often looks like a bad idea.
I’ve been thinking about that concept a lot lately, especially outside of crypto.
Andrew Yang spent years talking about AI, automation, robotics, and universal basic income.
Ten years ago, many people thought he sounded ridiculous.
Today, many of the technologies he discussed are becoming reality.
The ideas weren’t necessarily wrong.
The timing was.
Markets work the same way.
Politics works the same way.
Business works the same way.
You can identify a real opportunity and still fail because the conditions aren’t ready.
Maybe Bitcoin DeFi eventually becomes huge.
Maybe Layer 2 ecosystems eventually thrive.
But right now, investors are chasing AI, SpaceX, robotics, and whatever comes next.
That doesn’t mean the idea is wrong.
It means the market has decided something else is more exciting.
For now.
Crypto Prices
Bitcoin (BTC): $61,674
Ethereum (ETH): $1,641
BNB: $589
XRP: $1.12
Solana (SOL): $64.49
Tron (TRX): $0.322
Dogecoin (DOGE): $0.084
Hyperliquid (HYPE): $56.33
Zcash (ZEC): Down approximately 8%
Total Crypto Market Cap: $2.12 Trillion
Fear & Greed Index: 14 (Extreme Fear)
My Take
I don’t buy the idea that this market is truly terrified.
I’ve seen fear.
Fear was Bitcoin at $3,000 during COVID when nobody knew whether the global economy was about to shut down permanently.
Fear was watching markets collapse while the world tried to figure out what came next.
This?
This feels more like frustration.
Bitcoin at $61,000 isn’t exciting. It’s disappointing if you bought higher. It’s boring if you’re waiting for a recovery. It’s painful if you’re overexposed.
But it isn’t panic.
The bigger story is that crypto is no longer the only exciting game in town.
AI is absorbing capital.
SpaceX is absorbing attention.
Stablecoins are absorbing financial infrastructure.
Crypto isn’t dead.
It’s competing.
And competition is a lot harder than being the only story in the room.