Game Over

Yesterday, Citrini Research published a “State of the Themes” report, pointing to the conclusion that the playbook that worked since 2023 has stopped working. For crypto, the more interesting question is what sits on the other side of that trade. We think our Bottom Signals framework offers an answer.

Since its May 2023 inception, the Citrindex has returned more than 2.5x the S&P 500 by riding broad baskets in AI, fiscal primacy, GLP-1s, robotics, energy and defense. The shop now argues the conditions behind that monster run are gone. Valuations are no longer cheap, sentiment is no longer bleak, and narratives have drifted toward unprofitable names priced on 2030 TAMs. The core call is that AI capex growth has peaked. Annualized hyperscaler capex is approaching $1T against roughly $200B of ecosystem ARR, and doubling spend from here would require revenue measured in the trillions. 

Large-scale capex commitments are fading, hyperscalers are leaning on debt and equity issuance beyond free cashflows, bottlenecks create real execution risks, and pricing power is eroding, evidenced by OpenAI’s July 30 token price cut that pulled share from Anthropic and revealed real demand elasticity.

If AI-led Nasdaq leadership is past peak expectations, the natural follow-up for crypto allocators is how stretched that leadership already is against BTC. That relationship is the foundation of our July report, Bottom Signals.

We started from an uncomfortable fact. BTC has been flat against the Nasdaq since November 2017, nearly nine years, while carrying far higher volatility. Adjusted for risk, it has underperformed. As the asset matures, we expect diminishing returns in both directions. Passive, always-long exposure earns progressively less, and outperformance against equity benchmarks increasingly depends on knowing when to be overweight.

Our primary signal leaned on the NAS100/BTC ratio, and the weekly RSI of that pair. Q2 2026 was the most overbought the Nasdaq had been against BTC on record, and on a high timeframe. Said simply, the Nasdaq was blown out to the upside against BTC, driven by the blockbuster rallies in semis, memory, and the AI-bottleneck trade; it was time to take the other side. 

Conditions like that have consistently preceded BTC outperforming the Nasdaq over the next one-three years. This time was not different. Since then, BTC has outperformed the Nasdaq.

This is where the two theses meet. Citrini’s case is about the Nasdaq’s AI leadership reconciling with reality, and our signal measures how far that leadership has run against BTC. The ratio can mean-revert without BTC rallying on its own, because a drag on the AI winners does part of the work. If the debt in the AI complex goes bad, does it get monetized? If it does, what’s the trade? BTC could be seen as a hedge to the left tail scenario of the AI bull going bust and the subsequent debasement that may ensue. The end of one trade is often the start of another, and there’s always a hot ball of money somewhere.

— Luke

Notional trading volume on Hyperliquid’s HIP-4 markets made a new all-time high of $31.6M last week, showing four consecutive weeks of growth.

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