Robinhood Chain is off to a fast start to democratize finance for all in <1 month.

• >300K Daily Active Addresses

• >$1B Daily Spot DEX Volume (#3 among chains)

• >$300m of stablecoin supply

• +$40m Annualized Daily Fees on Robinhood Chain

• >$300M+ in TVL driven by Morpho, Ethena, Uniswap, etc

  

I invested in Robinhood back in 2019 at Whale Rock (L/S Hedgefund) in a pre-IPO round and covered the Coinbase IPO roadshow back in 2020. I started Artemis to focus people on investing in real enduring assets in crypto and equities vs speculate on memecoins.

I was horrified and sad when I went into my Robinhood Wallet last week and saw that I could really only trade meme coins and in just 3 days since buying a nominal amount of $CASCHAT, I’ve been air dropped a ton of random and meaningless tokens (including a token called “Pointless Coin”)

Yes, Robinhood is #3 in spot DEX volume today.

BUT, majority of DEX volume is still primarily meme coins (animal memes, vlad and robinhood memes, or general memes). PLEASE, Robinhood DO NOT build a meme coin chain.

There’s a lot of learnings for Robinhood Crypto from Coinbase’s Base as it’s still a much larger chain today.

Brian Armstrong even doubled down on the quote of steering folks to real and enduring use cases in his reply.

I get the temptation as meme coins are a great way to attract early users, partners that drive liquidity and volumes (come for the memes, stay for real use cases). Large independent projects are able to flourish like Aerodrome which dominate volumes on Base and has built a real business model)

But memecoins lose people money and destroy trust.

Look no further than the Base meme coins that were launched in early 2024 that are down another 90% this year. (Down 99% from the peak in early 2024).

Meme coins AREN’T durable and hurt customers and further alienates retail from using blockchains.

Also memecoins on Robinhood Chain further the sentiment from Wall Street and Hedgefunds that Robinhood is the meme stock trading app embroidered in the GME / meme stock mania of early 2021.

Tweets like these don’t help:

Wall Street struggles to understand Robinhood as is. DO NOT double down on what hurt the brand in 2021.

Instead, focus liquidity and attention on the Robinhood Wallet and ecosystem on Arcus (former dydx team, OG / early leading perp DEX) and tokenized stocks. I love that Arcus today allows anyone in the world to trade spot tokenized stocks globally.

These stocks are up only in the last decade.

Please ACTUALLY focus on RWAs on Robinhood chain to expand financial access to more and more investors who can trade stocks and pre-IPO companies. Teams like RWA.xyz and Artemis would gladly help highlight these use cases.

Robinhood’s biggest bear case is its fully saturated the U.S market with 27m funded accounts and the street modeling to 31-32M funded accounts in FY2028 which is not explosive.

My bull case for Robinhood is access to 100M+ more international investors who can now invest in RWAs, prediction markets, stablecoins, public companies and pre-IPO stocks through Robinhood Chain and act as an early top of funnel for Robinhood App.

There’s real demand for 24/7/365 tokenized stocks -- look no further than Trade.xyz on Hyperliquid where people are trading primarily equities like SK Hynix which does $68B of actual revenue and is a real business that people want access to.

If through Robinhood Chain, Robinhood grows to say 100M MAUs in 2030 and ARPU is currently ~$171 and say international users have lower ARPU because they’re paying Chain Fees instead of trading through Robinhood App which has higher take rates, and ARPU is $100. That’s $10B of revenue on just consumer revenue alone in 2030 and beats the streets estimate of $8.78B by FY29.

Vlad and Johann, you have the opportunity to fulfill crypto’s promise of enabling anyone to access finance through tokenizing assets.

Please don’t f*ck it up by making Robinhood a memecoin chain.

Wall Street, your customers and the world will thank you for it.

Sincerely,

Jon Ma

Robinhood User since 2017.

Global risk assets closed the first full week of July on firm footing, but beneath a placid index tape the composition of leadership shifted hard. The Dow crossed 53,000 for the first time and set new record closes, capping a first half in which the Dow rose ~8.9%, the S&P 500 ~9.6%, the Nasdaq ~12.8%, and the Russell 2000 ~22% – its best first half since 1991. The macro backdrop turned friendlier: a soft June jobs report and new Fed Chair Kevin Warsh’s comment that inflation risks had come down revived hopes of a less-hawkish Fed, reversing months of “higher-for-longer” repricing. The counterweight was geopolitics: fresh attacks in the Strait of Hormuz and the revocation of Iranian sanction waivers pushed oil and the 30-year Treasury yield higher (back above 5%), lifting the discount-rate hurdle for long-duration growth just as Q2 earnings season opened. By later in the week that tension produced a genuine chip rout: Samsung’s record quarterly guidance on July 7 could not stop a semiconductor sell-off, and the Nasdaq wobbled even as the broader tape held.

The week’s scoreboard tells the rotation story in one picture. The biggest single-name winners were not the AI-hardware leaders but recovering high-beta and crypto-levered names: Rivian (+19.8%), Robinhood (+15.4%, riding its Robinhood Chain launch), Palantir (+14.6%), Coinbase (+11.4%) and Strategy (+8.7%), alongside a sharp crypto bounce (ETH +11.8%, BTC +6.5%). The benchmarks advanced only modestly (Dow +1.6%, S&P 500 +1.4%, Nasdaq-100 −0.2%). The damage was concentrated in the AI-capex complex: Corning (−23.8%) and SanDisk (−14.9%) were dumped even as the mega-cap AI names (NVDA +0.3%, AVGO +0.4%) went sideways — a textbook “sell the crowded winners, rotate into everything else” week.

Today We Highlight:

• The Great Rotation: Capex-payoff doubts pull money out of AI hardware and into "boring" value.

• Robinhood Chain: Robinhood ships its own Arbitrum-based L2 with 24/7 tokenized stocks and a day-one DeFi stack.

• Open USD: A ~140-partner consortium (Google, Visa, Stripe, BlackRock, Coinbase…) unveils a stablecoin for “global money movement.”

The Great Rotation: AI Collapses as “Boring” Stocks Rise

The most important market story of the week is that capital is rotating out AI hardware and into the value and defensive names that sat out the 2025 boom. The proximate cause is a growing investor demand for evidence that record AI capital spending will actually pay off. Big-tech AI capex is set to climb another ~50% in 2026 to well over $600bn, and the gap between investment and revenue is now wider than the 2001 telecom bubble as capex is growing roughly 46% faster than sales. With US tech/AI multiples near EV/EBITDA of ~25x, the market has begun to punish spending even when operational results beat, because the fear is margin compression as monetization lags.

Corning fell 23.8% and SanDisk 14.9% over the week even as Nvidia and Broadcom went flat and Samsung was sold despite a record quarter. That is the signature of a positioning unwind, not a demand collapse: breadth stayed positive, the equal-weighted index held up better than the cap-weighted one, and leadership migrated toward financials, insurers, healthcare, staples and midstream energy. The Dow made records while the Nasdaq-100 slipped.

The Fed and the resumed US-Iran war are accelerants. After a hawkish June (PCE at ~4.1%, Goldman pushing its next cut to 2027), the early-July dovish inflection re-rated rate-sensitive value higher; separately, Hormuz pushed oil and the long bond up, mechanically raising the hurdle for long-duration AI winners at the worst possible moment.

Robinhood Chain: From App to Infrastructure

On July 1, Robinhood launched the public mainnet of Robinhood Chain, an Ethereum Layer-2 built on Arbitrum’s stack, purpose-built for tokenized real-world assets that trade 24/7 and plug directly into DeFi. The headline product is Stock Tokens: on-chain exposure to equities like NVDA, AAPL and GOOG, structured as tokenized debt securities (economic exposure, not legal ownership), available via the Robinhood Wallet in 120+ countries, though not the US. What sets it apart from the usual corporate-chain announcement is that a working DeFi stack was live on day one: Uniswap (a dedicated AMM as primary liquidity), Lighter, 1inch, Rialto and Arcus (from the dYdX team), with Chainlink as the official oracle. Robinhood also rolled out Earn, a Morpho-powered lending product targeting ~7% APY on USDG.

The strategic read is that this is the culmination of Robinhood’s 2025 acquisition spree (Bitstamp, WonderFi, the European tokenized-equity pilots) composed into one vertically integrated, on-chain brokerage – assets tokenized on its own network, traded through its own wallet, financed through integrated lending, custodied on its own stack. The market liked it: HOOD was one of the week’s biggest winners, up 15.4%. The open question is regulatory; the line between a compliant synthetic instrument and an unregistered security varies sharply by jurisdiction, and multiple regulators (including an SEC that just added crypto rulemaking to its July agenda) are drawing those lines right now.

Open USD: the consortium stablecoin

The week’s biggest fintech headline was the unveiling of Open USD, a new stablecoin from Open Standard — an independent venture led by former Coinbase product lead Zach Abrams and backed by a roster of roughly 140 partners that reads like a who’s-who of tech and finance: Google, Samsung, IBM, Coinbase, Solana, BlackRock, Standard Chartered, US Bank, American Express, BBVA, Visa, Mastercard, BNY and Stripe. Pitched as “a new stablecoin for global money movement… built for the internet economy,” it is set to go live later this year.

The ambition is enormous; so is the incumbency it must overcome. Stablecoin supply remains extraordinarily concentrated: on Artemis data, USDT (~$185B) and USDC (~$76B) together account for the overwhelming majority of the ~$295B+ tracked, and even well-funded fintech entrants remain small — PYUSD sits near $2.8B, Ripple’s RLUSD near $1.6B, USD1 near $4.2B. Open USD would launch into the low end of that distribution. What makes it different is distribution: a consortium spanning card networks, banks and Big Tech could route real-world payment flow to a stablecoin from day one, which is exactly the “monetization model” fintechs have been circling. It is also the clearest sign yet that stablecoins have become table stakes — the same week, Standard Chartered opened direct USDC minting/redemption for institutions via Circle, and PayPal moved PYUSD to native issuance on Polygon.

Charts of the Week

Other Notable News

• DTCC began limited production trades of tokenized Russell 1000 equities, ETFs and US Treasuries in July, backed by 50+ firms (BlackRock, Goldman, JPMorgan, Circle, Ondo), with a full launch slated for October; unlike Robinhood’s synthetic model, DTCC tokenizes assets already in custody, so the tokens carry actual legal ownership

• MiCA’s transitional period closed on July 1, locking Binance out of the EU after it withdrew its Greek application on June 24; capital is flowing to licensed operators, underscored by SBI’s ~$289M acquisition of Japanese exchange Bitbank — a nine-figure purchase of “permissions”

Thanks for reading! Go deeper on any story above with Artemis Analyst — our new AI analyst built on Artemis's institutional data. Ask it anything ("compare Kalshi vs. Polymarket volume," "chart spot BTC ETF flows") and get data-backed answers, comps, and charts in seconds – right in the Terminal.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

Risk assets sold off hard this week. The mid-June bounce on US-Iran de-escalation had already faded. Bitcoin slid below $60,000 on Thursday, June 25, for the first time since 2024, opening near $60,983 and trading down to roughly $59,300 intraday. Ethereum falling in step from about $1,620 toward the mid-$1,500s. The selling was mechanical as much as macro: spot bitcoin ETFs bled for 6 consecutive weeks. The lone exception was DeFi: AAVE ripped higher on a fresh Standard Chartered initiation with a $3,500 by 2030 target, Aave V4 traction with deposits past $200 million, and USDT deposits flowing back into the protocol, even as the rest of the screen turned red.

DeFi stood alone: AAVE (+30.18%) and SOL (+3.49%) were the only names in the green, while SKY (-14.06%), HOOD (-8.75%) and COIN (-8.70%) lagged, with NVDA (-8.62%) and CRCL (-8.30%) close behind. Unlike last week, AI and semis offered no cover (NVDA -8.62%, QQQ -4.60%) and gold slipped (GLD -3.48%); only the Dow (DIA +0.43%) and Micron (MU -0.15%) finished near flat. The basket averaged -3.10% on the week, median -3.64%.

Today We Highlight:

• Bitcoin breaks $60K as spot ETFs bleed for 6th consecutive weeks

• Strategy’s treasury sinks roughly $13.3B underwater, hits a 23-month low, and the repair job drags on

• Robinhood closes an upsized $2.2B zero-coupon convertible, raising cheap capital into the teeth of the selloff

Bitcoin breaks $60K as spot ETFs bleed for 6th consecutive weeks

The headline number is simple: bitcoin traded below $60,000 on Thursday for the first time since 2024.

US crypto ETF flows have flipped from bid to bleed. Net outflows ran a sixth straight week, with roughly $227 million out in the latest week, and the damage runs deeper than the weekly tape: back-to-back record outflow streaks in May and June pulled an estimated $7.2 billion out, IBIT alone shedding about $3.3 billion, and tipped 2026 flows negative on the year for the first time. The 2024-25 institutional buyer has became a seller for now.

Strategy’s treasury goes underwater as the STRC repair drags on

Last week the story was STRC breaking its peg. This week it spilled over into the equity.

MSTR fell to its lowest level in nearly 23 months, with the stock testing the low-to-mid $90s intraday and printing into the $80s on the worst sessions. The reason is arithmetic: Strategy holds 847,363 BTC bought for about $64.10B at an average cost near $75,651 per coin.

With bitcoin around $60K, that treasury is now roughly $13.3B underwater, the first time the core trade has been meaningfully offside since the model was built.

The critics got louder this week, as STRC came under immense pressure (Cash Reserves to USD coverage roughly sits around 9.8 months at point of writing). Peter Schiff escalated his attack, framing the STRC structure as a Ponzi, while CryptoQuant's CEO argued Strategy should halt bitcoin buys outright and rebuild cash. The slide traces back to the company's roughly $1.5 billion convertible-note buyback in May. With a software business that covers only a fraction of more than $1.2 billion in annual preferred-dividend obligations, the funding gap is bridged almost entirely by capital markets (selling ATM shares).

Robinhood closes a $2.2B zero-coupon convertible into the selloff

The contrast of the week: while crypto-native balance sheets delever, Robinhood walked into the convertible market and walked out with $2.2B at a 0.00% coupon. exercised the $200M greenshoe, and closed the upsized deal June 25, with about $290M earmarked for buybacks and $123.2M for capped calls that lift the effective conversion price to $174.42. This effectively push the no-net-dilution threshold to roughly $237.85, or about $304 after the repurchase.

Shares dipped a reflexive 4% on dilution worries, but a zero-coupon convertible is essentially free optionality financing. Robinhood is using it opportunistically rather than out of need: Truist reiterated a Buy with a $100 target, citing record June volumes in equities, options, and prediction markets, with crypto the lone soft spot. Raising long-dated, zero-cost capital into a risk-off tape is a move only platforms with real balance-sheet credibility can pull off right now

Charts of the Week

• Prediction Markets continue to hit ATH in trading volume driven by World Cup.

• RWA perp volume continue to increase

Other Notable News

• The Senate passed the 21st Century Road to Housing Act on June 22, which bans the Federal Reserve from issuing a retail CBDC through 2030

• The DOJ seized infrastructure tied to Huione in a crypto money-laundering action

• Binance will suspend most EU services from July 1 after withdrawing its Greek MiCA application on June 24, and is now pursuing a license in France; funds remain withdrawable and ESMA has told unauthorized providers to stop onboarding EU clients

• BofA changed its base case to three quarter-point Fed hikes in 2026, with FedWatch pricing a 60.7% chance of a hike by October

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (COIN segment revenue and pre-IPO perps volume, spot BTC ETF flows, HYPE fees and buybacks) or pull live numbers straight into your models with =ART() in Excel/Google Sheets.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

We recently hosted a Artemis’ x DormDAO Quant Blockchain Competition, where teams chose one of two research tracks: build a systematic crypto factor strategy or design a prediction market strategy.

It was to reward rigorous research, clear reasoning, and thoughtful strategy design.

Our winner’s from SMU (@smu_blockchain), @Xynersrn and @kangnuza, built a two-layer quant strategy: first, a BTC regime filter decides whether the market is worth taking risk in; then, a cross-sectional model ranks a basket of crypto assets and crypto-linked equities using momentum and funding signals.

The result is a strategy that spends most of its time in cash, but concentrates capital when both the market regime and asset-level signals line up.

Without further ado, here is the winning memo from our Quant competiton.

Abstract

Two layers, one decision per week. Layer 1 (a 5-factor BTC composite) decides whether to be in the market. Layer 2 (a 2-factor cross-sectional ranking on 7 Hyperliquid perps) decides what to hold. The strategy is flat 83% of the time and concentrates capital in the windows where both layers agree.

Over January 2022 through May 2026 this posts Sharpe 1.31, max drawdown -27.2%, and 5.63x final equity. Net of Hyperliquid fees and tiered slippage: Sharpe 1.27, 5.33x. The strategy beats BTC buy-and-hold (1.93x, -64.3% DD) and an equal-weight alt portfolio (4.41x, -66.6% DD) on every metric while spending only 17% of weeks deployed.

Net of transaction costs (Hyperliquid taker fees + tiered slippage modelled per-rebalance): Sharpe 1.27, 5.33x, 47.0% annual return. Cost drag is 3.1% of Sharpe and 5.3% of final equity.

Performance metric convention. Throughout this report, annualised return is geometric CAGR

((final/initial)^(52/N) − 1) and Sharpe is CAGR / (σ_weekly × √52). The textbook

arithmetic-mean Sharpe is slightly higher because variance drag pushes geometric below arithmetic for high-vol return streams; we report the CAGR convention, so all numbers tie back to the final equity figure.

1.2 Architecture in One Picture

T-1 lag on every signal. Weekly rebalance on Friday close. Both layers were optimised independently before being combined.

2. Why Two Layers

Altcoins are levered bets on Bitcoin. The correlation is structural: when BTC trends down, alts get crushed regardless of individual fundamentals. A pure cross-sectional ranking of alts would still hold positions through bear markets and suffer catastrophic drawdowns, our equal-weight alt control portfolio finishes at 4.41x but takes a -66.6% drawdown along the way.

The regime gate is not a market-timing signal. It does not call tops or bottoms. It is a blunt filter that asks: is the macro environment favourable for taking alt risk? When the answer is no, the strategy steps aside.

This produces two complementary edges:

• Regime timing: avoiding the -64% drawdowns that come from being long during bear markets.

• Cross-sectional selection: we pick the strongest alts within each BULL window.

Neither alone produces the full result. The regime gate applied to BTC alone (long BTC during BULL, cash otherwise, 2020 to 2026) returns 3.72x at -47% DD; better risk-adjusted than BTC buy-and-hold but well short of what the alt layer adds. The alt engine without the gate is the equal-weight alt portfolio (4.41x, -66.6% DD). Stacked together, they produce 5.63x at -27.2%. The gate routes capital into the top 3 ranked alts instead of BTC.

The 2022 stress test makes this concrete: BTC drew down 64%, the equal-weight alt portfolio drew down 66.6%, the strategy drew down 0%. The regime gate kept us flat for the entire year. Most of the strategy’s risk-adjusted edge over the benchmarks comes from this kind of avoided drawdown; most of the absolute return comes from the alt layer in BULL years (see §6.5 for the year-by-year split).

3. Layer 1, BTC Regime Gate

3.1 Signal Composition

The BTC composite is a weighted sum of five signals, each normalised to 0-100 via a rolling 2-year min-max:

The 2-year rolling normalisation is non-negotiable; full-sample normalisation would leak future highs and lows into historical scores. The trade-off is a 104-week warmup; the integrated backtest starts in 2022, safely past it.

3.2 T-1 Lag

The regime decision for the coming week uses only data available at the prior Friday’s close. This applies to every signal before classification, every price before entry, and every factor score before ranking. A strategy cannot trade Friday’s close on Friday’s data.

3.3 Classification

The NEUTRAL band prevents whipsaw at the boundaries. When the score hovers, the strategy waits for conviction rather than flipping.

3.4 Threshold Choice

The shipped BULL threshold is 60. Sensitivity testing across the full sample:

Threshold 55 produces the highest in-sample Sharpe (1.46), but at a wider drawdown (-35.1% vs -27.2%). We ship 60 deliberately, not because it is the Sharpe peak but because:

1. Drawdown control matters more than the extra 0.15 Sharpe for a strategy positioned around risk discipline.

2. Walk-forward conservatism. The training-window optimum was 50 (Sharpe 1.25); its OOS Sharpe of 2.07 came with -33.1% DD. Picking the in-sample optimum would be over-fitting.

3. The relationship is well-behaved across 50-60. Sharpe is comparable; only at 65 does the gate become too restrictive and Sharpe collapse to 0.83.

We are explicitly not running at the in-sample Sharpe peak.

3.5 Regime Distribution

Two windows matter, and they give slightly different distributions:

The integrated subset is more BEAR-heavy because it excludes the late-2020/2021 bull run and includes the 2022 bear plus the 2025-26 BEAR stretch. In both windows the strategy is flat during BEAR and NEUTRAL , 83% of the integrated backtest (51% BEAR + 32% NEUTRAL), and 82% of the full diagnostic window. BULL weeks (17-19%) are the only weeks capital is deployed.

3.6 BTC-Only Validation and Design Evolution

As an intermediate check, we tested the gate on BTC alone, long BTC during BULL, cash otherwise, over Jan 2020 → May 2026. Three regime variants and the buy-and-hold benchmark:

Option B matches BTC’s Sharpe (0.77 vs 0.77) at less than half the drawdown (-47% vs -77%). It does not match BTC’s absolute return (3.72x vs 11.24x); that gap is exactly what the alt layer closes in the integrated strategy.

The ETF Inflows signal was originally included at 20% weight but removed on May 5, Option B Sharpe rose from 0.64 to 0.77 on removal. The signal’s short history (Jan 2024+) prevented the 2-year rolling normalisation from working.

4. Layer 2 , Alt Factor Engine

4.1 The Two Active Factors

We began with five factors. Two remain , revenue growth and activity momentum were removed on May 7 after factor attribution showed each contributed +0.01 Sharpe. They had Artemis on-chain data for only 2 of 7 assets (SOL, HYPE) and added no cross-sectional differentiation. Open-interest confirmation was planned at 10% weight but Hyperliquid only exposes current OI snapshots, not historical series.

Both factors use cross-sectional ranking: score = 1.0 − (rank − 1)/(n − 1), where n counts only assets with real data. Assets without data on a factor receive neutral 50, neither benefit nor penalty. The model degrades gracefully: when funding is silent across the universe, ranking falls back to momentum-only.

Funding rate. Crypto-native, not in the Fundamentals 1 factor set. Negative funding means the marginal trader is short and paying a premium; positioning extremes tend to revert.

HL fundingHistory returns data from May 2023 onward for SOL/BNB/HYPE and from January 2026 onward for XMR. Bybit linear-perp funding fills each token’s pre-HL window via bybit_funding_pull.py, so SOL, BNB, and XMR carry real funding signal across the full backtest. HYPE is silent before its Dec 2024 TGE (handled by the phantom-pick gate, §5.4).

After splicing, every token in the universe registers nonzero funding in every week post-May-2023 except HYPE pre-TGE; the cross-sectional rank is well-populated whenever the strategy is active. Equity perps (COIN, HOOD, CRCL) carry HIP-3 funding from their respective HL listing dates forward; pre-listing equity weeks score neutral 50 on funding, since no cross-venue equity-perp proxy exists.

Price momentum (7-week). Selected through a grid search across {2, 3, 4, 5, 6, 7, 8, 10}-week windows. The 7-week window dominates by a clear margin:

Marginal Sharpe contribution: -0.35 (removing momentum drops Sharpe from 1.31 to 0.96). It is the dominant factor.

Factor interaction. When funding is silent (most weeks), momentum provides the only cross-sectional differentiation. When funding fires, the combined signal is stronger than either alone. The shipped model (Sharpe 1.31) clearly beats momentum-only (1.18) and funding-only (0.96).

4.2 Portfolio Construction

Every BULL week:

1. Rank all 7 assets by composite alt score (0.45 × funding + 0.55 × momentum)

2. Select top 3 (or fewer if fewer have valid scores)

3. Weight by signal strength: w_i = score_i / Σ top_3_scores

4. Cap any single asset at 40%, redistribute excess to the uncapped survivors

5. Apply leverage by BTC conviction:

6. BTC ≥ 70 → 2.5x

7. BTC 60-70 → 1.5x

Why these parameter choices. Each is a tuned design decision:

• Top 3 selection. Top-1 concentrates risk in a single name; top-5+ on a 7-asset universe selects almost the whole investable set and dilutes the cross-sectional signal. Top-3 keeps differentiation while still allowing diversification across the typical 5-7 available names.

• 40% single-asset cap. With top-3 and signal weighting, an extreme score distribution can produce raw weights as high as ~70% on the best name. The 40% cap floors the second and third positions at real weight, preserving diversification benefit. We tested removing the cap (concentration up to 70%) and Sharpe dropped. The cap is not just defensive; it is positive-EV.

• Leverage tiers (1.5x / 2.5x at the 60 / 70 boundary). Two tiers keep the model interpretable.

The 60 boundary is the BULL classification threshold; the 70 boundary marks high-conviction BULL where adding leverage is risk-justified. We tested continuous leverage scaling (BTC score → leverage as a smooth function) and discrete tiers performed comparably with far less complexity. Leverage above 2.5x produced larger drawdowns without proportional return improvement.

• Friday rebalance. HL funding settles on a 8-hour cadence and the week-end Friday close is the natural alignment point for weekly factors. Monte Carlo with Mon-Thu rebalance days (§6.3) confirms the strategy is not dependent on Friday; it works across all weekday rebalance points, with median Sharpe similar across days.

4.3 Removed and Why

• Revenue growth , +0.01 Sharpe delta. Data for 2/7 assets. Removed May 7.

• Activity momentum , +0.01 Sharpe delta. Data for 2/7 assets. Removed May 7.

• OI confirmation , never built. HL provides only current snapshots, not history.

• Short overlay (BEAR). Tested twice. Original (May 7) vs 1.13 baseline: Sharpe 0.48,

DD -75%. Re-tested May 10 vs current 1.31 baseline: bottom-2 short → Sharpe 0.10, DD -86.1%, 1.38x. Top 2 short → Sharpe 0.05, DD -81.7%, 1.18x. Both destroyed capital. The factor model identifies hated, oversold assets. In bear-market rallies, those are exactly the assets that bounce hardest. Ranking for longs does not invert to ranking for shorts. Permanently rejected.

5 Investable Universe

5.1 Selection Criteria

Two hard constraints from Artemis: (1) listed on Hyperliquid with active perp markets, (2) Artemis price data coverage. Beyond that, we wanted assets where the factor model could rank effectively; usable funding history, a clear value-driver story, and enough cross-sectional diversity that the top 3 selection isn’t picking among near-duplicates.

We deliberately kept the universe compact (7 assets) for three reasons. First, every asset must clear a real value-driver bar; we didn’t want to pad the count with minor listings the model can’t evaluate honestly. Second, a smaller universe lets each name carry real weight in the cross-sectional rank rather than diluting signal across many similar tokens. Third, with a 40% concentration cap and top 3 selection, there’s no operational benefit to a 15-asset universe; the extra asset is rarely picked.

The active count varies from 3 (early 2022: SOL, BNB, HOOD) to 7 by December 2025. During BULL weeks the strategy actually trades, 5-7 assets are available, the flat 2022 period predates most BULL weeks, so the strategy never trades on the smaller set.

5.2 Per-Asset Rationale

The 7 assets span six distinct value-driver categories. This matters: a cross-sectional ranking model only adds value when the inputs have meaningfully different return drivers. A universe of seven L1 alts would mostly produce correlated picks; a universe with structural variety lets the factor model differentiate during real regime shifts.

SOL, L1 protocol token. Leading alt L1 by on-chain throughput and ecosystem breadth. Artemis provides full coverage (fees + DAU) , one of only two assets with usable on-chain data. Price history spans the full backtest. Canonical “alt L1 beta” position.

HYPE, DEX token (Hyperliquid native). The leading perps DEX by volume , a deliberate venue bet.

HIP-3 equity perps are live and HIP-4 prediction markets are on the roadmap. Artemis covers fees and DAU. TGE’d 29 Nov 2024; gated before that date. We carve DEX out from L1s because HYPE’s value driver is venue fee capture, not L1 settlement throughput.

BNB, CEX token. Value drivers are Binance ecosystem flows (burns, launchpad, fee discounts), not on-chain BNB Chain activity. We tested including BNB Chain metrics and Sharpe collapsed (1.08 →

0.59). BNB competes on price + funding only; this is the empirically defensible specification.

XMR, Privacy coin (diversifier). Structurally different holder base and use case from other alts. No on-chain data is possible (shielded chain). HL only listed XMR perps on 2026-01-16, so funding is Bybit-spliced for the ~140 pre-HL weeks (the same splice methodology is applied to SOL and BNB for the ~70 pre-May-2023 weeks where HL has no fundingHistory data; see §5.4). The XMR splice is signal-critical: it lets XMR be picked in 9 of 38 BULL weeks (24%) instead of permanently scoring neutral-50 on funding.

COIN, CEX equity. Coinbase, largest US-domiciled crypto exchange. Quarterly revenue from Artemis (10+ quarters). Fixed-cost business provides revenue-leverage beta to crypto volume. HL HIP-3 from 25 Nov 2025; yfinance backfills pre-listing price.

HOOD, CEX equity (retail brokerage). Robinhood; picks up broader retail risk-on flow beyond pure crypto-native channels. Crypto revenue ~40-50% of total during bull cycles. HL HIP-3 from 26 Nov 2025.

CRCL, Stablecoin equity. Circle (USDC issuer). Revenue = float × interest rates , the only asset with a macro driver uncorrelated to “crypto goes up.” IPO’d 5 Jun 2025; gated. Quarterly history too short (2 quarters) for ranking , competes on price + funding for now.

The construction summary:

Diversity is measured, not asserted. The pairwise correlation matrix of weekly returns over the full backtest:

The off-diagonal average is 0.34. Within-category averages are higher as expected (token perps 0.35, equity perps 0.58). With the six-category split above, the only within-category pair is COIN-HOOD (0.64); excluding that, the strict cross-category average is 0.34, and the token × equity cross-block average is 0.28 , token perps and HIP-3 equity perps are moderately correlated in weekly returns. This is exactly what a cross-sectional ranking model wants: when the token sleeve and equity sleeve are picking among genuinely different return streams, top-3 selection is optimising over real cross-sectional information rather than near-duplicates.

Caveat, survivorship bias. Every asset in this universe survived 2022 to 2026, and most performed strongly: SOL roughly 20x’d from its 2022 low, HOOD and COIN rode the crypto-equity recovery, HYPE rallied sharply post-TGE. We did not select these names at random from HL’s full listing; they were chosen because they have recognisable tickers, liquid markets, and a clear value-driver story. A universe constructed with the benefit of hindsight will always make any ranking model look better than it would have in real time.

Past performance does not guarantee future results: the factor relationships that held over this window may not hold over the next cycle, and the assets that dominated this backtest may not dominate the next. This is the single largest source of uncertainty between backtest and live performance, and we treat it as the dominant risk in §8.

5.3 Universe Table

5.4 Special Cases

• Phantom vs venue-mismatch. Only HYPE (gated before 2024-12-06 TGE) and CRCL (gated before 2025-06-06 IPO) physically did not exist at some point during the backtest; picking them pre-existence would be a lookahead error. The other five assets traded on other venues before their HL listings; we treat those as venue-mismatch (defensible with backfilled prices), not phantom. An earlier blanket HL-listing gate was abandoned May 9 because it conflated the two cases.

• BNB on-chain exclusion. BNB Chain metrics are available under Artemis ID bnb, but including them in cross-sectional ranking degraded Sharpe from 1.08 to 0.59 on the earlier baseline. BNB is an exchange token; its value drivers are CEX burns, launchpad allocations, and fee discounts, not on-chain BNB Chain activity. The model treats BNB as competing on price + funding only.

• Bybit funding splice (SOL, BNB, XMR). HL fundingHistory returns data from May 2023 onward for SOL/BNB/HYPE and from January 2026 onward for XMR. Bybit linear-perp funding fills each token’s pre-HL window via bybit_funding_pull.py (SOL/BNB ~70 weeks, XMR ~140 weeks). The XMR splice is signal-critical (XMR is selected in 9 of 38 BULL weeks, all inside the Bybit-only window). The SOL/BNB splice is precautionary: the SOL/BNB Bybit window (Jan 2022 → Apr 2023) is entirely BEAR/NEUTRAL in this backtest, so it affects zero picks, but we keep it for methodological consistency (one principled rule: “HL where available, Bybit as cross-venue proxy where not”) and to avoid having to defend a cherry-picked splice scope. Within the overlap window (post-May-2023), HL is primary; Bybit is used only where HL has no data.

• Equity perps as crypto-native assets. COIN, HOOD, CRCL are crypto-native businesses whose quarterly revenue tracks industry cycles. They provide equity exposure within the same execution venue as token perps; no separate brokerage, no equity-market hours constraint, funding mechanism identical to tokens.

• BTC as a tradeable position, tested and rejected (May 10). Adding BTC as an 8th asset dropped Sharpe from 1.31 to 1.13 and equity from 5.63x to 4.41x. BTC was never selected in any of 38 BULL weeks; risk-on regimes favour higher-beta alts on both factors. Adding BTC still hurts performance because it shifts the cross-sectional normalisation denominator. BTC’s informational value is as a regime gate, not a portfolio position.

6. Validation

6.1 Walk-Forward (Out-of-Sample)

The BULL threshold was optimised on 2022 to 2023 and tested on 2024 to 2026, with all other parameters held at shipped values.

Train-window optimiser chose threshold 50 (looser than shipped 60). The test-window Sharpe of 2.07 is not strong OOS validation; the test window contains 65 of the backtest’s 104 lifetime BULL weeks, making it structurally the easier half. The walk-forward shows that a threshold fit on a low-BULL window generalises directionally (Sharpe stays strongly positive), but the magnitude of the test result is driven by the 2024 to 2025 bull market, not by the threshold choice. We ship 60, which is more conservative than the train-window optimum of 50.

6.2 Transaction Costs

Hyperliquid taker fees (0.035% per notional) plus tiered slippage (0.02% for <$50K, 0.05% for $50K-$200K, 0.10% above). Costs charged on rebalance turnover only, not on static holds.

Low turnover keeps drag manageable. Average weekly turnover is 9.6% of portfolio value (including flat weeks). On traded weeks only, turnover runs ~57%: a full entry or exit turns over 100%, while weeks where the top-3 ranking is unchanged turn over 0%. The 1.8pp annual return drag is far smaller than a naive full-round-trip-every-week model would estimate.

6.3 Monte Carlo Stress Testing

250 backtest runs with randomised perturbations:

• Rebalance day: Mon-Thu (shipped: Fri)

• BULL threshold: ±3 points (shipped: 60)

• 1-2 random asset dropouts per run (shipped: 7)

24.8% of runs exceed Sharpe 1.0; 82.0% exceed 0.5. The shipped Sharpe of 1.31 sits in the upper tail of this distribution. The gap between median (0.77) and shipped (1.31) indicates genuine specification sensitivity; the chosen configuration sits in the upper end of what was achievable. Dropping 1-2 of 7 assets at random is mechanically the heaviest perturbation (removing a high-contributing name like SOL or HOOD materially shrinks the cross-section available for ranking), though we have not formally decomposed the three perturbation sources. The strategy stays profitable across most configurations, but the shipped result is an upper-tail outcome, not the central expectation.

6.4 Parameter Optimisation Sweep

The momentum window and factor weights were selected through a 112-configuration grid search: 7 momentum windows × 4 thresholds × 4 weight combos {40/60, 45/55, 55/45, 60/40}. The full grid is at results/integrated/optimization_sweep.csv.

The sweep’s Sharpe-max configuration is 7-week momentum, 45/55 weights, threshold 55 (Sharpe

1.46, DD -35.1%). Shipped is the same momentum and weights but threshold 60 (Sharpe 1.31, DD -27.2%), chosen for drawdown control and walk-forward conservatism (see §3.4).

6.5 Sub-Period Breakdown

The full-sample Sharpe of 1.31 averages over a window with very different sub-periods. Year-by-year:

Year return (YoY) is the realised year-on-year equity change (End equity / prior year’s End equity − 1), so the yearly returns compound exactly to the headline 5.63x final equity. Per-year Sharpe is computed on that year’s weekly returns under the same convention as §1.1.

2024 is unambiguously the dominant year: 24 of 38 lifetime BULL weeks, +149.6% return, Sharpe 3.17, and the entire -27.2% peak drawdown sat within it. This concentration is a real concern and we do not hide it: a strategy that posts most of its excess return in one year is heavily exposed to that year being repeatable.

That said, excluding 2024 the strategy still posts Sharpe 1.18 and 2.26x equity over the remaining 175 weeks (combining 2022, 2023, 2025, 2026 YTD). The 2025 sub-period in particular , Sharpe 1.77 over a different sub-cycle than 2024 , provides a second positive observation rather than a single one. The strategy is concentrated, not single-window. Whether 2024’s magnitude generalises to future cycles is unknowable; that the framework produces positive risk-adjusted returns across multiple sub-periods is the most we can claim from in-sample data.

7. Factor Attribution

Each factor was zeroed individually and the backtest re-run; the remaining factor renormalised to 100%.

Momentum at 7 weeks is the dominant factor: removing it drops Sharpe by 0.35. Funding is secondary but still matters removing it widens drawdown from -27.2% to -35.4%. Both contribute materially.

The momentum-only model (Sharpe 1.18, -35.4% DD) shows that momentum alone carries most of the signal but loses funding’s diversifying effect. The funding-only model (Sharpe 0.96, -23.3% DD) shows that pure positioning ranking is positive risk-adjusted but lower equity (4.11x vs 5.63x).

Both factors matter in every specification tested, though their relative weight shifts with the momentum window; at shorter lookbacks funding dominates, at longer windows momentum leads. The qualitative conclusion is stable across baselines.

8. Critical Evaluation

8.1 Data Limitations

• On-chain coverage is narrow. Only SOL and HYPE have Artemis fees/DAU. Privacy coins (XMR), exchange tokens (BNB), and equity perps don’t have on-chain activity in the sense Artemis measures. The revenue/activity factors were removed precisely because of this gap. Structural to the crypto data environment, not a fixable pull issue.

• No historical OI from Hyperliquid. Planned 10% weight, blocked by platform. Factor is designed and ready if HL adds historical OI.

• Short backtest window. Jan 2022 → May 2026, ~4.25 years, one crypto cycle. Bounded by HL’s history (perp dex mid-2022, fundingHistory mid-2023). One-cycle validation carries uncertainty about structurally different regimes.

• Survivorship bias. Discussed at length in §5.2 , every asset in the universe survived 2022 to 2026 and most performed strongly. We do not model delistings or death events. The relationships that held over this single cycle may not hold over the next, and the gap between backtest and live performance is almost always negative. This is the dominant source of risk-of-being-wrong in the backtest, more than any specification choice.

8.2 Model Risk

• Specification sensitivity. The Monte Carlo distribution puts the shipped configuration in the upper tail (Sharpe 1.31 vs median 0.77). The walk-forward and full sensitivity suite partially mitigate this, but the gap is a real signal that specification matters. We have six tuned choices (BULL threshold, factor weights, momentum window, top-N, cap, leverage tiers) on a ~4-year backtest; within defensible range but worth flagging.

• BTC decorrelation. The architecture assumes alt returns are levered BTC returns during BULL and levered BTC losses during BEAR. This relationship has held across multiple cycles but it is empirical, not law.

• Funding mechanism change. The funding factor depends on Hyperliquid’s specific 8-hour cadence and 0.01% per-period cap. A change to the mechanism would alter signal properties with no historical precedent to recalibrate.

• Equity perp regulatory risk. COIN, HOOD, CRCL trade on HL’s HIP-3 dex. Regulatory action against equity perps would shrink the universe to 4 crypto-native assets and reduce cross-sectional selection.

• Static universe composition. The backtest uses a fixed 7-asset universe. In practice, perps delist, liquidity migrates, and new listings create opportunities. A static universe embeds an implicit survivorship benefit, assets that would have been delisted or become untradeable are never removed. Live operation would require periodic universe review, and the judgment calls involved in adding or removing assets are a source of divergence between backtest and live performance that the backtest does not capture.

8.3 Tested and Rejected

Every material design path explored and abandoned, with dates and metrics:

8.4 Forward-Looking Risks

Three structural changes could break this strategy:

1. HL funding mechanism change alters the signal with no historical precedent.

2. BTC-alt decorrelation, the gate loses its rationale; strategy is flat through alt rallies that occur outside BTC BULL.

3. Equity perp regulatory action, universe shrinks to 4 crypto-native assets.

None of these are priced into the backtest.

9. Differentiation vs Artemis Fundamentals 1

Fundamentals 1 is the natural reference: a long-short, vol-targeted, ~24-asset factor strategy with reported Sharpe 1.73. Our 1.31 is lower in absolute terms, but achieved with deliberately different design choices that are worth being explicit about:

The trade is intentional: we accept a lower Sharpe for a simpler, long-only, smaller-universe strategy that is easier to operate, easier to interpret, and that avoids the implementation burden of long-short rebalancing across 24 assets. The funding-rate factor is the qualitative differentiator: it is crypto-native, picks up positioning information that price-only signals miss, and is not part of the Fundamentals 1 set. The equity-perp inclusion is the structural differentiator; it lets us trade crypto-correlated equity exposure on the same venue as the underlying tokens, without the equity-market-hours and brokerage friction TradFi factor strategies face.

10. Reproducibility

10. 1 Quick Start

pip install -r requirements.txt python strategy/alts/backtest.py
macOS users: substitute python3 for python and pip3 for pip — recent
Full source at https://github.com/ImNuza/artemis-juara

The integrated backtest reproduces all headline numbers. Reads from data/alts/ and data/btc/, applies the Layer 1 regime gate, runs the Layer 2 factor ranking, and outputs the equity curve and performance metrics.

10. 2 Analysis Suite

python strategy/alts/walkforward.py # §6.1 python strategy/alts/cost_model.py # §6.2 python strategy/alts/monte_carlo.py # §6.3 python strategy/alts/sensitivity.py # §3.4 python strategy/alts/factor_attribution.py # §7 python strategy/alts/momentum_sensitivity.py # §4.1 python strategy/alts/position_log.py # regen docs/position_log.md

10.3 Data Refresh

python strategy/data_pull/hl_data_pull.py # token perps + funding python strategy/data_pull/pull_hl_equities.py # HIP-3 equity perps python strategy/data_pull/pull_equities.py # yfinance pre-listing backfill python strategy/data_pull/artemis_data_pull.py # Artemis fees + DAU python -m strategy.btc_regime.run # regenerate BTC regime CSV

10.4 Code Structure

strategy/
├── btc_regime/ # ImNuza: BTC regime gate
├── alts/ # Xyners: integrated backtest + analysis
└── data_pull/ # data fetch scripts
data/
├── btc/ # BTC regime inputs
└── alts/ # alt prices, funding, fees, regime CSV
results/
├── btc_regime/ # BTC regime outputs
└── integrated/ # integrated backtest outputs
docs # documentations

A complete week-by-week position log , every rebalance, weights chosen, leverage applied, BTC score, weekly return, is at docs/position_log.md.

Price source hierarchy. Hyperliquid is primary for every asset, we trade on HL, so HL’s mark/close is the correct fill reference. Token perps use the main HL dex; equity perps use HIP-3 from each asset’s HL listing date forward. yfinance is used only to backfill equity history before HL listing.

Phantom-pick gate. HYPE excluded before 2024-12-06 (TGE 2024-11-29). CRCL excluded before 2025-06-06 (IPO 2025-06-05). As they did not exist. All other assets traded on other venues before their HL perp listings.

Appendix A: Key Files

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions.

Risk assets round-tripped through the week. Bitcoin and ether had already been beaten down in early June as the US-Iran war and the threat to the Strait of Hormuz drove crypto into full risk-off, with bitcoin erasing all gains made since the start of the war and sliding below its pre-war levels around June 4. Sentiment then flipped: by June 16 both bitcoin and ether posted their strongest opening levels in about two weeks following news that the US and Iran were making meaningful strides toward a peace deal that would reopen the Strait of Hormuz, and as of June 17 bitcoin and ether were up 6.4% and 9.3% respectively versus a week earlier. The rally faded into Friday: the Fed under new Chair Kevin Warsh left rates unchanged on June 17 and signaled rate cuts are all but off the table for 2026, and a strengthening dollar pressured crypto, gold and silver lower, with bitcoin opening near $62,900 on June 19, down 2.4% on the day.

Brokers and DeFi led: HOOD (+17.3%), AAVE (+16.0%) and HYPE (+15.7%) topped the table, while MSTR (-6.3%), CRCL (-2.9%) and BTC (-1.0%) lagged. AI/semis were firm (TSM +9.7%, NVDA +2.8%, QQQ +3.3%) and gold was flat (GLD +0.2%) as the post-Fed dollar bid capped it.

Today We Highlight:

• SpaceX drives Pre-IPO trading; popular pre-IPO market Ventuals sunsets

• Canton announces $355 raise to grow its institutional-grade blockchain

• Strategy’s is in the midst of its worst depeg ever

SpaceX goes public, and Hyperliquid ran the unofficial IPO

The month’s marquee event: SpaceX sold roughly 555.6 million Class A shares at $135, raising about $75 billion at a ~$1.75 trillion valuation, marking the largest IPO in history. Its valuation is enough to make it roughly the seventh-largest US company, just above Tesla.

This year, a new class of market has been driving price discovery ahead of IPOs. Trade.xyz launched the SPCX-USDC pre-IPO perpetual on Hyperliquid on May 18 at a $150 reference price (a $1.78T implied valuation); it spiked to $216 within hours before settling at $202.89, up 12.7% on the day. By IPO week, SPCX accounted for roughly 30% of all HIP-3 trading volume on Hyperliquid, with aggregated open interest above $225M and more than $2.2B in cumulative volume. SPCX aggregated VWAP sat near $155, a 15% premium over the $135 IPO price, and printed near $172 on listing morning.

The pitch is that these synthetic markets price accurately: the earlier Cerebras pre-IPO perp closed within 3% of its Nasdaq open, versus ~35% spreads on traditional platforms, which is exactly the kind of performance that builds a reputation. Even NYSE/ICE chief Jeff Sprecher publicly called Hyperliquid “bigger than NASDAQ,” noting it’s run by just “11 people” (Coindesk).

The flip side of the pre-IPO boom is consolidation. Ventuals is the project behind the OpenAI and Anthropic perpetual markets on Hyperliquid, having facilitated over $650M in trading volume. On June 15 it is winding down and that its team will join another project building within the Hyperliquid ecosystem, and the team framed it as “one leg of the journey ends, and a new one begins”. Ventuals was one of the go-to markets for getting exposure to the equity of major private AI labs like OpenAI and Anthropic.

Ventuals went out having proven the demand: it generated more than $650 million in trading volume and raised over 500,000 HYPE through its vHYPE staking mechanism. The team also confirmed the points and referral programs are discontinued and that no Ventuals token will launch, since the wind-down removes any path to a value-accruing token. The bigger signal: TradeXYZ now accounts for nearly 97% of HIP-3 trading volume, making it the dominant operator in the category. For context on scale, Hyperliquid processed roughly $234 billion in perpetual futures volume over the past month.

Canton lands a $355M+ round as Wall Street picks an institutional chain

Digital Asset, the creator of the Canton Network, announced on June 11 a $355 million round led by a16z crypto, with participation from ABN Amro, the Abu Dhabi Investment Authority, Apollo, BNP Paribas, Citadel Securities, CME Ventures, Coinbase Ventures, HSBC, S&P Global, Tradeweb, Optiver and more than 20 other institutions. The round closed above an earlier $300 million target at a ~$2 billion valuation, and follows roughly $185 million raised over the prior 12 months (a $135M DRW/Tradeweb round in June 2025 and a $50M BNY/Nasdaq/S&P/iCapital extension in December 2025). a16z itself contributed about $100 million.

Canton is a public, permissionless Layer 1 with configurable privacy built for institutional finance, using Digital Asset’s Daml smart-contract language to enable tokenized-asset workflows while keeping transaction data confidential and the network now has more than 700 ecosystem participants. The raise lands in a heating institutional-chain race. It comes just after a16z closed a $2.2 billion fifth crypto fund, and alongside peers Stripe/Paradigm’s Tempo (reportedly $500M at a $5B valuation) and Circle’s Arc ($222M at a $3B valuation). Not everyone’s convinced: TD analyst Lance Vitanza has called Canton “a glorified database in the cloud” that isn’t consistent with bitcoin’s open, trustless, permissionless architecture.

Strategy’s STRC “Stretch” preferred breaks its peg

STRC, one of Strategy’s preferred equity instruments, traded this week near $82, 18% lower than its $100 par value. In our equities data, STRC sat pinned at a flat $100 through mid-April, last closed at par in mid-May, and has slid steadily since - ending June 18 at $88.59.

STRC is the centerpiece of Strategy’s funding machine. When it trades at or above $100, Strategy issues fresh STRC through an at-the-market (ATM) program and uses the proceeds to buy bitcoin; below par that channel becomes uneconomic, and the company has paused it. So the depeg directly throttles one of Saylor’s main levers for accumulating BTC.

The slide is partly self-inflicted: to fund STRC distributions, Strategy sold 32 bitcoin for about $2.5M in late May. This marked its first BTC sale since it began accumulating in 2022, rattling a market unused to Strategy ever being a seller. STRC then broke below $95 on June 3, which under Strategy’s February dividend framework triggers a recommended rate hike of at least 0.5% (~$53M/year of added cost). The dividend has been held at 11.5% for four straight months but is now widely expected to rise to at least 11.75% at the June 30 reset, and STRC is shifting to twice-monthly payments (first record date June 30, first payment July 15) in a bid to “stabilize price, dampen cyclicality, drive liquidity, and grow demand” (Strategy).

Strategy held 846,842 BTC as of June 14 - it bought 1,587 BTC (~$100M) that week, funded by $209M of common-stock ATM sales rather than STRC - but its legacy software business generates only ~$477M of annual revenue against more than $1.2B in preferred-dividend obligations, a gap bridged almost entirely by capital markets. STRC isn’t alone: the sibling $100-par STRF also sits below par (~$91), and rival Strive’s SATA preferred slipped under par too, prompting a move to daily dividends. Bears (Peter Schiff) are circling; bulls like Jesse Myers frame it as a leverage-driven liquidation cascade rather than a Terra/Luna-style break, arguing the fundamentals are unchanged and a June 30 dividend hike stabilizes it. This is a sobering reminder that a 12%-yielding “par” instrument is not a stablecoin. A few options present themselves to Strategy: sell BTC, sell MSTR, or skip STRC dividend payments. All eyes remain on Bitcoin’s largest treasury vehicle through this period of market tumult.

Charts of the Week

• Prediction markets trading volume rockets past $10B driven by World Cup mania and the New York Knicks first NBA Championship win in 53 years

• Agentic payments have begun to inflect

• NEAR Fundamentals have held strong amid mediocre price performance

Other Notable News

• Zelle steps into the remittance game with its own stablecoin (American Banker)

• Charles Schwab is looking to break into the prediction market space (WSJ)

• The Ethereum Foundation lost another leader as co-executive director Hsiao-Wei Wang resigned, following co-executive director Tomasz Stanczak’s earlier exit (Coindesk)

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (COIN segment revenue and pre-IPO perps volume, spot BTC ETF flows, HYPE fees and buybacks) or pull live numbers straight into your models with =ART() in Excel/Google Sheets.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

• Risk-off May: Five of seven factors were negative as BTC fell 6.5% and ETH fell 15.4%, reflecting broad crypto market weakness. Only Fundamental 1 (+8.7%) and Growth (+3.9%) held positive ground.

• Quality signals outperformed price signals: Both positive factors rely on on-chain activity metrics rather than price momentum. Momentum (-7.9%), SMB (-12.8%), and Stablecoin 1 (-10.3%), all price- or flow-based, underperformed meaningfully.

• XLM was the month’s breakout: Stellar Lumens surged ~52% in May, appearing as a top contributor across Growth, Fundamental 1, and as a painful short-side loss in Value and Momentum, making it the single most consequential asset across the factor suite.

• Large caps squeezed small-cap shorts: HYPE (+69.5%) and NEAR (+66.9%) surged, delivering SMB’s worst month of 2026. The factor’s short (large-cap) book bore the brunt, underscoring the concentration risk in thin crypto markets.

• Long-run edge remains intact: Fundamental 1 (1.63 Sharpe), Growth (1.54), and Momentum (1.29) continue to show strong risk-adjusted performance since inception, reinforcing the case for systematic factor exposure across crypto cycles.

Market Context

May 2026 proved a challenging month for systematic factor strategies, with five of seven factors posting negative returns amid a broad crypto drawdown. BTC fell 6.5% and ETH lost 15.4%, dragging market-cap-weighted exposure lower. The two standout performers were Fundamental 1 (+8.70%) and Growth (+3.89%), both of which isolate on-chain activity signals over price momentum, suggesting that assets with genuine protocol usage held up and in some cases rallied sharply versus the broader market. SMB was the worst performer (-12.76%): large-cap names like HYPE and NEAR surged unexpectedly, creating losses for the small-long/large-short construction. Momentum (-7.93%) and Value (-7.78%) gave back recent gains as the risk-off rotation compressed dispersion across the board. Stablecoin 1 (-10.25%) was hurt by adverse chain-flow reversals.

For a more in depth look into how each of the strategies were built, see our Crypto Factor Model Analysis, Fundamentals 1 strategy, and Stablecoins 1 strategy. For a complementary guide on reading through this report, see our factors guide.

Performance Summary

Market Risk Factor

Construction

Long-only portfolio of the top 10 assets by market cap, market cap-weighted, rebalanced weekly. Captures broad crypto market exposure similar to a crypto index.

Current Holdings

BTC (75.9%), ETH (12.2%), BNB (4.9%), XRP (4.3%), HYPE (0.8%), ZEC (0.4%), XLM (0.4%), CC (0.4%), ADA (0.4%), LINK (0.3%)

Performance Metrics

The Market Risk factor returned -6.53% in May, broadly in line with BTC’s decline. With BTC comprising ~76% of the portfolio, the strategy is effectively a leveraged bet on Bitcoin sentiment. ETH’s steeper -15.4% drop weighed on the remaining exposure, while small-weight holdings like HYPE (+69.5%) and ZEC (+59.8%) were too tiny to offset losses. The factor’s -30.85% YTD drawdown reflects the broader 2026 crypto bear phase, though the long-run annualized return of +10% since inception continues to reflect the market’s structural upward drift. Max drawdown of -52.4% since Jan 2022 is consistent with crypto’s historic peak-to-trough behavior.

Top 5 Winners & Losers for May

HYPE (+69.5%) and ZEC (+59.8%) were the portfolio’s top contributors in May, though their combined weight below 1% meant the impact on total return was minimal. BNB +11.5% at a 4.2% weight provided modest positive drag. The real story was the concentration risk: BTC (-6.5%) and ETH (-15.4%) together represent ~88% of the portfolio and both declined, while BCH fell 33.6%, an outsized move for a relatively illiquid holding. The winners/losers table highlights how, even in a down month, high-beta small-weight names can diverge dramatically from the overall portfolio trajectory.

Size Factor

Construction

Equal-weighted long-short factor: long the smallest 50% of eligible assets by market cap, short the largest 50%. Minimum 40 assets (20 per leg). Breakpoint: 50th percentile of market cap.

Performance Metrics

SMB delivered -12.76% in May, its worst month in 2026, as large-cap assets dramatically outperformed small caps. The factor shorts large caps and longs small caps, so HYPE (+69.5%), NEAR (+66.9%), and ZEC (+59.8%), all in the short (large-cap) leg, created severe losses that swamped gains on the long side. Structurally, this reflects a flight-to-quality dynamic common in bear markets: liquidity concentrates in the most well-known assets, punishing the small-cap long book. Despite May’s setback, the strategy’s annualized return of +8.7% and Sharpe of 0.47 since inception suggest the small-cap premium persists over time.

Top 5 Winners & Losers for May

INJ (+74.7%) and AKT (+61.1%) were the top contributors on the long (small-cap) side, reflecting strong token-specific catalysts. BCH shorting (+33.5%) also added value as that large-cap name sold off. The catastrophic losses came from the short book: HYPE (-69.5%) and NEAR (-66.9%) as shorts both surged, each carrying equal weight. The factor’s equal-weighting across 20+ names per leg means any outsized move in even one position has a material impact. The May episode underscores that SMB can experience large short-term reversals when market narratives sharply favor large-cap assets.

Value Factor

Construction

Equal-weighted long-short: long assets with the lowest Market Cap / Fees ratio (highest fundamental value), short assets with the highest MC / Fees ratio (most expensive). Minimum 30 assets (15 per leg).

Performance Metrics

Value returned -7.78% in May as several high-value (low MC/fees) long positions underperformed while some low-value shorts rallied. The factor longs assets trading cheaply relative to fees generated and shorts expensive ones, a sensible long-run signal, but subject to momentum reversals. Notably, the YTD return is still positive at +5.72%, and the all-time cumulative return of +36.8% is the strongest of the price-based factors. The May drawdown reflects temporary mispricing as investors bid up high-MC/fees assets (e.g., XLM, TON) in anticipation of future fee growth rather than current fundamentals.

Top 5 Winners & Losers for May

HYPE (+69.5%), NEAR (+66.9%), and AKT (+61.1%) powered the long book, confirming that some low-MC/fees assets delivered exceptional returns. CHZ (+32.0%) and OP (+23.2%) shorts worked as expected. The main drag was the short book’s reversal: XLM (-51.8%) and TON (-43.6%) were shorted as expensive assets but rallied hard, a reminder that sentiment can override fundamentals in the short run. MON long (-39.1%) and INJ short (-37.2%) also hurt, the latter particularly frustrating given INJ’s strong momentum simultaneously benefiting the Momentum factor.

Momentum Factor

Construction

Volatility-adjusted momentum: calculates 3-week rolling Sharpe-like score (mean return / std dev of daily return) for each asset. Long top 25% by filtered momentum, short bottom 25%. Equal-weighted, minimum 30 assets (15 per leg).

Performance Metrics

Momentum returned -7.93% in May as trend reversals hit both the long and short books. The strategy builds positions based on recent 3-week Sharpe-adjusted returns, making it vulnerable when markets abruptly change direction. INJ (+74.7%) was a standout long position that sustained its trend, but XLM reversed dramatically from the short book, surging 53% to become the factor’s biggest single detractor. At a YTD return of -12.23%, Momentum has given back gains from a strong 2025. Over the full period, however, it remains the second-best-performing factor at +50.2% annualized and Sharpe of 1.29.

Top 5 Winners & Losers for May

INJ’s +74.7% return as a sustained long position was the standout, carrying 5.8% average weight and driving meaningful positive contribution. HYPE (+57.6%) and NEAR (+54.4%) as short-lived momentum entries also added value. On the other side, XLM’s -53.0% surge from a short position was the single largest detractor: the asset had been flagged as a negative-momentum name but reversed sharply. ORCA (-26.3%), DEEP (-24.8%), and JUP (-24.1%) as long positions that faltered further compounded losses, suggesting momentum in mid-cap DeFi names broke down mid-month.

Growth

Construction

Equal-weighted long-short: composite score combining z-scores of 2-week trailing fee growth (pct change) and DAU growth (pct change). Long top 50% composite score, short bottom 50%. Eligibility requires DAU > 100 and weekly fees > $500. 30 assets (15 per leg).

Performance Metrics

Growth was one of only two positive factors in May, returning +3.89%. The strategy longs assets with accelerating fee and DAU growth and shorts decelerating ones, a signal that proved prescient in May’s selective environment. HYPE and XLM both featured as longs with genuine on-chain activity expansion, while the short book correctly identified slowing growth in ARB, BONK, and ZRO. The +2.35% YTD return and annualized +36.0% return with a Sortino of 3.16 make Growth one of the more risk-efficient factors in the suite.

Top 5 Winners & Losers for May

HYPE (+67.5%) and XLM (+66.4%) drove outsized gains on the long side, with both assets showing strong DAU and fee growth ahead of their price moves. ARB short (+35.4%), BONK short (+28.8%), and ZRO short (+26.6%) confirmed the factor’s identification of decelerating growth protocols. The losses came from JUP short (-40.9%), JUP’s activity growth re-accelerated unexpectedly, causing the short to lose significantly. ICP long (-27.4%), PENDLE (-25.9%), and STRK (-25.8%) also disappointed, with on-chain activity failing to translate into price outperformance in a broadly weak market.

Fundamentals 1

Construction

Equal-weighted long-short quintile portfolio: composite score combining rank z-scores of DAU growth, inverted active revenue share, revenue stability, and MC/fees mean reversion. Long top quintile (~12 assets), short bottom quintile (~12 assets).

Performance Metrics

Fundamental 1 was the top-performing factor in May at +8.70%, its best monthly return in 2026. The strategy’s composite signal, combining DAU growth, revenue quality, stability, and MC/fees mean-reversion, correctly identified assets with improving on-chain health. XLM’s positioning as a long based on MC/fees mean-reversion generated exceptional returns. The factor’s small universe (as few as 3 assets per leg in May) creates high concentration risk, which in this case worked in its favor. The annualized return of +54.4% and Sharpe of 1.63 remain the best in the factor suite since inception.

Top 5 Winners & Losers for May

XLM’s +73.6% return over two weeks as the top long position was the dominant driver; the asset scored highly on MC/fees mean-reversion as its ratio had compressed relative to its historical average. MON (+21.8%) also contributed positively as a one-week long. On the short side, NEAR (+11.8%), TAO (+10.0%), and ICP (+6.5%) all declined as expected. The main detractors were ADA long (-29.9%), where the signal misfired despite strong metrics, and SUI short (-25.4%) which rallied against the factor’s positioning. The small universe means each position carries 20% weight, amplifying both gains and losses.

Stablecoins 1

Construction

Equal-weighted long-short quintile portfolio: composite score combining rank z-scores of stablecoins flow. Long top quintile (~3-4 chains), short bottom quintile (~3-4 chains).

Performance Metrics

Stablecoin 1 returned -10.25% in May, its second consecutive negative month, bringing YTD losses to -11.96%. The factor tracks stablecoin inflows and outflows across chains, longing chains with net inflows (bullish signal) and shorting those with outflows. In May, the signal misfired as chains with expected outflows (SEI, APT) instead saw their native tokens rally. The annualized return of +12.6% and Sharpe of 0.37 reflect that this factor captures a real signal but with higher noise than the on-chain fundamental strategies. It also has the shortest track record in the suite at ~2 years.

Top 5 Winners & Losers for May

OP long (+32.7%) and MNT short (+23.7%) were the top contributors; both chains showed clear stablecoin flow dynamics that the signal correctly anticipated. TON short (+22.6%) and NEAR short (+11.8%) also contributed positively. The severe losses came from SEI short (-43.6%) and APT long (-41.9%): SEI experienced a native token rally despite stablecoin outflows, and APT’s stablecoin inflows failed to support its token price. ARB short (-22.7%) and SUI long (-13.3%) further compounded the negative return, suggesting stablecoin flow as a standalone signal had low predictive power for native token returns in May’s choppy environment.

Key Findings & Conclusion

May 2026 reinforced two durable lessons about systematic factor investing in crypto. First, on-chain activity metrics are more resilient than price-based signals in a risk-off environment. Growth and Fundamental 1 were the only two positive factors in May precisely because they measure what protocols are actually doing, not where their tokens have been trading. The remaining five factors, which rely on price, volume, or capital flows, all declined in a month when sentiment shifted faster than fundamentals. Second, single-name concentration risk is amplified in crypto’s thin market structure. XLM’s roughly 52% surge in May simultaneously drove the best returns in Fundamental 1 and Growth while punishing Value and Momentum shorts, illustrating how one asset can swing the outcome of multiple strategies at once. Looking across the full track record, the three highest-Sharpe factors (Fundamental 1 at 1.63, Growth at 1.54, and Momentum at 1.29) have all weathered periods like this before and continued compounding. The case for running a diversified multi-factor portfolio is exactly that no single month, and no single narrative, moves all seven strategies in the same direction.

If you have any questions, feel free to reach out to team@artemis.xyz or shoot us a DM on X.com at https://x.com/artemis

Summary: We believe that most investors view Robinhood (HOOD) as a cyclical retail brokerage that trades with Bitcoin. This narrow view misses that Robinhood is becoming a financial super-app for Gen Z and Millennials, the demographic we anticipate being on the receiving end of one of the largest intergenerational wealth transfers in U.S. history. Robinhood Gold is, in our view, poised to become the Amazon Prime of retail finance, turning subscription revenue into a flywheel that can make Robinhood higher quality, more recurring, and less cyclical over time. Prediction markets are an emerging new retail asset class — and Robinhood already has more than 20x the monthly active users of the next-largest distribution-native competitors like Polymarket and Kalshi. We believe asset per customers will keep growing due to Robinhood’s strong product velocity and foothold with Gen Z and Millennials, a demographic we expect to benefit from an impending intergenerational wealth transfer, positioning Robinhood as a winner of retail finance.

Intro

This memo is a joint perspective from Artemis and North Island Ventures (NIV). Artemis is a digital finance research firm focused on blockchain and equity assets. NIV is an NYC-based investment firm, focused at the intersection of blockchain, fintech, and AI.

Our shared view: Robinhood is misunderstood as a highly correlated bet on crypto and investors are missing that Robinhood is becoming a financial super-app benefiting from a generational wealth transfer and that HOOD should benefit from 2 catalysts in 2026: prediction markets and the mega-cap IPOs of SpaceX and potentially Anthropic and OpenAI.

We believe that most investors still file Robinhood under “retail brokerage” and as an asset that heavily correlates with Bitcoin.

We want to demystify this assumption: Robinhood is finally becoming uncorrelated with Bitcoin with a correlation of 0.41 most recently after spending most of 2026 >0.70. The street prices the equity as if it is structurally tied to options and crypto trading cycles. We think that is wrong, and we think the mispricing closes as the super-app thesis becomes increasingly relevant.

1. The intergenerational wealth transfer and super-app. The median Robinhood customer is 35 years old, a demographic poised to benefit from Boomer populations’ wealth transfer to Gen Z and Millennials in the coming two decades, which we expect to be one of the largest intergenerational wealth transfers in U.S. history. While Boomer balances at legacy incumbents are more than 20x larger than Robinhood’s median customer’s average balance of roughly $12K, we view Robinhood’s relatively young customer base as positioning Robinhood to have little in terms of a legacy book to defend as compared to incumbents. The “why now” is the super-app. Robinhood finally has the product suite across investing, retirement, savings, spending, and speculating products to absorb the capital potentially coming from the intergenerational wealth transfer.

2. Prediction markets as a new retail asset class. Event contracts traded on Robinhood went from 300M in Q1’25 to 8.8B in Q1’26 — a 30× jump in four quarters. We estimate that prediction market revenue scaled from ~$3M to ~$104M over the same period. This is one of the fastest-growing product lines Robinhood has ever launched, with major catalysts still ahead: the World Cup, US mid-term elections, a full NFL season, and Rothera, Robinhood’s CFTC-regulated vertically integrated exchange and clearinghouse, going live.

We can already see a massive spike in prediction market volume on Kalshi and Polymarket that we expect will likely show up in Robinhood’s Q2 and Q3 ‘26 reported numbers as well.

Both tailwinds are early. Neither is reflected in the current forward multiple.

3. The mega IPOs could drive retail engagement. SpaceX is scheduled to IPO in early June and is planning to allocate a record 30% of shares to retail. Typical IPOs allocate 5-10% to retail. Anthropic and OpenAI may IPO in the coming months. The fundraising demand of these companies is unprecedented, and the retail interest appears strong. These IPOs could serve to increase engagement in Robinhood’s platform.

Why HOOD wins from the wealth transfer: Gold as the Amazon Prime flywheel

Gold subscribers grew from 1.14M at the end of 2022 to 4.34M in Q1’26 — 3.8× in roughly three years. The product costs $5/month (or $50/year). Our estimates put gross value to a member at ~$880/year (from higher cash yields, IRA match, free margin, cheaper options, Robinhood Gold Card, Morningstar research, Level II data, Robinhood Strategies).

What matters is the mix. Gold subscribers are ~16% of funded accounts but ~79% of assets on the platform. They are the asset compounders. Robinhood’s expanding product suite positions it well to convert more of their existing 27M funded accounts, into Gold subscribers. As Gold penetration rises, every metric that compounds — ARPU, net deposits, retention, gross margin — moves with it.

We believe Prime turned Amazon from a retailer into a consumer habit. The Prime subscription model increased engagement and ultimately spending on Amazon creating a stickier higher value customer. We believe Gold could do something similar for Robinhood and potentially make Robinhood the default financial home for the next generation.

We believe that the asset base is converging. Average AUC per funded customer grew from $2,700 at the end of 2022 to $11,900 at the end of 2025. Even at that pace, HOOD assets per customer remain ~5% of Schwab, Fidelity, and Interactive Brokers — all of whom carry far older books.

The margin profile shows the operating leverage has already arrived. Adjusted EBITDA margin went from -7% in 2022 to 29% in 2023, 48% in 2024, and 56% in 2025. Costs are largely fixed — technology, operations, and G&A together account for ~70% of the cost base — so incremental revenue lands at >70% incremental margins.

Why HOOD could win prediction markets

We believe this is the most underestimated part of the story.

In our view, three things make prediction markets a winner-take-most market: distribution, product UX, and integration with the user’s broader financial graph. We believe Robinhood could win on all three.

• Distribution. 27M funded accounts and ~13M MAUs. Kalshi has an estimated ~5M MAUs; Polymarket has ~0.5M. The acquisition gap to the next-largest distribution-native competitor is more than 20×.

• Product surface. Event contracts can sit alongside equities, options, and crypto in the same app, with the same wallet, statements, and risk system. Standalone prediction market apps cannot replicate that without becoming a brokerage.

• Vertical integration. Rothera, the company’s CFTC-regulated exchange and clearinghouse, lets Robinhood control take rate, add markets quickly, and avoid paying a third-party exchange. Even at flat monetization, vertical integration typically expands contribution by 25–30%.

We treat prediction markets as a new asset class — like spot crypto in 2017 or zero-commission equity trading in 2014. The pattern we see in both prior cases: the broker that owns retail distribution captures the category and re-rates.

How HOOD monetizes the super-app

The shape of Robinhood’s revenue is changing.

The transaction line is no longer the whole business. Net interest, Gold subscription fees, prediction markets, Robinhood’s high-yield checking, the Gold Card, retirement (TradePMR added ~$40B in advisory AUM in 2025), Robinhood Strategies, and an early estate-planning push are all independent monetization lines. Each touches a different lifecycle moment and stickifies the relationship. Together, we believe they are converting Robinhood from a transaction-revenue business levered to speculation into a recurring-revenue platform whose customers monetize across their financial lives.

Why the market is mispricing this

HOOD trades at ~34x 2027 consensus EPS, which is roughly in line with Interactive Brokers and Coinbase. In our view, three things suggest HOOD is mispriced:

1. Gold mix is still ~16% of accounts. As it climbs, ARPU is structurally positioned to converge toward the $621–$1,410 range that incumbents earn per account, against HOOD’s $167 today. That is not a forecast — that is the structural setup of the business.

2. Prediction markets are already one of the fastest-scaling product lines in U.S. retail finance, and Robinhood owns the distribution.

3. The cost base is largely fixed. Adjusted EBITDA margin already hit 56% in 2025 with the platform still in investment mode.

Coverage hasn’t caught up because Robinhood is between buckets. Brokerage analysts under-cover it. Fintech analysts treat it as crypto-exposed. Crypto analysts treat it as a brokerage. That is exactly the kind of pricing gap where we expect the asset to re-rate after the fact, not before.

Conclusion

The market is viewing Robinhood as a cyclical retail brokerage. The business it is becoming — a vertically integrated financial super-app for the demographic poised to benefit from the intergenerational wealth transfer from Boomers to Gen Z and Millennials, with a fast-growing new asset class of the cycle running through its app — is, in our view, a different kind of company.

We believe HOOD should be benchmarked against the platform comp set, not the brokerage comp set. The flywheel of (1) demographic ownership × (2) Gold-driven asset compounding × (3) prediction market category leadership compounds. Each new Gold sub raises ARPU. Each ARPU dollar raises the margin. Each new product locks the customer in further. In our view, the longer this compounds, the more durable the franchise becomes.

We don’t think this is a 2026 story. We think this is the beginning of a decade-long platform shift in how the next generation saves, trades, borrows, bets, and builds wealth.

Important Disclosures

This article and all of the information presented herein is being provided by Artemis Analytics Inc. and North Island Ventures, LLC (“NIV”) (each an “Author” and together, the “Authors”) solely for informational purposes to provide educational content and general market commentary.

No statements included herein relate to or contain any offer of NIV’s investment advisory services, nor does any content herein, including but not limited to any referenced companies, constitute an offer to sell or the solicitation of any offer to buy any security or shares or interest in any of NIV’s current or future private investment funds (each a “Fund”), which may only be made at the time a qualified offeree receives the applicable confidential private placement memorandum, subscription documents and governing documents (collectively, the “Operative Documents”).

The information herein is not intended to provide, and should not be relied upon for, accounting, legal or tax advice or investment recommendations. NIV is not acting, and does not purport to be or act as, an adviser or fiduciary, in any capacity, with respect to any prospective investor in any Fund. A recipient of this article should consult his or her tax, legal, accounting or other advisors about the matters discussed herein.

While the information presented in this article is believed to be accurate, neither Author nor their respective affiliates or representatives (i) makes any express or implied warranty as to the completeness or accuracy of the information presented herein, (ii) shall be liable for errors appearing in this article or (iii) has any duty to update the information set forth herein. Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue“, “target” or “believe” (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of investments may differ materially from those reflected or contemplated in such forward-looking statements. No representation or warranty is made as to such forward-looking statements.

Any analyses and opinions contained herein (including market commentary, statements or forecasts) may contain elements of subjectivity (including certain assumptions) or be based on incomplete or incorrect information. The Authors do not undertake to update the information contained herein.

This document displays certain trademarks and logos owned by the companies discussed herein. All such trademarks remain property of their respective owners, and are used only to directly identify or describe the companies being discussed herein. Their use is not intended to indicate and in no way indicates any sponsorship, endorsement or affiliation between the Authors or their affiliates, on the one hand, and the owners of such trademarks, on the other hand.

Accounts advised by NIV are currently invested in Robinhood and may make additional investments or exit positions at NIV’s discretion at any time for a variety of reasons and without further notice. No claim of performance (predecessor or otherwise) or prior track record is made in this document. Company metrics, including but not limited to, revenues, earnings, EBITDA, net income, and similar metrics, are not a proxy for the performance of a potential investment and should not be understood as such. There is no guarantee that achievement of any financial metrics, including changes in share price, will result in positive investment performance. Unforeseen or unaccounted for events could materially impact Robinhood’s performance and/or valuation—in such an event, projections could be materially altered. An investment’s performance is based on and must take into account a number of factors that the materials do not reflect, such as trading activity, terms of investment (e.g., share class), use of leverage, trading costs and other factors. Readers of this article should not interpret any presentation of share price as a proxy for any fund managed by NIV or investment performance. NIV makes no guarantee or assurance that any Fund will make similar investments. All investments are subject to the risk of total loss.

The discussions of Robinhood reference publicly-available information and certain estimates or projections have been provided by Robinhood or are primarily sourced from Robinhood. The Authors make no representation as to (i) the accuracy or reliability of any estimates or projections, (ii) the reasonableness of applicable assumptions and comprehensiveness of available inputs or (iii) the effectiveness or reliability of calculation methodologies. The Authors make no guarantee with respect to the prices at which any securities can be bought or sold. Numerous factors affect the performance of any investment.

Risk assets reversed hard this week, with crypto taking the worst of it by a wide margin. A blowout May jobs report on June 5 (172,000 jobs against ~80,000 expected) flipped the Fed conversation from cuts to hikes and spiked Treasury yields, while Broadcom's soft AI-chip guide two days earlier had already snapped a nine-week equity win streak and triggered the Nasdaq's worst day since April 2025 (down -4.18%). BTC fell to $59,000 (at it lowest), its worst week since February, ETH broke $1,500 for the first time since spring, and the Crypto Fear & Greed Index collapsed to 16 (Extreme Fear) from 42 (Greed) a week ago. Underneath the headlines, spot bitcoin ETFs extended a record outflow streak to about $4 billion since mid-May.

The week split cleanly, and it inverted last week's: the names that led the rally now led the defense, while crypto cratered. Equities and havens held up best: DJIA -0.2%, SPY -2.5%, NVDA -2.9%, QQQ -4.5%, and gold (GLD) -5.0%, with Dell giving back part of last week's surge at -6.3%. The crypto-equity complex was hit far harder: SoFi -12.0%, Robinhood -12.6%, Coinbase -19.4%, and Circle the single worst name in the basket at -29.0%. The major coins were uniformly lower: BTC -17.0%, ETH -21.5%, SOL -22.6%, BNB -11.0%, and XRP -17.5%, with the DeFi names worst of all (AAVE -24.3%, UNI -18.6%). HYPE was the relative standout at -7.6%, the most resilient crypto in the set even after a mid-week record near $75.51 gave way. The basket median fell 12.0% (average -12.8%), with even the S&P 500 (-2.5%) and Nasdaq-100 (-4.5%) holding up far better than anything in crypto.

Today We Highlight:

• Strategy sold bitcoin for the first time in four years, a trivial 32-coin sale that reframed the whole selloff as a rotation into AI.

• Coinbase launched SpaceX pre-IPO perps days before the largest IPO in history, pushing private-market access further on-chain.

• HYPE’s win streak ended, but at -7.6% it was still the most resilient crypto in the basket as the majors fell 17-24%.

• The nine-week equity win streak snapped: Broadcom beat but guided soft on AI chips, sending the Nasdaq to its worst day since April 2025.

1. Strategy sells bitcoin, and the rotation thesis goes mainstream

For four years Michael Saylor’s promise was unconditional: Strategy buys bitcoin and never sells. On June 1 an 8-K ended that streak. The company disclosed selling 32 bitcoin between May 26 and 31 at an average of $77,135, about $2.5 million, to help fund the dividend on its STRC perpetual preferred (”Stretch”). It was Strategy’s first bitcoin sale since December 2022.

Thirty-two coins is roughly 0.0038% of the 843,706 BTC Strategy still holds at a blended cost near $75,699, a ~$63.8 billion position. In the same week the company raised $128.3 million through its at-the-market equity program (fifty times the size of the bitcoin sale) and continued buying back its 2029 convertible notes. TD Cowen and others called the sale economically immaterial, a tactical move to service preferred dividends rather than a change of heart. Markets disagreed on the meaning: MSTR fell about 5% on the disclosure, bitcoin slipped to a near two-month low, and the move revived old questions about the digital-asset-treasury model now that most DAT peers have halted purchases or turned net sellers since October. With BTC well below Strategy’s cost basis, the firm is sitting on a paper loss north of $11 billion, and a June 8 shareholder vote on capital-structure matters will test how the narrative holds with institutions.

The more useful signal came from Saylor’s own framing. Rather than defend a price, he reframed the entire selloff as a rotation: he argues AI infrastructure is pulling in roughly $400 billion of investment over six months, and that the ~$4 billion of bitcoin ETF outflows since mid-May reflect capital migrating into that trend rather than a verdict on bitcoin’s fundamentals. Bitcoin is now trailing equities by the most since 2019, and the newest products being built (pre-IPO and AI exposure, not spot crypto) are following the same capital. The DAT model was the 2024-25 vehicle for “leveraged bitcoin beta.” In 2026 the market is asking these companies to earn their keep, and the capital that once chased mNAV premiums is shopping elsewhere.

Analyst Take: I think Saylor’s selling Bitcoin is a net positive for both and the market. It finally puts the balance sheet to work rather than leaving it as unrealized optionality, a pile of what it "could be." The sales give Strategy a cleaner way to fund its preferred dividends, and when mNAV falls below 1, to buy back its own shares, which lifts bitcoin per share.

2. Coinbase puts private markets onchain, just in time for the largest IPO ever

Last week we wrote about the race to put private markets on-chain. This week Coinbase made it a product.

On June 4, Coinbase launched its first pre-IPO perpetual futures on its international exchange, listing SpaceX (ticker SPCX-PERP) as the inaugural underlying. The contracts are USDC-settled, trade 24/7 with no expiry, offer up to 5x leverage, and are available to eligible users outside the US through Coinbase’s Bermuda entity. The design is the interesting part: because a private company’s full share count isn’t public, the contract references a valuation-based index rather than a share price: a quote of 1,735 implies a $1.735 trillion equity valuation. When SpaceX completes its IPO, Coinbase pauses trading and rebases the contract into a standard per-share equity perp via a P&L-neutral adjustment.

The timing is not accidental. SpaceX filed Amendment No. 1 to its S-1 on June 1, setting a roadshow price of $135 per share and a plan to sell 555.6 million shares to raise roughly $75 billion at a valuation near $1.75 trillion, which would make it the largest IPO in history, more than double Saudi Aramco’s 2019 record. The roadshow began June 4; pricing is expected around June 11 with a Nasdaq debut targeted for June 12. Coinbase isn’t first or alone here: Binance launched pre-IPO perps on May 21, and Ventuals has run the same playbook on Hyperliquid’s HIP-3 for months.

3. HYPE’s win streak ends, but it still won the week

For a month, Hyperliquid was the answer to the question of what’s working, the one major crypto asset printing new highs while everything else bled. This week the exception ended.

HYPE set a fresh all-time high around $75.60 on June 3, extending a roughly 26% monthly run built on the Coinbase/Circle USDC alignment, ETF launches from Bitwise and 21Shares, DAT accumulation, and genuinely strong perp and HIP-3 volumes. Then it reversed with the rest of the market, sliding more than 20% from that Tuesday peak. Two name-specific headlines didn’t help: the UK’s FCA issued an unauthorized-firm warning on the platform, and BitMEX co-founder Arthur Hayes disclosed exiting his entire HYPE position, both landing June 5 into an already-fragile tape. And yet, here is the part that matters: HYPE finished the week down just 7.6%, the best-performing crypto asset in our basket on a week when BTC fell 17%, ETH 21%, and SOL 23%. The win streak ended; the relative outperformance did not.

4. Broadcom beat, and the nine-week streak broke anyway

Why does a company grow AI revenue 143% year over year, beat on both lines, and lose a sixth of its value in two sessions?

Broadcom’s fiscal Q2 (reported June 3 after the close) was strong by any normal standard: revenue of about $22.2 billion edged consensus, non-GAAP EPS of $2.44 beat the $2.39 estimate, and AI semiconductor revenue grew 143% to $10.8 billion. Current-quarter total revenue guidance of $29.4 billion also came in above the Street. The problem sat entirely in one line. Management guided fiscal Q3 AI chip revenue to $16 billion against a roughly $17.2 billion consensus and, critically, left the full-year AI target at $56 billion rather than raising it. After first-half AI revenue approached $19 billion, investors had penciled in an upgrade. When the math landed at a ceiling instead of a floor, it triggered a textbook sell-the-news reaction. Two remarks on the call deepened it: Hock Tan acknowledged Google would likely use multiple chip suppliers, and he flagged that the AI mix is diluting gross margins. AVGO, which had entered the print at an all-time high up ~40% YTD, was downgraded to Neutral and fell roughly 14% Thursday before sliding further Friday to close near $386.

The read-through mattered more than the name. Broadcom is the cleanest proxy for hyperscaler custom-silicon demand, building accelerators for six of the largest buyers, including Google, Meta, OpenAI and Anthropic, on 18-to-24-month design cycles that lock customers in. If even Broadcom’s forward guide can’t clear a raised bar, the entire group is vulnerable to the same gravity. Nvidia fell 6% on Friday alone, with AMD, Micron and Intel following, though on a full-week basis the megacaps proved far more resilient than the single-day carnage implied (NVDA -2.9%, versus memory names like Micron down ~11%).

Charts of the Week

Courtesy of Artemis Insights

Other Notable News

• MoneyGram launched MGUSD on Stellar on June 2, a native USD stablecoin issued by Stripe-owned Bridge (GENIUS Act-ready), with M0 minting infrastructure and Fireblocks custody. Targets MoneyGram’s 60M+ customers and ~500,000 retail locations, US-first with global rollout planned, the latest legacy remittance player onto stablecoin rails after Western Union’s USDPT.

• Morgan Stanley and Galaxy Digital opened a crypto-to-ETP lending path on June 5: eligible wealth clients can lend BTC, ETH, or SOL to Galaxy for spot crypto ETP shares (including MSBT) without triggering a taxable sale. Galaxy cut its Morgan Stanley-referral minimum from $25M to $5M, with onboarding times projected down up to 75% from 4-plus weeks.

• Mastercard opened card settlement to six regulated stablecoins across eight chains on June 3 (Ethereum, Solana, Polygon, Base, Arbitrum, XRPL, Canton, Tempo), adding intraday, weekend, and holiday windows. Visa expanded to nine chains in April at a ~$7B settlement run-rate, +50% QoQ.

• Stripe, Visa, and Mastercard neared a joint stablecoin platform on June 3, with Coinbase weighing participation: a direct challenge to the Circle/Tether duopoly (~80% of the ~$325B stablecoin market) backed by distribution across 200+ countries. Coinbase's role is complicated by its USDC revenue-share with Circle.

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (COIN segment revenue and pre-IPO perps volume, spot BTC ETF flows, HYPE fees and buybacks) or pull live numbers straight into your models with =ART() in Excel/Google Sheets.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

Risk assets split hard this week, with crypto taking the worst of it. US strikes near the Strait of Hormuz on May 25-26 broke the ceasefire and sent BTC below $73,000, with ETH under $2,000 for the first time since late March and the Fear and Greed Index at 22. Underneath the headlines, spot bitcoin ETFs logged a record ninth straight day of outflows, about $2.85 billion in all and the longest streak since the funds launched in January 2024.

The week split cleanly: AI hardware led while crypto fell across the board. Dell topped the basket at +25.4% on its AI-server earnings, and Micron rose 21.2% as it and SK Hynix each crossed a $1 trillion market cap, though Nvidia slipped 2.4%. Fintech was mixed, with Robinhood up 11.8% on its AI-agent trading launch and SoFi 8.4% on the SoFiUSD stablecoin, while Coinbase and Circle fell about 5.8% alongside the tokens. The major coins were uniformly lower: BTC -5.2%, ETH -5.8%, SOL -6.0%, BNB -3.0%, and XRP -4.3%, the last at its lowest since February, with UNI (-15.4%) the worst in the set. HYPE was the exception at +4.9%, holding a gain after a mid-week record near $64.63. The basket median fell 2.4% even as the S&P 500 rose 1.6% and the Nasdaq-100 2.9%.

Today We Highlight:

• AI hardware ripped: Dell crushed earnings on AI servers, while Micron and SK Hynix crossed $1T market caps.

• HYPE hit a record on SpaceX pre-IPO perps as private-market access moved on-chain.

• SoFi launched a bank-issued stablecoin and Robinhood opened equities trading to AI agents.

• ETH slid below $2,000 as a value-capture debate flared over David Hoffman’s exit and a leaner Ethereum Foundation.

1. Dell beats earnings on AI servers as Micron and SK Hynix cross $1 trillion

Dell reported fiscal Q1 results after the close on May 28 that reset the AI-hardware bar. Revenue of $43.84 billion grew 88% year over year, well above the roughly $35.4 billion consensus, and non-GAAP EPS of $4.86 nearly doubled the $2.94 expected. AI-server revenue rose 757% to $16.1 billion, with $24.4 billion of new AI orders booked in the quarter and a backlog of $51.3 billion. Management raised full-year revenue guidance to about $167 billion, up from a prior outlook near $140 billion, including roughly $60 billion from AI servers. The stock surged the most in two years and is up over 150% year to date. Dell separately won a $9.7 billion Pentagon software contract on Wednesday.

The memory side of the trade hit its own milestone. Micron and SK Hynix both crossed a $1 trillion market cap on May 27, joining Samsung, leaving the three memory makers collectively worth more than $3 trillion. The driver is a severe shortage of high-bandwidth memory and DRAM: contract prices rose roughly 90% to 95% quarter over quarter in Q1 per TrendForce, with further increases projected. SK Hynix shares have climbed more than 900% over the past year on its HBM lead. The proximate catalyst for the milestone day was a bullish UBS note, but the substance is the pricing and the sold-out capacity, not the rating change.

The strength across AI hardware traces to a single source: hyperscaler capital spending. Microsoft, Alphabet, Amazon, and Meta are on track to spend roughly $700 billion on data centers and chips in 2026, up more than 70% from 2025, and three of the four raised those budgets at their most recent earnings. That demand is why vendors like Dell and the memory makers keep beating estimates: order backlogs give forward revenue visibility, and supply stays tight enough that suppliers hold real pricing power, as the DRAM and HBM increases above show. Analysts have also repeatedly under-modeled the cycle, with Microsoft guiding 2026 capex to $190 billion against a consensus near $152 billion. The open question is durability: bulls argue the revenue growth justifies the outlay, while skeptics cite falling free cash flow, circular financing among AI firms, and valuations that leave little room for a slowdown.

2. HYPE and the race to put private markets on-chain

HYPE was the week’s most-watched crypto-native name, setting an all-time high of $64.63 on May 26 before sliding with the market to around $57 by May 28 and steadying into Friday, leaving it up about 5% on the week and outperforming the majors as bitcoin fell. The bid rested on growing institutional access. The first US spot HYPE ETFs, from Bitwise and 21Shares, launched in mid-May and drew early inflows. Around the same time, Coinbase listed HYPE and signed a USDC arrangement that lets Hyperliquid capture most of the yield on the roughly $6.8 billion of USDC held on the platform, a new recurring revenue stream. And on May 28, a Grayscale report flagged Hyperliquid as a breakout success, projecting around $800 million in annual revenue.

The third leg is Hyperliquid’s 24/7 commodity markets. Its permissionless HIP-3 perps have made it a round-the-clock venue for oil and metals, and during Iran flare-ups it has repeatedly captured the hedging flows that arrive when oil moves while traditional futures are closed. The volumes are real: single-day oil volume has topped $1 billion during peak volatility, and as recently as mid-May the WTI and Brent contracts carried combined open interest above $480 million, with oil at times the platform’s most active market after bitcoin. Because that activity generates fees that accrue back to the token, traders increasingly read the platform’s macro volume as a fundamentals signal for HYPE, and the same US-Iran ceasefire-extension uncertainty that pressured bitcoin this week coincided with HYPE outperforming the majors.

3. SoFi launches a bank-issued stablecoin: SoFiD

SoFi was the week’s standout fintech, up about 12% on Friday and roughly 8% on the week on the launch of SoFiUSD (ticker SoFiD), a move that lifted peers like Robinhood and Upstart and built on a record Q1 in which SoFi re-entered crypto trading. The token is a fully reserved digital dollar held against cash at SoFi Bank, built on BitGo and live on Ethereum and Solana; its roughly 15 million members can buy, sell, hold, convert, and redeem it 1:1 in the app, making SoFi the first US national bank to put its own stablecoin inside a consumer banking app.

The launch is a direct product of the GENIUS Act, the July 2025 law that lets bank units issue payment stablecoins under OCC supervision with full 1:1 reserves. Because it bans paying interest on the stablecoin itself, SoFi splits the products: SoFiUSD is a non-yield payment token that is not a deposit and not FDIC-insured, while the planned tokenized deposits are the interest-bearing, insured layer.

4. ETH's value-capture debate resurfaces as the Foundation slims down

ETH’s drop below $2,000 coincided with a resurfaced question: whether ETH the asset captures the success of Ethereum the network. Bankless co-founder David Hoffman, a longtime advocate, revealed he had sold his entire ETH after nearly nine years, teasing it May 21 and explaining it May 26: “the ETH is money thesis didn’t fail, it played out.” He stays bullish on the network but doubts ETH will be structurally rerated, since Ethereum has deliberately pushed value outward to layer-2s, apps, and stablecoins rather than capturing it at the base layer. The price reaction was muted, but the post drew over a million views and reopened the debate.

The debate overlaps with turnover at the Ethereum Foundation, where at least eight senior contributors have left or announced exits in 2026, five in May, hitting core protocol research hardest. In a May 24 post he stressed was his personal view, Vitalik Buterin defended the restructuring, describing a smaller EF that pursues “longevity over breadth,” sells less ETH, and narrows its mandate to core properties he labels CROPS: censorship and capture resistance, openness, privacy, and security. He noted the EF holds only about 0.16% of all ETH and that 90% of his net worth sits in it. Selling less eases a supply complaint but does not settle the value-capture question, and some read his neutral-infrastructure framing as confirming the gap Hoffman flagged, even as plenty of analysts still see upside from upgrades and ETF demand.

Charts of the Week

Courtesy of Artemis Insights

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (CLARITY Act vote tracker, COIN Q1 segment revenue, USDC supply on Hyperliquid) or pull live numbers straight into your models with =ART() in Excel.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

This week we continued to see high dispersion in markets as indices were down on the week (SPY and QQQ -0.73%), and so were digital asset leaders like BTC (-4.33%) and ETH (-6.57%). Through this down market there have been some select winners. Hyperliquid, which we dive into below, hit new all time highs while privacy/AI tokens Zcash (ZEC), Venice (VVV) and Near (NEAR) were each up ~20%. Key macro drivers in markets this past week include:

• Kevin Warsh being sworn in as the new Federal Reserve Chair replacing Jerome Powell

• Oil continuing to trade at ~$100 as the US and Iran war continues

• US 30Y bond yields hit their highest levels since 2007

Today We Highlight:

• Hyperliquid: HYPE crosses $60, prints new ATH. We dig into why.

• Artemis Research: Crypto Factor Model Analysis: May 2026 Update

• Tokenized Stocks: The regulatory landscape is changing (too) quickly

1. Hyperliquid Hits New ATH

Hyperliquid took the spotlight once again this week as it printed fresh all time highs, the only major crypto asset to do so in many months. HYPE peaked at about $62 a token on Thursday.

A few drivers could be responsible for the dramatic 50% rise over the past month.

The real move started last Thursday, May 14th, with the news that Coinbase and Circle were aligning themselves strongly with the Hyperliquid ecosystem. The alignment manifests itself in a few steps:

• Firstly, Coinbase acquired the USDH brand assets from Native Markets. USDH was the original aligned quote asset on Hyperliquid, having won a (slightly controversial) bid last year beating the likes of PayPal, Paxos, Ethena and more. Having only reached ~80m in supply, USDH will be fully sunset in the coming months.

• Secondly, Coinbase and Circle will jointly operate Hyperliquid’s first V2 Aligned Quote Asset (AQAv2): USDC. USDC already has ~5B in supply on Hyperliquid, but by becoming an AQA, USDC becomes the default quote asset on Hyperliquid markets. More importantly for HYPE investors, any AQAv2 asset must share 90% of cost-adjusted reserve yield revenue on their Hyperliquid supply with the protocol.

This is really important because it could add an incremental ~$150M in revenue for the protocol, diversifying Hyperliquid’s revenue profile away from pure trading revenues. It also aligns the interests of 2 of the world’s largest digital asset companies (who are also the most influential in Washington), with Hyperliquid’s.

On the institutional side, last week both 21Shares and Bitwise launched HYPE ETFs, giving institutions easier exposure to the asset. Despite a relatively quiet first week, trading volume exploded this week, reaching nearly 100M in volume on Thursday.

Further showing institutional interest and growth in HYPE, HYPE DATs have been buying HYPE and now own nearly 10% of all HYPE supply, more than any other major asset. Hyperliquid Strategies (PURR) announced at earnings that they have another $100m to deploy, plus a $1B Equity Line of Credit facility. Expect this share to continue rising.

Hyperliquid fundamental metrics continue to strengthen across the board as HIP-3 markets reached new weekly highs at 2.6B in open interest across RWA perp markets. HIP-4 launched outcome markets a couple of weeks ago to more modest growth. Equity perpetuals, pre-IPO markets and prediction markets are all in the very early innings, and Hyperliquid is well positioned to capitalize on that momentum.

The combination of institutional access via ETFs and publicly listed digital asset treasury companies like PURR and HYPD alongside strengthening fundamentals in the form of revenue diversification and product adoption have driven HYPE to new all time highs. In spite of heavy competition, Hyperliquid has continued to impress and grow. We continue to monitor closely as the US regulatory landscape and markets evolve.

2. Artemis Crypto Factor Model Analysis: May 2026 Update

Executive Summary

• April marked a sharp reversal from the Q1 risk-off regime. The crypto market factor rallied +17.2%, led by BTC (+19.2%) and ETH (+19.5%), as the broader macro backdrop shifted toward optimism on Middle East conflict resolution and a powerful AI-driven rally in equities.

• Long-short factors posted muted but mostly positive returns as expected during a broad recovery. Value (+1.7%), Momentum (+0.9%), and Growth (+1.1%) all generated positive alpha, though the short legs were squeezed as previously oversold tokens snapped back. Fundamentals 1 was the only negative factor (-3.7%), driven primarily by PENDLE‘s sharp rally against its short positioning.

• Cross-factor themes included the DAO governance narrative (DEXE as a top contributor in both SMB and Momentum for the second consecutive month), explosive privacy coin demand (ZEC rallying 50%+ on SEC clearance and Grayscale’s first-ever privacy coin ETF filing), and a DeFi yield recovery led by PENDLE‘s sPENDLE tokenomics overhaul and Aerodrome‘s cross-chain expansion plans.

• Value (+13.3% YTD) and Stablecoins 1 (+2.1% YTD) remain the only factors positive for the year, while the market factor sits at -14.2% and BTC at -10.5%. Since inception, Momentum (547.7% cumulative) and Fundamentals 1 (519.3%) continue to far outpace passive crypto exposure, demonstrating the framework’s compounding advantage over full cycles.

Read the full piece by Maggie on our Substack

3. Tokenized Stocks

Tokenized equities (on-chain versions of public company stocks like Apple, Nvidia, Tesla, or ETFs) are one of the fastest-growing segments inside the broader Real-World Assets (RWA) boom, but they remain relatively small compared to tokenized Treasuries.

Current Market Snapshot

• Tokenized equities market cap: Roughly $1–1.6B (up sharply from ~$960M in March 2026 and ~$424M mid-2025).

• Dominant player: Ondo Global Markets leads with the majority of the market (~60% share), offering 100–260+ tokenized U.S. stocks and ETFs. Other activity on Ethereum, Solana, and BNB Chain.

• Broader RWA context: Total tokenized RWAs hit a record ~$33–34B (up 1,600% in two years), with equities still a smaller slice but accelerating.

These tokens typically offer price exposure, 24/7 trading, fractional ownership, and DeFi composability (collateral, lending, perps), but most are synthetic wrappers rather than native issuer-issued securities.

• Early this week (May 18–19): Bloomberg reported the SEC (under Chair Paul Atkins) was preparing to release an “innovation exemption” for tokenized stocks as soon as this week.

  • This would have created a lighter-touch framework allowing crypto-native platforms and DeFi protocols to trade third-party tokenized versions of U.S. public equities without issuer consent, enabling 24/7 trading under guardrails (disclosures, exposure limits, etc.).

• Today (May 22): The SEC delayed/postponed the innovation exemption amid significant pushback from traditional Wall Street players (stock exchanges, banks, Citadel, SIFMA, etc.).

  • Concerns raised: investor protections, handling of corporate actions (dividends, voting rights), liquidity fragmentation (parallel markets for the same stock), price discovery issues, and risks around synthetic tokens.

  • No new timeline has been given. Commissioner Hester Peirce has emphasized narrower, fully backed representations tied to federal securities laws.

ONDO and CFG were up double digit percents on the initial news before retracing nearly all their gains after the postponement.

Charts of the Week

• NVDA Q1 Earnings: Nvidia beat guided revenue expectations, reporting $81.6B in quarterly revenue, primarily from data centers.

• Ventuals Daily Open Interest passes $20M: As appetite for pre-IPO stock exposure surges, Ventuals has captured much of that growth, reaching $20M in open interest this week.

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (CLARITY Act vote tracker, COIN Q1 segment revenue, USDC supply on Hyperliquid) or pull live numbers straight into your models with =ART() in Excel.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

Market Sentiment: risk-off. The week kicked off on the back foot with a hot April CPI print on May 12 (3.8% YoY, hottest since May 2023) and a record $635M single-day BTC ETF outflow on May 13. Kevin Warsh was confirmed as the next Fed Chair (May 13) and the Senate Banking Committee advanced the CLARITY Act 15-9 (May 14). Bitwise’s spot Hyperliquid ETF (BHYP) began trading on NYSE on May 15.

Across the digital finance basket, the week averaged -2.67% (median -2.66%). Green prints were sparse: BNB +3.57%, HYPE +2.35% (riding the BHYP tailwind), XRP +1.12% (CLARITY read-through), CRCL +0.29%, and HOOD +0.14%. The majors all closed lower: BTC -1.40%, ETH -3.61%, SOL -2.95%. The heaviest hits landed in DeFi: SKY -13.14%, POL -10.70% as Polymarket's chain-migration overhang kept pressing, and LDO -10.33% giving back the prior-week buyback rally. On the equity side, MSTR -5.42% led the decliners after a $12.54B Q1 GAAP loss and the smallest weekly BTC buy of 2026. Traditional indices weren't immune: SPY +0.21%, QQQ -0.32%, DIA -0.15%. Even GLD slipped -3.80%, taking some shine off the safe-haven trade.

Today We Highlight

• CLARITY Act clears Senate Banking

• Artemis Research Spotlight:

• Bullish buys Equiniti for $4.2B

• Coinbase becomes Hyperliquid's official USDC deployer

1. CLARITY Act clears Senate Banking

The Senate Banking Committee advanced the Digital Asset Market Clarity Act 15-9 on May 14. The vote was largely along party lines, with Democratic Senators Ruben Gallego (AZ) and Angela Alsobrooks (MD) joining all Republicans on the panel. Sen. Elizabeth Warren called it “a bill written by the crypto industry for the crypto industry,” but the bipartisan crossover is the structurally important read: it's the first time material Democratic support has materialized for a market-structure bill in committee.

What the bill does: classifies digital assets as securities or commodities and establishes formal SEC-CFTC jurisdiction lines. The SEC retains issuance and primary-market oversight; the CFTC takes secondary-market activity in non-security digital commodities. The framework operationalizes the SEC-CFTC MOU signed by Atkins and Selig on March 11 and the joint interpretation issued March 17.

Where it goes next: the bill heads to the Senate floor where it will be merged with the Agriculture Committee version. The 60-vote threshold means Republicans need ~5-7 more Democrats than the committee delivered. The legislative window is narrow: the August recess and the 2026 midterms compress the calendar.

Market reaction: XRP led on the print, briefly clearing $1.47 resistance before settling near $1.43. SOL and AAVE held bids better than ETH on the framing that both clear as commodities under the bill, removing a long-tail regulatory overhang. The BTC reaction was muted (BTC is already treated as a commodity), but the broader read-through is that altcoin beta finally has a structural rationale that isn't ETF approval. If the Senate gets to a floor vote by July, we'd expect the largest re-rate to land in tokens with active SEC litigation history.

2. Artemis Research Spotlight:

Artemis Research Spotlight: Why Coinbase wins in an AI-native finance world by Alex Weseley, Jon Ma, and Andrew Van Aken.

Artemis’s bull case argues Coinbase is mispriced as a cyclical crypto brokerage when it’s actually building the settlement, distribution, and commerce layer for AI-native finance. Target: $300B market cap by 2031 (~6x current, ~35% CAGR).

The thesis rests on two generational tailwinds the market is underweighting:

Stablecoins

The USDC distribution agreement with Circle is structurally a Coinbase asset, not Circle’s. Coinbase’s share of Circle’s reserve revenue has climbed from 32% in 2022 to ~50% in each of the last two years, earning ~100% yield on USDC held in its products plus a share of off-platform balances via the Payment Base waterfall (Q4’25 average USDC in Coinbase products: $17.8B, an all-time high). Critically, the contract is a “continuation lock”: it auto-renews if Product/Company/Reseller thresholds are met, and per filings cannot be terminated if they are. With Bessent forecasting $3T stablecoin supply by 2030 (Bain says $3.8T), this is durable infrastructure revenue, not at-risk consumer product.

Agentic commerce

The onchain data is decisive: 92.8% of agentic payment volume runs on Base, 99.8% settles in USDC, and 99.8% transits x402 (Coinbase-pioneered, now managed by Linux Foundation). Since October 2025, x402 has processed 180M+ payments, $47.5M of agent spend, across 5K+ merchants. Card rails can’t economically handle sub-cent API calls; stablecoins on L2s can. McKinsey calls $3-5T global agentic commerce by 2030; Gartner says $15T B2B via agents by 2028.

Bull-case math: assuming $5T agentic commerce by 2030 with ~20% settling in stablecoins, Coinbase captures ~$5B in agentic revenue across three lines: USDC float (~$4B from $200B × 4% × 50% share), CDP/AgentKit/Agentic.Market ($750M), and Base sequencer fees ($250M).

Link to the full article here.

3. Bullish buys Equiniti for $4.2B

Bullish (BLSH) announced on May 5 that it has agreed to acquire transfer agent Equiniti from private-equity firm Siris Capital for $4.2B. The consideration is $1.85B of assumed debt and $2.35B of Bullish stock, priced at $38.48/share based on the 30-day VWAP through May 4. Close is expected in early 2027 pending regulatory approval.

What Equiniti brings: nearly 3,000 issuer clients, 15,000 corporate clients, 20M shareholders, and ~$500B in annual payments processed. Pro-forma 2026E adjusted revenue is ~$1.3B and adjusted EBITDA-less-capex is over $500M. Bullish guides 6-8% annual revenue growth from 2027E-2029E with $100M+ of incremental EBITDA-less-capex per year.

Strategic read: the deal positions Bullish as the first crypto-native operator with a regulated transfer agent attached. In a market where the SEC has been quiet on tokenized public equities, owning the registry layer means Bullish can offer real-time cap tables, automated corporate actions, and tokenized share liquidity, particularly for non-U.S. investors, without renting that infrastructure from incumbents. It's an explicit bet that tokenization moves through the back-office stack before it shows up in front-end products.

Context vs. Robinhood: HOOD has gone the front-end route (tokenized SpaceX and OpenAI exposure offered to EU investors). Bullish is buying the plumbing. Both bets converge on the same end state: if the SEC ever blesses tokenized public equities in the U.S., the firm that owns the transfer-agent rail captures economics from both sides of the trade.

4. Coinbase becomes Hyperliquid's official USDC deployer

On May 14, Native Markets transferred the USDH brand assets to Coinbase, which became the official USDC treasury deployer on Hyperliquid. Circle takes the technical role for minting, redemption, and cross-chain transfers, and disclosed it will stake 500,000 HYPE (adding to a position established in September 2025) as it moves toward becoming a Hyperliquid validator. USDH remains redeemable for USDC or fiat during the migration period before being phased out.

Why this matters: USDC supply on Hyperliquid has roughly doubled YoY to ~$5B. By formalizing Coinbase as the deployer and Circle as the rails operator, Hyperliquid effectively converts its largest stablecoin float into a fee-and-treasury relationship with the two most regulated U.S. crypto entities. It also removes a clear regulatory tail risk for HYPE: a native stablecoin issued by a no-KYC perps exchange was always an audit-and-compliance question; an offshore-issued USDC stack with Coinbase managing treasury isn't.

Read on HYPE: the move is incremental cash flow to the Assistance Fund (the fee economics flow through buyback-and-burn) and a step toward institutional distribution. Combined with the Friday BHYP launch (the first U.S. spot HYPE ETF with staking), the chain now has a regulated wrapper on the equity side, a regulated stablecoin on the rails side, and the most efficient perps order book in the market.

The bull case from the April Hyperliquid Strategies ($PURR) deep dive looks materially closer to base case after this week.

Charts of the Week

Other Notable News

• Coinbase (COIN) reported Q1’26 on May 7: revenue $1.41B (vs. $1.52B est.), GAAP EPS -$1.49 on a $482M crypto markdown, adjusted EBITDA $303.3M. Transaction revenue -23% QoQ to $756M, subscription $583.5M, derivatives volume $4.2B (+169% YoY), all-time high 8.6% global crypto trading market share.

• Strategy (MSTR) reported Q1’26 on May 5: revenue $124.3M (+11.9% YoY), net loss of $12.54B driven by BTC fair-value markdown, BTC Yield 9.4% YTD, holdings 818,334. The May 5-11 weekly buy was just 535 BTC for $43M at $80,340/coin, the smallest weekly purchase of 2026. CEO Phong Le and Saylor for the first time disclosed conditions under which they would sell BTC (dividend funding and tax management when sales beat new equity issuance).

• Circle (CRCL) reported Q1’26 on May 11: revenue $694M (+20% YoY), adjusted EBITDA $151M (+24%), net income $55M (-15% YoY), USDC supply $77B, onchain transaction volume +263% YoY to $21.5T. Closed the Arc token presale ($222M raised at $3B FDV, a16z crypto leading). CRCL +16% on the print.

• Western Union launched USDPT on Solana May 4, issued by Anchorage Digital Bank. First MSB-distributed regulated stablecoin built for remittance corridors; “Stable by Western Union” consumer product slated for 40+ countries later in 2026.

• Bitwise BHYP began NYSE trading May 15. The first U.S. spot Hyperliquid ETF, and the first U.S. crypto ETF with in-house staking. 0.34% sponsor fee, waived to 0% for the first month on the first $500M of AUM.

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (CLARITY Act vote tracker, COIN Q1 segment revenue, USDC supply on Hyperliquid) or pull live numbers straight into your models with =ART() in Excel.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

Executive Summary

• April marked a sharp reversal from the Q1 risk-off regime. The crypto market factor rallied +17.2%, led by BTC (+19.2%) and ETH (+19.5%), as the broader macro backdrop shifted toward optimism on Middle East conflict resolution and a powerful AI-driven rally in equities.

• Long-short factors posted muted but mostly positive returns as expected during a broad recovery. Value (+1.7%), Momentum (+0.9%), and Growth (+1.1%) all generated positive alpha, though the short legs were squeezed as previously oversold tokens snapped back. Fundamentals 1 was the only negative factor (-3.7%), driven primarily by PENDLE‘s sharp rally against its short positioning.

• Cross-factor themes included the DAO governance narrative (DEXE as a top contributor in both SMB and Momentum for the second consecutive month), explosive privacy coin demand (ZEC rallying 50%+ on SEC clearance and Grayscale’s first-ever privacy coin ETF filing), and a DeFi yield recovery led by PENDLE‘s sPENDLE tokenomics overhaul and Aerodrome‘s cross-chain expansion plans.

• Value (+13.3% YTD) and Stablecoins 1 (+2.1% YTD) remain the only factors positive for the year, while the market factor sits at -14.2% and BTC at -10.5%. Since inception, Momentum (547.7% cumulative) and Fundamentals 1 (519.3%) continue to far outpace passive crypto exposure, demonstrating the framework’s compounding advantage over full cycles.

Market Context

April marked a sharp reversal from March’s risk-off environment. It was the best month for markets in nearly 6 years, as investors priced in positive steps towards a resolution of conflict in the Middle East. US equities rallied hard with the S&P 500 rising about 10.4%, its best month since November 2020 and hitting new all-time highs. AI and tech dominated this rally (Communication Services +18.5% and Technology +17.5%) as investors renewed confidence in AI, cloud, infrastructure, and semiconductors. Emerging markets also gained (MSCI Emerging Markets +14.7%) powered by AI semiconductor supply chain gains in Taiwan (+26.2%) and South Korea (+38.2%). While tensions between the US and Iran continue to dominate headlines, markets are looking through the turmoil and are largely optimistic a resolution will take place.

For a more in depth look into how each of the strategies were built, see our Crypto Factor Model Analysis, Fundamentals 1 strategy, and Stablecoins 1 strategy. For a complementary guide on reading through this report, see our factors guide.

Performance Summary

In April, driven by a shift away from the risk-off regime that defined Q1 2026, crypto market recovery was broad but uneven across strategies. The market-cap-weighted index benefited the most from the rally as large-cap assets like BTC (+19.2%) and ETH (+19.5%) led the charge. SMB also posted a strong +9.2% as small caps participated meaningfully on the risk-on reversal. Stablecoins 1 gained +5.7%, continuing its role as a more defensive, positive-carry strategy that tracks capital flows across chains.

However, the long-short factors that have been the best performers over the prior months, Value (+1.7%), Momentum (+0.9%), and Growth (+1.1%), had relatively muted returns. This is expected as in a broad market rally, the short legs of long-short factors get squeezed as the tokens snap back aggressively, offsetting gains in the long leg. Fundamentals 1 was the only factor with a negative return in April (-3.7%), as its short leg experienced severe reversals from tokens like PENDLE and RAY that rallied sharply.

Overall, the factor framework behaved as designed. It limited the downside in the February to March drawdown and underperformed the market in a sharp recovery month. Since inception, Momentum (51.1% annualized) and Fundamental 1 (46.8% annualized) remain far ahead of the market factor (15.1% annualized). Value continues to stand out as the best YTD performer at 13.3%, having navigated both the drawdown and recovery with minimal volatility.

Market Risk Factor

Construction

Long-only portfolio of the top 10 assets by market cap, market cap-weighted, rebalanced weekly. Captures broad crypto market exposure similar to a crypto index.

Current Holdings

BTC (73.2%), ETH (13.1%), XRP (4.0%), BNB (3.9%), SOL (2.3%), TRX (1.5%), DOGE (0.8%), HYPE (0.5%), ADA (0.4%), BCH (0.4%)

Performance Metrics

The market factor’s +17.2% April return was a relief after months of decline. BTC surged +19.2% as institutional demand returned and a broader risk-on rotation rallied both crypto and equities mid-April. Despite the strong month, the portfolio remains well below its all-time high, with a max drawdown since inception of -66.5% reflecting the severity of the 2022 bear market and the early 2026 Iran war shock. The April rally narrowed the YTD gap between BTC (-10.5%) and the broader market factor (-14.2%), but the market index still lags BTC on a YTD basis, reflecting the ongoing underperformance of most altcoins relative to Bitcoin even during the recovery.

Top 5 Winners & Losers for April

ETH (+19.5%) was the top contributor by return, benefiting from the macro risk-on rotation and several institutional catalysts. BlackRock launched a staked Ethereum ETF (ETHB) that attracted tens of millions in daily flow. The upcoming Glamsterdam upgrade, targeting a significant gas reduction and parallel transaction execution, and the Ethereum Foundation’s 70,000 ETH staking commitment, signaling a shift from selling pressure to productive deployment of its treasury, were both additional forward catalysts. BTC (+19.2%) followed closely, driven by demand from digital asset treasury firms like Strategy (MSTR) and Bitmine sustaining strong demand, along with a weakening dollar and easing oil-war fears that supported risk assets broadly. HYPE (+12.5%) continued its multi-month outperformance as the platform hit a new all-time high of 6.9% open interest share relative to centralized exchanges. There were no negative losers in April, but TRX (+0.6%) and BCH (+0.7%) lagged significantly.

Size Factor

Construction

Equal-weighted long-short factor: long the smallest 50% of eligible assets by market cap, short the largest 50%. Minimum 40 assets (20 per leg). Breakpoint: 50th percentile of market cap.

Performance Metrics

SMB returned +9.2% in April, a recovery from the prior months of small-cap underperformance. YTD losses narrowed to -3.2% from -13.7% at the end of March, and the max drawdown since inception stands at -38.4%. The recovery was driven by the risk-on rotation: as sentiment turned, capital flowed back into smaller, more speculative assets that had been oversold in the February-March selloff. Small caps broadly rallied harder than large caps during April, which is the expected pattern in a market recovery.

Despite the strong monthly return, the SMB factor’s annualized return of 8.0% and Sharpe of 0.36 remain the weakest across all factors since inception. While the size premium for crypto exists over long periods, it is extremely volatile and tends to underperform during risk-off regimes that have dominated early 2026.

Top 5 Winners & Losers for April

DEXE (+114.91% as a long) was by far the top contributor, extending its rally that began in March. The DAO governance platform token more than doubled during the month, driven by surging demand for on-chain governance infrastructure as institutional capital increasingly sought DAO coordination tools. DEXE’s market cap climbed from roughly $350 million to over $680 million in April alone, with daily volumes regularly exceeding $30-50 million. High staking APRs (up to 102%) locked up circulating supply, amplifying the rally. LUNC (+72.48% as a long) was fueled by accelerating token burn mechanics. The community burned over 2 billion LUNC in April, with Binance’s monthly burn contributing hundreds of millions. The successful Cosmos SDK v0.53 integration improved cross-chain connectivity, and the upcoming v4.0.1 governance vote provided a forward catalyst. LDO (+49.16% as a long) rallied after the Lido DAO proposed a $20 million LDO buyback using treasury funds, signaling strong conviction in the protocol’s fundamentals. A whale purchase of $1.86 million in LDO followed the announcement. AERO (+46.49% as a long) benefited from growing Base ecosystem activity and anticipation of its cross-chain DEX launch planned for July 2026, with smart money wallets accumulating aggressively.

On the losing side, ZEC (-65.54% as a short) was the largest detractor. Zcash rallied explosively in April, up over 50% in the month, driven by the SEC’s January clearance (no enforcement action), Grayscale’s landmark filing to convert its Zcash Trust into the first-ever privacy coin spot ETF, and institutional accumulation by firms like Multicoin Capital and Cypherpunk Technologies. With 30% of ZEC supply in shielded pools and the 2024 halving tightening issuance, the supply squeeze punished the factor’s short positioning.

Value Factor

Construction

Equal-weighted long-short: long assets with the lowest Market Cap / Fees ratio (highest fundamental value), short assets with the highest MC / Fees ratio (most expensive). Minimum 30 assets (15 per leg).

Performance Metrics

Value returned +1.7% in April, a modest but positive result that extends its streak as the most consistent factor in 2026. YTD returns stand at +13.3%, the highest among all factors. The max drawdown since inception of -23.4% is considerably shallower than most other factors, reflecting Value’s defensive character across regimes. Value has navigated both the brutal February-March selloff and April’s recovery with remarkable stability.

Top 5 Winners & Losers for April

ARB (+47.2% as a long) was the top contributor, benefiting from a sharp L2 sector recovery. Arbitrum’s fee generation made it fundamentally cheap on a MC/Fees basis, and the broader market rally lifted L2 tokens that had been heavily sold off. AERO (+46.5% as a long) rallied on strong DeFi fundamentals (see SMB commentary for details). RAY (+34.7% as a long) and MORPHO (+33.4% as a long) also contributed from the long leg, both representing fundamentally cheap DeFi protocols that benefited from the sector rotation back into risk assets. JUP (+29.4% as a long) rounded out the winners as Jupiter’s dominance of Solana DEX aggregation continued to generate strong fees.

On the losing side, ALGO (-48.3% as a short) was the worst performer. Algorand rallied sharply despite its elevated MC/Fees ratio, as the token continued to benefit from the SEC’s declaration in March that it was a digital commodity, which resolved years of regulatory uncertainty. CHZ (-24.6% as a short) gained on World Cup-driven momentum. Chiliz’s roadmap for omnichain fan tokens and CHZ buybacks ahead of the 2026 FIFA World Cup continued to attract speculative flows.

Momentum Factor

Construction

Volatility-adjusted momentum: calculates 3-week rolling Sharpe-like score (mean return / std dev of daily return) for each asset. Long top 25% by filtered momentum, short bottom 25%. Equal-weighted, minimum 30 assets (15 per leg).

Performance Metrics

Momentum returned +0.9% in April, a marginal positive after March’s -1.3%, and YTD losses stand at -2.3%. While the monthly return was modest, the factor continues to exhibit extraordinary long-run performance: 51.09% annualized return with a 1.39 Sharpe ratio since inception, the highest among all factors. The muted April return reflects a challenging environment for trend-following strategies: the sharp reversal from March’s risk-off regime meant that many of the trends momentum was positioned for reversed quickly in April. Tokens that had been declining (and were therefore shorted) rallied, while some prior winners stalled.

Despite the flat monthly return, momentum’s -2.3% YTD loss is relatively mild compared to the market factor’s -14.2% and BTC‘s -10.5%, showing the factor’s ability to limit downside.

Top 5 Winners & Losers for April

DEXE (+91.8% as a long) was once again the top contributor across multiple factors. The momentum signal correctly identified DEXE’s strong uptrend early, capturing the bulk of its April rally (see SMB commentary). ZEC (+65.5% as a long) was the second-best performer, capturing Zcash’s explosive rally driven by the catalysts described in the SMB section. LUNC (+53.4% as a long) contributed as the burn-driven rally continued (see SMB commentary) and the Cosmos SDK v0.53 integration going live.

On the losing side, AXS (-30.5% as a short) was the largest detractor, rallying against the factor’s short positioning as gaming tokens benefited from the broader altcoin recovery. PENDLE (-22.7% as a short) hurt the factor meaningfully. The DeFi yield protocol rallied over 20% in mid-April as its new sPENDLE liquid staking model (launched January 2026) and ~$34 million annualized revenue attracted renewed investor interest, including from high-profile buyers like Arthur Hayes.

Growth

Construction

Equal-weighted long-short: composite score combining z-scores of 2-week trailing fee growth (pct change) and DAU growth (pct change). Long top 50% composite score, short bottom 50%. Eligibility requires DAU > 100 and weekly fees > $500. 30 assets (15 per leg).

Performance Metrics

Growth returned +1.1% in April, bringing YTD losses to -1.7%. The factor continues to display the lowest volatility among long-short factors at 23.0% annualized, reflecting the stability of its underlying signals (trailing fee growth and DAU growth). The positive monthly return represents a return to profit that was previously challenged in the risk-off environment when fundamental growth metrics provided less differentiation.

The Sharpe ratio of 1.53 and Sortino ratio of 2.82 since inception remain the highest of any factor, indicating that Growth’s quality-driven signal delivers the best risk-adjusted returns over full cycles. The max drawdown since inception of -14.4% is the shallowest among long-short factors after Value, reflecting the stability of the growth signal.

Top 5 Winners & Losers for April

MON (+45.8% as a long) was the top performer, correctly identified by the growth signal as exhibiting accelerating fees and user activity. XPL (+40.4% as a long) contributed over one week of positioning. ARB (+37.9% as a long) rallied alongside the L2 recovery, with Arbitrum’s fee growth confirming its position as the leading L2 by DeFi activity. ENA (+36.5% as a long) surged as Ethena’s synthetic dollar protocol continued to gain traction. Arthur Hayes’s visible accumulation of ENA tokens and growing speculation around a potential Bitwise ETF filing for ENA supported the rally.

On the losing side, AERO (-46.5% as a short) was the largest detractor. Despite Aerodrome’s strong fundamentals (see SMB commentary), the growth factor shorted it based on its composite ranking. RAY (-34.7% as a short) similarly rallied against the short position as Raydium’s Solana DEX volumes surged. MORPHO (-30.8% as a short) gained as the DeFi lending sector recovered. ZRO (-21.1% as a long) was a notable long-side loser as LayerZero’s price declined despite its earlier announcement of a Layer-1 blockchain backed by Citadel Securities, ARK Invest, and Google Cloud, as the initial excitement faded.

Fundamentals 1

Construction

Equal-weighted long-short quintile portfolio: composite score combining rank z-scores of DAU growth, inverted active revenue share, revenue stability, and MC/fees mean reversion. Long top quintile (~12 assets), short bottom quintile (~12 assets).

Performance Metrics

Fundamentals 1 returned -3.7% in April, the only factor to post a negative return during the month. YTD losses now stand at -6.6% and the max drawdown since inception is -21.7%. This underperformance during a strong market rally is attributable to the factor’s concentrated short positions in tokens that experienced unexpected reversals.

Despite the challenging month, the factor retains the second-highest annualized return (46.8%) and one of the best Sharpe ratios (1.46) since inception. The cumulative return of 519.3% compared to BTC‘s 65.8% highlights the long-term value of the composite fundamental signal.

Top 5 Winners & Losers for April

AXS (+20.6% as a long) was the top contributor, with the gaming token’s fundamental scores correctly positioning it on the long side as Axie Infinity’s fee generation and user activity showed improvement. ALGO (+11.1% as a long) continued to benefit from the SEC’s digital commodity declaration (see Value commentary).

On the losing side, PENDLE (-56.9% as a short) was by far the largest detractor (see Momentum commentary). The factor’s short positioning was based on PENDLE’s composite fundamental score, but the market rewarded its strong revenue generation with a sharp re-rating. RAY (-31.4% as a short) rallied as Raydium’s dominance of Solana DEX trading volumes continued to grow. JTO (-29.5% as a short) gained alongside the broader Solana ecosystem recovery. CHZ (-29.0% as a short) rallied on World Cup momentum (see Value commentary).

Stablecoins 1

Construction

Equal-weighted long-short quintile portfolio: composite score combining rank z-scores of stablecoins flow. Long top quintile (~3-4 chains), short bottom quintile (~3-4 chains).

Performance Metrics

Stablecoins 1 returned +5.7% in April, bringing its YTD return to +2.1%, one of only two factors (alongside Value) positive for the year. The max drawdown since inception of -31.8% reflects earlier drawdowns in the strategy’s history, though the factor has been on a strong run since mid-2025. The factor’s annualized return of 39.6% and Sharpe of 1.26 since inception demonstrate that stablecoin flows are a powerful signal for predicting relative chain performance.

Top 5 Winners & Losers for April

OP (+24.5% as a long) was the top contributor by a wide margin. Optimism attracted significant stablecoin inflows in April as the broader L2 ecosystem recovery took hold. As one of the leading Ethereum L2s, Optimism’s Superchain vision, a network of interconnected OP Stack rollups, continued to attract new chain deployments, driving stablecoin deposits into its ecosystem. TON (+9.6% as a short) contributed from the short leg as Toncoin experienced stablecoin outflows. TRX (+6.9% as a long) continued to capture the stablecoin transfer narrative, with Tron remaining the dominant network for USDT transfers globally.

On the losing side, APT (-14.1% as a short) was the largest detractor, as Aptos rallied despite showing negative stablecoin flow trends. The broader market recovery lifted all chains in April, making it harder for the stablecoin flow signal to fully differentiate.

Key Findings & Conclusion

April was a recovery month that tested the crypto factor framework in the opposite direction from the prior three months. After limiting losses during the February-March drawdown, the long-short factors naturally lagged the broad market during recovery. This is by design: the short legs that protected capital during the selloff gave back some returns as speculative assets bounced indiscriminately.

Several cross-factor themes emerged in April. The DAO governance narrative continued to drive DEXE, which appeared as a top contributor in both SMB and Momentum for the second consecutive month. Privacy coins saw explosive demand, with ZEC‘s rally driven by the SEC clearance, Grayscale’s spot ETF filing, and the growing narrative that AI surveillance will increase demand for financial privacy. DeFi yield protocols recovered sharply: PENDLE‘s rally (fueled by its sPENDLE tokenomics overhaul and strong revenue) was the single largest loss for Fundamentals 1, while Aerodrome‘s cross-chain expansion plans attracted institutional accumulation. The LUNC burn narrative gained renewed steam with over 2 billion tokens destroyed in April and a major network upgrade vote on the horizon.

Value and Stablecoins 1 remain the standout YTD performers at +13.3% and +2.1% respectively, while all other factors, including the market index at -14.2% and BTC at -10.5%, remain negative for the year. The framework’s cumulative value is best measured over the full backtest period: Momentum has returned 547.7% since inception versus BTC‘s 65.8%, Fundamentals 1 has returned 519.3%, and Growth has returned 326.9%.

Looking ahead, the key question is whether April’s recovery has legs or whether the ongoing Iran conflict and elevated oil prices will reassert downward pressure. If the risk-on environment persists, long-short factors may continue to lag the market in the near term, but their compounding advantage over full cycles remains compelling.

If you have any questions, feel free to reach out to team@artemis.xyz or shoot us a DM on X.com at https://x.com/artemis

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions

The thesis is not simply that stablecoins grow. It is that Coinbase is structurally positioned to monetize that growth through USDC distribution, on-platform balances, Base, and its economic agreement with Circle.

If stablecoins become a major financial rail, Coinbase is not a passive beneficiary. It is one of the businesses most directly levered to the upside.

Stablecoins have become larger than crypto

Stablecoins used to be pseudonymous with crypto. As trading volumes and exchanges grew, the supply of stablecoins grew in parallel. But after 2021 we started to see something different. Usage metrics including transaction volume, daily active address and transactions continued to increase despite a downturn in crypto prices and trading. Stablecoins had “decoupled”, indicating broad based usage of all types of payments and store of value.

As more individuals adopted stablecoins, institutions followed. BlockRock launched a tokenized money market product, Circle had an IPO and regulation like GENIUS passed in the US. These developments turned many optimistic about the use of stablecoins, given their upgraded features to the traditional financial system. Even the US Treasury Secretary Bessent believes stablecoins could reach $3T by 2030, up almost 10x from today.

Coinbase is a clear beneficiary of the stablecoin mega-trend.

First, on-chain data tells a compelling story. Coinbase is the #1 holder of USDC on platform and is growing its lead over competitors. USDC on Coinbase is nearing an all time high as USDC is also hitting an all time high.

Second, we believe the USDC distribution agreement is Coinbase’s asset, not Circle’s. Circle’s share-of-revenue paid to Coinbase has climbed from 17.8% in Q1’22 to roughly 50% in each of the last two years.

The structural reason is straightforward: Coinbase earns roughly 100% of the yield on USDC held in its products and a 50% share of off-platform balances under the Payment Base waterfall. As Coinbase’s distribution grew (Q1’26 average USDC held in Coinbase products hit $19B, an all-time high), its waterfall share grew with it.

From an investor’s standpoint, Coinbase effectively gets issuer-like economics without the cost or overhead of being an issuer. The Collaboration Agreement runs in 3-year terms and auto-renews provided that three thresholds are met (Product, Company, and Reseller). Public filings indicate that, if those thresholds are satisfied, “the Circle Agreement cannot be terminated.” The renewal mechanism is not a renegotiation cliff, rather a continuation lock. As Coinbase is in full control of the renewal terms, this could be viewed as a perpetual agreement. For Coinbase, the upside scenarios (regulatory clarity drives stablecoin payments to scale, USDC market cap expands meaningfully) flow directly through the same contractual share. The contract is structured to compound Coinbase’s position regardless of who runs Circle.

Third, clear regulation is coming into play. The CLARITY Act’s relevance to Coinbase’s stablecoin economics is also greater than is widely appreciated. Coinbase’s distribution and reserve-share arrangements with Circle generate a revenue stream that, on current rate assumptions, rivals the issuer-level economics earned by Circle itself, and Coinbase’s USDC rewards program contributes a further line whose ultimate scale depends on how the Tillis-Alsobrooks compromise is finally drafted. The market underweights the magnitude and durability of these stablecoin-linked revenue lines and treats them as adjuncts to the exchange business rather than as core infrastructure economics in their own right. The CLARITY Act, by formalizing the broader regulatory architecture in which stablecoins clear, settle, and circulate — and by clarifying the registered intermediaries through which institutional stablecoin flows transit — strengthens that argument. It reframes Coinbase’s stablecoin franchise as the application layer of a regulated and rapidly institutionalizing system, rather than as a discrete consumer product line whose value rises and falls with retail token trading volumes.

Future Growth of USDC

As blockchain rails support increasingly interesting applications, USDC has been often used as the settlement or collateral asset integral to those applications. We’ve seen drastic growth in USDC supply in protocols like Polymarket, Hyperliquid, MakerDAO, etc. As new financial use cases emerge on blockchain platforms, USDC will continue to compound its position as core infrastructure.

We believe Coinbase is in a good position to capture the next wave of stablecoin use cases: payments. Payment types on card rails (B2B, B2C) have all increased significantly over the past year, and USDC has been gaining share in these types of transactions.

When looking at address to address transfers of USDC, a proxy for these types of transactions, we can see USDC gaining share against USDT.

Most investors think Stripe ($159B as of Feb ‘26) and Tempo are the clear winner of agentic commerce but a look at onchain metrics shows otherwise: 92.8% of real agentic payments volume happens on Base, while 99.8% are settled in USDC.

For a deeper look at how agentic commerce could create the next major source of stablecoin demand, read our full agentic Coinbase thesis here.

Conclusion

Coinbase has already proven to be the leader in USDC and USDC economics. As stablecoins continue to grow and see new use cases in trading and commerce, we believe Coinbase is well positioned to capitalize on all of these trends. As new entrants enter the space and regulation becomes clear, we believe there is a path for stablecoins to reach 3 trillion and for Coinbase to have a meaningful share of that on platform.

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions

Agents are one of those platform shifts where the first-order use case is obvious, but the second- and third-order effects are impossible to predict. That uncertainty is precisely the investment case. Coinbase has a track record of entering frontier markets early (crypto, stablecoins), absorbing the initial ambiguity, and turning emerging primitives into scaled revenue lines.

For agentic commerce, the same pattern has formed: Coinbase has exposure to the stablecoin, the settlement layer, and the agent payment protocol that every credible path likely depends on.

Having already crossed $300 billion in supply, stablecoin growth represents a significant earnings vector for Coinbase through 2030 and beyond. The question is no longer whether stablecoins can reach mainstream scale, but what drives the next phase of growth. Agentic commerce could become that driver by creating an entirely new market dependent on stablecoins.

Agents are becoming a new class of internet user, company worker, buyer, and economic actor. Cloudflare expects AI bot traffic to surpass human traffic by 2027, Slack expects agents to outnumber humans on its platform within two years, Microsoft sees software users shifting beyond humans, and Jensen Huang has described Nvidia operating with 7.5 million agents for 75,000 employees.

Economic actors need money. AI agents will buy APIs, data, compute, inference, software, and services in real time. These payments will be high-frequency, small-dollar, global, and automated. Card rails were not set up for this: a $0.03–$0.04 fixed cost makes a $0.003 API call uneconomical, while stablecoins on blockchains can settle in seconds for fractions of a cent.

If agents become a primary user of the internet, they need three things:

• A programmable unit of exchange

• A low-cost settlement layer

• Developer infrastructure to hold balances, authorize spend, manage permissions, and transact without a human in the loop

Coinbase already has built all three:

• USDC as the programmable dollar

• Base as the low-cost settlement layer

• CDP / AgentKit / x402 as the developer and payment infrastructure stack

Coinbase is not the only company building for this. Stripe’s Machine Payments Protocol, Visa’s agent pilots, Circle’s Agent Stack, PayPal’s PYUSD-backed efforts are all credible. The difference is vertical integration: Stripe is anchored to card rails and its stablecoin position is still young; Visa and Mastercard face unit economics that don’t work below a cent; Circle has the stablecoin, but the chain is not yet live, and the developer ecosystem is more nascent; PayPal has the stablecoin but not the chain or the developer surface. Coinbase is the only player with issuance economics, a settlement layer, and a payment protocol under one roof, which is what allows USDC, Base, and x402 to compound on each other.

Coinbase’s stack is now starting to move into enterprise distribution. Coinbase recently announced that x402 and Coinbase wallet infrastructure are now integrated into Amazon Bedrock AgentCore Payments, AWS’s agentic payments product. This matters because it gives AWS developers a managed way to let agents discover services, pay in USDC, and transact with budget controls, compliance, and audit trails. For Coinbase, the bigger signal is enterprise validation.

This distribution milestone comes on top of early x402 protocol traction. Since October 2025, x402 has processed 178.7 million agentic payments, moving $42.4 million in agent spend across more than 5,000 merchants. Of that volume, 82.1% settled on Base and 99.8% settled in USDC. Right now, early agentic payments activity is defaulting to Coinbase in the form of Base, USDC, and x402.

Coinbase’s economic exposure is not limited to transaction fees. The larger opportunity is becoming the financial account layer for autonomous commerce.

The agentic bull case for Coinbase is material:

If agentic commerce reaches $7.5 trillion in annual volume by 2031, in line with the high end of McKinsey’s estimate, and 20% settles through stablecoin rails, this implies $1.5 trillion of annual stablecoin-based agentic payment volume.

If Coinbase compounds on its early lead, it could capture roughly $4.25 billion of annual revenue from USDC float, developer infrastructure, facilitator economics, and Base settlement.

The key point is simple: stablecoins gave the internet a payment layer. AI agents may give that payment layer its first native 24/7/365 user base.

If stablecoins are the monetary layer of internet-native finance, agentic commerce is one of the clearest reasons that layer compounds. And if agents become the next major user of the internet, Coinbase is positioned to own the financial stack they use to hold, route, and settle money.

Our view: the market is still underwriting Coinbase as a crypto exchange. It should be underwriting Coinbase as financial infrastructure for AI-native finance.

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions

Intro

Artemis is a digital finance research firm that focuses on onchain data. We helped McKinsey estimate real stablecoin payment volume, written extensively about Agentic Commerce and what digital finance looks like in 2030. As crypto and AI converge, Coinbase will no longer be just a crypto exchange. It is becoming the settlement, distribution, and commerce layer for AI-native finance.

Most view Coinbase as just a crypto brokerage that is cyclical and trades along with crypto trading volume.

Not surprisingly, Coinbase trades in line with other brokerages like IBKR, Robinhood, Schwab

– versus Circle which captures a much higher multiple (103.9x NTM earnings) as a pure play bet on stablecoin growth.

Coinbase can become a $300B company (6x from today, 35% CAGR) in 2031 as the primary winner of stablecoins and agentic payments — NOT just as a crypto exchange. See our full model here.

Our core assumptions:

• Stablecoin supply hits $3T of supply in 2031

• Agentic commerce volume reaches $7.5T in 2031.

• We make the same assumptions on the core exchange business as the street - ~$6B in transaction revenue by 2028.

The market misses the fact that Coinbase benefits and wins from two generational tailwinds:

1. The rise of stablecoins and demand for digital dollars globally. US Treasury Secretary Scott Bessent forecasts stablecoin supply to reach $3T in 2030 (up 10x from today). Bain & Co thinks supply will be 12x by 2030, or $3.8T.

2. The rise of agentic commerce. McKinsey forecasts $3-$5T of global agentic commerce by 2030 and we predict 1/3rd of all commerce volume will settle onchain and leverage agentic payment protocols like x402, MPP, etc. We currently see on chain the rapid growth of agentic payments happening on blockchains:

Coinbase is a clear beneficiary of both these tailwinds and accrues value as the #1 largest and most regulated distributor of USDC and for having the #1 network for agentic payments.

Even when institutions are skeptical of DeFi and see crypto as “dead”, Coinbase will win not because of crypto and exchange trading volume but by being the most trusted and dominant stablecoin platform and payments infrastructure for agents.

Why Coinbase is winning from stablecoins

The market doesn’t understand that Coinbase is a clear winner from stablecoin growth – even when crypto trading volumes go down, stablecoin usage has continued to trend upwards historically.

The USDC distribution agreement is a Coinbase asset, not a Circle one. Circle’s share-of-revenue paid to Coinbase has climbed from 32% in 2022 to roughly 50% in each of the last two years. The structural reason is straightforward: Coinbase earns roughly 100% of the yield on USDC held in its products and a meaningful share of off-platform balances under the Payment Base waterfall. As Coinbase’s distribution grew (Q4’25 average USDC held in Coinbase products hit $17.8B, an all-time high), its waterfall share grew with it.

From an investor’s standpoint, the agreement is closer to Coinbase outsourcing the regulatory and reserve-management work to Circle than to Circle paying Coinbase for distribution. The Collaboration Agreement runs in 3-year terms and auto-renews provided that three thresholds are met (Product, Company, and Reseller). Public filings indicate that, if those thresholds are satisfied, “the Circle Agreement cannot be terminated.” The renewal mechanism is not a renegotiation cliff — it is a continuation lock. For Circle, walking away would mean cutting access to the largest single distribution channel for USDC. For Coinbase, the upside scenarios (regulatory clarity drives stablecoin payments to scale, USDC market cap expands meaningfully) flow directly through the same contractual share. The contract is structured to compound Coinbase’s position regardless of who runs Circle.

Future Growth of USDC

Outside of Coinbase, we also see many interesting use cases for USDC, especially in emerging protocols. We’ve seen growth in USDC supply in protocols like Polymarket, Hyperliquid, MakerDAO, etc., which has increased drastically over the past two years. As new financial use cases emerge on blockchain platforms, we see USDC continue to be used in these protocols.

Coinbase is in a good position to capture the next wave of stablecoin use cases, payments. Payment types on card rails (B2B, B2C) have all increased significantly over the past year, and USDC has been gaining share in these types of transactions.

When looking at address to address transfers of USDC, a proxy for these types of transactions, we can see USDC gaining share against USDT.

Is the market misinterpreting CLARITY?

The Digital Asset Market Clarity Act of 2025 (H.R. 3633), commonly referred to as the “CLARITY Act,” passed the U.S. House of Representatives on July 17, 2025 by a bipartisan vote of 294–134. The bill would establish a comprehensive regulatory framework for digital assets other than payment stablecoins. For Coinbase, the CLARITY Act represents the most consequential piece of pending U.S. legislation in the company’s regulatory environment, and would establish a substantially complete federal regulatory architecture for the digital asset ecosystem in which Coinbase operates.

The CLARITY Act’s relevance to Coinbase’s stablecoin economics is also greater than is widely appreciated. Coinbase’s distribution and reserve-share arrangements with Circle generate a revenue stream that, on current rate assumptions, rivals the issuer-level economics earned by Circle itself, and Coinbase’s USDC rewards program contributes a further line whose ultimate scale depends on how the Tillis-Alsobrooks compromise is finally drafted. The market underweights the magnitude and durability of these stablecoin-linked revenue lines and treats them as adjuncts to the exchange business rather than as core infrastructure economics in their own right. The CLARITY Act, by formalizing the broader regulatory architecture in which stablecoins clear, settle, and circulate — and by clarifying the registered intermediaries through which institutional stablecoin flows transit — strengthens that argument. It reframes Coinbase’s stablecoin franchise as the application layer of a regulated and rapidly institutionalizing system, rather than as a discrete consumer product line whose value rises and falls with retail token trading volumes.

Why Coinbase is winning agentic payments

Most investors think Stripe ($159B as of Feb ‘26) and Tempo are the clear winner of agentic commerce but a look at onchain metrics shows otherwise: 92.8% of real agentic payments volume happens on Base, while 99.8% are settled in USDC.

And of all agentic payment volume, over 99.8% of it happens on x402, the open payments protocol pioneered by Coinbase.

AI agents are shifting from assistants that answer questions to systems that transact on a user’s behalf, buying APIs, data endpoints, compute, inference, and services at sub-cent unit economics and machine speed.

Existing card rails were not designed for this. A typical card transaction carries a roughly $0.03 to $0.04 fixed cost before interchange, which makes a $0.003 API call uneconomic by two orders of magnitude. Stablecoins settled on high-throughput L2s clear for fractions of a cent in seconds, and require no human in the loop to open a billing relationship.

McKinsey projects $3 to $5T in global agentic commerce sales by 2030. Gartner estimates AI agents will intermediate over $15T in B2B purchases by 2028. Both numbers are directional and should be treated as such; however, what is not speculative is that if any of it materializes, it structurally prefers stablecoin rails, where USDC is already the default and Coinbase benefits directly.

The scoreboard

The x402 standard, an HTTP-native micropayments protocol co-developed by Coinbase (now managed by the Linux Foundation), has become the leading open protocol for agent-initiated payments. Since October 2025, x402 has processed +180M agentic payments, moving $47.5M in agent spend across over 5K merchants selling to agents.

When merchants make their services accessible for agent consumption, Coinbase’s L2 and USDC are already the default payment rails. Additionally, Agentic.Market gives Coinbase a path to own resource discovery. If agents use it to find, evaluate, and route to x402 services, value accrues not just through Base settlement and USDC volume, but through Coinbase’s position as the marketplace coordinating agent-to-service transactions.

How Coinbase monetizes

Coinbase captures agentic payment economics through four lines that compound around the stablecoin pillar: USDC float, Base settlement, CDP / AgentKit monetization, and Agentic.Market distribution.

1. USDC reserve yield. Coinbase’s highest-upside revenue line is not transaction fees, but float. Agent wallets need prefunded balances to authorize autonomous spend, pay for APIs, cover usage-based services, and settle machine-to-machine commerce in real time. As agents become economic actors, USDC balances held in Coinbase-controlled wallets become recurring, yield-generating deposits. Every dollar of agent-held USDC produces reserve income regardless of how quickly that dollar turns over.

2. Base sequencer economics. Every x402 or MPP-style transaction that settles on Base becomes a sequenced transaction that can generate priority fees. This line scales with transaction count, not just payment volume, which matters because agentic commerce is likely to be higher-frequency and smaller-ticket than human commerce. That said, sequencer fees are probably the smallest part of the upside because transaction costs trend lower over time.

3. CDP, AgentKit, and facilitator monetization. Coinbase can monetize the developer layer that lets agents hold wallets, manage permissions, sponsor gas, settle x402 payments, and interact with paid services. This includes facilitator fees on x402 transactions, wallet infrastructure, gasless transactions, key management, policy controls, and enterprise-grade developer tooling. If CDP becomes the default infrastructure stack for agentic payments, Coinbase earns platform revenue even when the end payment is low-value.

Sizing the upside

We assume $5T of annual agentic commerce by 2030. Most of this will still route through cards, ACH, bank payments, and account-to-account rails, especially for large-ticket consumer and enterprise purchases. But machine-native, high-frequency, cross-border, API-based commerce will disproportionately use stablecoins and payment standards like x402 and MPP.

We estimate that ~20% of agentic commerce settles through stablecoin rails, implying $1.0T–$1.5T of annual stablecoin-based agentic payment volume. Illustrative bull case revenue math is below:

• USDC float: $200B of average agent USDC balances × 4% reserve yield × 50% Coinbase-attributable economics = $4.0B

• CDP / AgentKit / facilitator / Agentic.Market: developer subscriptions, wallet infrastructure, x402 facilitation, marketplace routing, provider analytics, and distribution fees = $750M

• Base sequencer: $250B–$300B of agentic payment volume on Base, across tens of billions of transactions, at low per-transaction economics = $250M

This points to ~$4.25B of annual Coinbase-attributable agentic revenue. The important takeaway is that real value accrues if Coinbase becomes the operating account, developer platform, discovery layer, and settlement rail for autonomous commerce, which they have already made large strides towards in the past several months.

Why Coinbase and USDC wins

Coinbase’s advantage is that it controls four reinforcing layers of the agentic payments stack: USDC float, Base settlement, CDP / AgentKit infrastructure, and Agentic.Market discovery.

USDC is already the default settlement asset, which means builders integrate it first because it has the deepest tooling, liquidity, and developer support. Base then benefits as the natural settlement chain for USDC-native agent payments, with low developer friction and growing facilitator coverage. CDP and AgentKit sit one layer higher, giving developers the wallet, key management, gas sponsorship, and payment infrastructure needed to make agents economically active. Finally, Agentic.Market can become the discovery and routing layer where agents find, compare, and consume x402-enabled services. A competitor entering this market would need to replicate liquidity, settlement, developer infrastructure, and distribution simultaneously – while each new agent, merchant, and service makes the existing Coinbase stack harder to displace.

Conclusion

The market views Coinbase as a crypto exchange and misses that they are building the platform for AI-native finance. Global leaders forecast $3T in stablecoin supply and $5T in agentic commerce by 2030, and stablecoins have already decoupled from crypto prices. Coinbase has positioned itself to be a winner in that world and is showing an early lead. x402, USDC, and Base have become the de facto stack for agentic commerce, with each layer commanding a +90% share against competitors. Coinbase is uniquely positioned, having developed Base, incubated x402, and earn a favorable share in USDC economics. The mispricing has three legs. The Circle agreement is structured as a continuation lock, not a renewable contract, which means the stablecoin revenue line is durable rather than at risk. The CLARITY Act formalizes the regulated infrastructure layer Coinbase already operates, repricing the franchise from consumer product to core market plumbing. And the four-layer agentic stack (USDC, Base, CDP, Agentic.Market) compounds reflexively, with each new agent and merchant making the moat harder to attack. Coinbase should trade closer to the infrastructure comp set than the brokerage one. We think Coinbase becomes a $300B company off the back of these generational tailwinds, with the majority of revenue coming from subscription and services lines like stablecoins and agentic commerce.

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions.

Market Overview: The Weekly Recap

Crypto and crypto-equities took the worst of last week’s risk-off move, with the basket median printing -3.70% and crypto-fintechs HOOD (-12.75%), SOFI (-12.12%), and CRCL (-9.13%) leading the drawdown. Traditional equities went the other way, with QQQ +2.51% and SPY +1.44% on the megacap earnings cluster, leaving crypto distribution names repriced harder than the underlying assets they trade. The macro backdrop turned hawkish into the move: headline PCE printed 3.5% YoY on April 30, the hottest reading since May 2023, and the FOMC held rates at 3.5% to 3.75%. U.S. spot Bitcoin ETFs flipped to three consecutive days of net outflows totaling roughly $491M into FOMC week. BTC closes the period near $76,300, having stalled twice at $80,000 resistance.

In the basket, POL (+0.92%) was the only green crypto print as Polygon picked up Meta, Visa, and Modern Treasury USDC integrations. AAVE (-1.55%) held up best in major DeFi on the DeFi United bailout proposal, while SKY (-6.61%) and LDO (-6.14%) gave back the prior week’s gains from the Treasury Management Function proposal and the $20M LDO buyback program respectively. The L1 majors traded in a tight band: BTC -2.52%, ETH -3.21%, SOL -3.62%, BNB -3.70%, with XRP at -5.01% the laggard. Among equities, eq-MSTR (-4.07%) tracked BTC’s stall, while the crypto-distribution names carried the heaviest losses on combined earnings disappointment and risk-off sentiment

Today We Highlight

• Robinhood and SoFi both reported revenue beats overshadowed by softer forward color; HOOD fell 12.75%, SOFI fell 12.12%.

• Polygon picked up Meta, Visa, and Modern Treasury USDC integrations in the same week Polymarket signaled chain migration.

• Strategy extended weekly BTC accumulation to four straight weeks, adding 3,273 BTC for $255M and bringing total holdings to 818,334 BTC.

• Aave service providers proposed “DeFi United” with Lido and EtherFi to cover KelpDAO bridge losses; AAVE held up best in major DeFi at -1.55%.

1. Robinhood and SoFi: earnings get repriced

Robinhood and SoFi both reported Q1 earnings the week of April 28, and both stocks sold off sharply despite topline growth. HOOD finished -12.75% on the week and SOFI -12.12%. The two prints share a common pattern: revenue held up across deposits, lending, and equities, but crypto-tied revenue contracted and the market repriced both names off their crypto-cycle multiples.

Robinhood missed on net revenue ($1.07B vs $1.14B consensus) and EPS ($0.38 vs $0.39), with the miss driven by crypto revenue falling 47% YoY to $134M on just $24B of notional volume. Equities revenue grew 46% to $82M, event contracts jumped 320% to $147M on a record 8.8B contracts, and net interest income added $359M (+24%). HOOD closed -13.24% on April 29 on volume 132% above average; Barclays and KBW both cut price targets. SoFi delivered record adjusted net revenue of $1.1B (+41% YoY) and a 31% EBITDA margin, but EPS of $0.12 came in line and ended a streak of beats. The selloff came from softer forward guidance, a 27% drop in Galileo platform revenue tied to Chime exiting, and credit metrics drifting the wrong way (personal and student loan charge-offs both ticking up). SoFi formally launched crypto trading on the platform during the quarter; CEO Anthony Noto called digital assets a strategic priority going forward.

Both companies are still executing on their core franchises and both have credible crypto growth ahead of them, including SoFi’s just-launched trading product and Robinhood’s tokenized stocks rollout. The question for the multiple is not whether crypto revenue recovers but how soon. Coinbase’s May 7 print will set the near-term ceiling on how the market values that recovery.

2. Polygon adds Meta and Visa, faces Polymarket migration

POL was the only token in the crypto basket to print green on the seven-day FOMC tape, closing +0.92% against a basket median of -3.70%. Polygon picked up USDC integrations from Meta, Visa, and Modern Treasury in the same week Polymarket signaled it intends to migrate off the chain.

The catalyst side. On April 29, Meta launched USDC creator payouts via Stripe, settling on Solana and Polygon. The product is live for creators in Colombia and the Philippines, with expansion to 160+ countries planned by year-end per Polygon Labs. Meta paid creators roughly $3 billion through monetization programs in 2025; even a small fraction moving on-chain meaningfully expands the surface area for USDC outside the U.S. This is Meta’s first stablecoin product since shelving Diem in 2022, and the strategic shift is that Meta is using a regulated third-party stablecoin (USDC) under the post-GENIUS Act framework rather than building its own.

The same week, Visa added Polygon to its stablecoin settlement program alongside four other networks. Visa’s stablecoin network is now running at $7B in annualized transaction volume and growing approximately 50% QoQ, implying a near-term run rate above $10B. Modern Treasury added USDC on Polygon to its Payments API. The chain itself ran roughly $37B in stablecoin volume over the trailing 30 days and generated $11M in Q1 network revenue, up from $2.1M the prior quarter.

The migration side. On April 24, Polymarket VP of Engineering Josh Stevens posted on X that “chain migration” is now a roadmap priority, citing insufficient block space, gas costs, and block times on Polygon. No target chain has been announced; an Ethereum L2 called “POLY” was on the table in December 2025, but Stevens did not confirm whether that remains the plan. Polymarket generates $2.5M to $4M in weekly fees on Polygon, accounting for 50% to 70% of the chain’s total transaction fee revenue, and consistently occupies three of Polygon’s top five gas-consuming contracts. The platform was valued at $9B in October 2025 following Intercontinental Exchange’s $2B investment.

The CLOB V2 upgrade Polymarket executed on April 28, migrating the exchange to a new collateral token (pUSD) and a rebuilt order book, runs on Polygon. That is a Polygon-native event and separate from the broader chain migration.

How the market priced it. That POL printed only +0.92% on a week stacked with Meta, Visa, and Modern Treasury integrations is the signal. The market is pricing both halves of the story rather than either alone: Polygon is adding the institutional payments rail at the moment it risks losing its largest crypto-native consumer application. The variable that determines whether POL re-rates higher or compresses from here is whether Polymarket’s migration timeline crystallizes into a confirmed exit or Polygon retains the platform through performance fixes. Stevens has committed to weekly engineering updates beginning in early May, which makes that timeline directly observable.

The bigger read for Polygon is that institutional distribution and crypto-native distribution are now competing inputs into the same fee base. Adding Meta, Visa, and Modern Treasury makes Polygon a payments rail; losing Polymarket would remove its largest crypto-native demand source. May’s question is whether the chain can keep being both at once.

3. Strategy adds another $255M, BTC Yield ticks to 9.6% YTD

Strategy disclosed on April 27 that it acquired 3,273 BTC for $255M during the week ending April 26 at an average $77,906 per coin. Total holdings stand at 818,334 BTC at a $61.81B cost basis (average $75,537 per coin), a position now slightly in profit at current prices. The week’s purchase was funded via 1,451,601 MSTR Class A shares sold under the at-the-market program. It marks the fourth consecutive week of buying, but at a meaningfully slower pace than the prior week’s $2.54B headline buy. MSTR shares closed near $172 on Monday after the disclosure, off the prior week’s high near $183, and finished the week at -4.07%.

mNAV sits at 1.28x, off the 2.4x peak from 2024 but well above the sub-1.0x readings that briefly forced an ATM pause in February. The capital structure has expanded beyond common-equity issuance: the company has $8.25B in outstanding convertible notes with strikes from $149.80 to $672.40 and a suite of preferred shares (STRC, STRD, STRK) issued through 2025. STRC’s volume-weighted average price of $99.76 in April held the dividend steady at 11.5% for a third consecutive month. The March $42B ATM filing across MSTR common, STRC, and STRK gives Strategy runway to keep accumulating through 2027 even at compressed premiums.

BTC Yield ticked from 9.5% to 9.6% YTD on the latest disclosure. Strategy has bought roughly 89,000 BTC year-to-date. The next disclosure is expected Monday May 4 for the week ending May 3.

At $41.8B in Bitcoin fair value, Strategy holds nearly 7x the BTC position of the next-largest public corporate holder (MARA, $6.0B).

4. Aave coordinates the “DeFi United” bailout after KelpDAO contagion

KelpDAO’s rsETH cross-chain bridge was drained of approximately $293M on April 19, the largest DeFi hack of 2026. The attacker overwhelmed a security checkpoint with junk traffic and submitted fake transfer requests; the exploit was later attributed to North Korea’s Lazarus Group.

The contagion ran deeper than the exploit itself. Because rsETH was used as collateral on Aave, the attacker borrowed approximately 82,600 ETH (~$195M) against unbacked tokens, leaving Aave with bad debt despite its own contracts being uncompromised. Aave’s TVL fell from $26.4B to $20.1B over two days. Total DeFi withdrawals across the sector reached $13B. Two follow-on hits landed within days: Volo Protocol on Sui ($3.5M, April 22) and GiddyDefi ($1.3M, April 23).

By midweek, Aave service providers launched “DeFi United,” a coordinated recovery effort with Lido Finance, EtherFi, and Aave founder Stani Kulechov among those proposing to put forward ETH to cover the rsETH backing shortfall. AAVE held up better than peers across the basket at -1.55% on the week as the bailout took shape and the bad-debt overhang began to clear. Lido separately launched a $20M LDO buyback program funded from treasury stETH; LDO had rallied to 10-week highs the prior week before giving back -6.14% on the FOMC tape.

Charts of the Week

Other Notable News

• Mastercard agreed to acquire BVNK Holdings, a London-based stablecoin infrastructure firm, for $1.5B plus up to $300M in contingent consideration, confirmed on the Q1 earnings call April 30. CEO Michael Miebach named stablecoins and agentic commerce as the two strategic pillars; Mastercard Agent Pay is in adoption by partners including OpenAI. Q1 net revenue grew 16% to $8.4B with adj EPS of $4.60 beating $4.41 consensus.

• Visa reported fiscal Q2 results on April 28: net revenue of $11.2B grew 17%, the company’s strongest quarter in four years. Adj EPS of $3.31 beat the $3.10 consensus. The board authorized a new $20B multi-year buyback.

• DOJ dropped its criminal investigation into the Federal Reserve and Powell late in the prior week, cited by Powell as a precondition for considering when to step down from the Board of Governors.

• Wisconsin AG sued Kalshi, Coinbase, Polymarket, Robinhood, and Crypto.com over sports prediction market contracts. Separately, the DOJ filed what appears to be the first U.S. insider-trading prosecution tied to a prediction market: a Special Forces master sergeant who placed roughly $33,000 on Polymarket hours before Trump announced Maduro’s capture, netting more than $400,000. The Senate also unanimously banned members and staff from using prediction markets.

  IBIT options open interest topped Deribit in late April, the first time U.S.-listed regulated BTC options have outpaced the dominant offshore venue.

• Morgan Stanley launched MSNXX, a $1 NAV government money market fund built as a stablecoin reserves portfolio for issuers.

The Week Ahead

The data calendar quiets after the dense April 29-30 cluster. The April nonfarm payrolls report on May 2 is the next major macro print. ISM manufacturing and services bookend the week. On the crypto-adjacent earnings side, Coinbase reports Q1 after the close on May 7, the first read on subscription and services revenue inside the company’s $550-630M Q1 guide and the first meaningful disclosure of Base onchain revenue. Strategy’s next BTC purchase disclosure is expected Monday May 4 for the week ending May 3.

The macro question remains the same as last week: whether the Iran war’s oil pulse continues to feed PCE prints or whether near-term de-escalation cools the inflation impulse. The crypto question: whether ETF flows return to inflows after the three-day reversal into FOMC week, and whether $80,000 stops acting as resistance and starts acting as support.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

The AI infrastructure buildout is one of the largest capital deployment cycles in technology history and it is constrained not by demand, but by the physical availability of power. The United States faces a projected power deficit of ~50 gigawatts through 2028.

Within this context, operators who already control energized large-scale power such as Bitcoin miners who secured grid infrastructure years in advance, find themselves uniquely positioned to capture a structural premium.

The conversion of mining infrastructure to high-performance computing (HPC) data centers is one of the few near-term ways to bring scarce power capacity to market.

01 The Industry Investment Thesis

Artificial intelligence workloads require sustained high-density power at a scale and speed that the existing grid interconnection process cannot deliver. Training large language models and running GPU-intensive inference tasks demands thousands of chips operating in proximity, drawing electricity at densities that dwarf conventional enterprise data center requirements. The result is a supply/demand dislocation in energized power that is structural, multi-year in duration and largely insensitive to macro conditions. The compute intensity of AI tasks is also evolving in ways that systematically increase power demand per unit of economic output: while a simple chatbot query is computationally modest, chain-of-thought reasoning tasks require 100x the compute, video generation 3,000x, and deep research tasks potentially 1,000,000x the baseline.¹ As AI use cases proliferate toward these more computationally intensive agentic applications, the length of tasks have been consistently exponentially increasing over the past 6 years, with a doubling time of around 7 months.² The aggregate power demand per user and per dollar of AI-driven economic activity will continue to increase regardless of efficiency gains at the chip level.

The Power Bottleneck: AI’s Defining Constraint

The single largest constraint on AI buildout timelines today is not chip availability or software capability, it is electricity. Hyperscaler capital expenditure alone is running at approximately $650 billion this year. Analysis of chip shipment forecasts and announced US data center construction suggests a power deficit of approximately 50 gigawatts between 2025 and 2028, driven by stronger-than-expected semiconductor demand.³ Data centers currently account for only 3–4% of total US grid consumption, but that figure is projected to reach 12% by 2028.⁹

The scale of individual lab demand illustrates the pressure. OpenAI’s compute footprint has scaled from ~600 MW to ~2 GW and is expected to reach ~6 GW this year, potentially 12 GW next year. Similarly, Anthropic is on a similar trajectory. For every $100 billion of AI revenue generated at 50% gross margins, labs must spend $50 billion on compute, equivalent to 5 GW of capacity at ~$10 billion per GW annually. Given this shortage against overwhelming near-term demand, time to power is the key focus.

The gap cannot be closed quickly. Grid interconnection queues now stretch to four or more years for large loads. ERCOT, the Texas grid operator, alone has approximately 458 GW of pending applications in its interconnection queue.⁴ In a recent survey, more than half of developers report that securing power has become more difficult over the past twelve months. Utility respondents say time-to-power will take 2 years longer on average than expected by hyperscalers and colocation providers.⁵ Even within ERCOT, widely regarded as the most accessible US interconnection regime, the minimum timeline is approximately 300 days under ideal conditions, with current average timelines running closer to 3–5 years due to study backlogs.⁶ PJM, the grid operator that covers Virginia, Ohio, Pennsylvania, and much of the Northeast, is broadly viewed as the most constrained region in the country today, with new large-load interconnection effectively stalled. PJM’s available supply capacity has declined 20% (40 GW) over the last four years, driven by plant retirements.¹⁰ Substations required for loads above 100 MW, now effectively universal for AI data center builds, add a further 18–24 months of delivery timeline, with large transformer procurement alone running 2–3 years.

The Power Cost Benchmark: Why Miner Conversions Win on Economics

Other than speed, the decision of where to source power is also a question of all-in cost per MWh, and that cost varies dramatically across the available options. Bitcoin miner conversions represent the lowest-cost path by a wide margin. Miners typically pass power through to tenants at $70–100/MWh, reflecting their underlying contracted rates of $30–50/MWh. Those economics largely reflect power contracts secured years ago, before scarcity became acute.

The alternatives each carry meaningfully higher costs and their own execution constraints:

• Nuclear: Securing a nuclear power purchase agreement currently costs approximately $80–100/MWh. Nuclear offers firm, 24/7 power with zero carbon emissions, making it attractive to hyperscalers with sustainability commitments, but existing capacity is limited, new nuclear technologies such as small modular reactors (e.g. OKLO, SMR) remain a decade away at scale, and the contracting process is competitive and slow. Constellation Energy (CEG), which operates the largest nuclear fleet in the US with 20 GW of capacity, has already leased ~10% of its fleet to hyperscalers.

• Natural gas turbines: Combined-cycle gas turbines are the conventional large-scale power solution, pricing at approximately $100/MWh all-in for behind-the-meter configurations. However, the market for new turbine orders is effectively backlogged. GE Vernova (GEV) and the small number of other major turbine OEMs have order books extending years out, making new turbine-powered capacity largely inaccessible for near-term data center buildouts regardless of price. GEV in particular has a $160B+ backlog and has seen its EBITDA margins expand from 8% in 2025 to 20% by 2028 as they are able to continue to take price.

• Fuel cells: Bloom Energy’s (BE) solid oxide fuel cells can be deployed faster than grid interconnection timelines and provide reliable baseload power, but at a cost of approximately $120–150/MWh, roughly 2x the all-in cost available through miner conversions. Suitable as a bridging solution or for smaller loads, but difficult to justify at scale.

• Alternative and exotic sources: A broader menu of generation technologies is available for behind-the-meter deployment, such as aircraft, ship and medium-speed reciprocating engines. These options are generally more expensive than grid-connected power, but developers choose them specifically to bypass interconnection queues and permitting timelines. Each technology can contribute meaningfully at the margin but none approaches the cost efficiency of pre-contracted miner power. More speculative configurations such as data centers in space are effectively pre-commercial and likely $1,000+ MWh today.⁷

The implication for investors is clear, operators with access to pre-contracted miner power at $30–50/MWh hold a structural cost advantage over every alternative path that is not replicable at any price in the near term, with a massive premium on near-term power availability. Announcements such as BE and Oracle’s recent 2.8 GW deal, along with Elon’s comments about data centers in space, highlight how acute the power shortage is and reinforce the view that BTC miner conversion, as the lowest-cost source of power, will be fully utilized before the market is forced toward more expensive and exotic alternatives.

A further structural advantage of Bitcoin site conversions has emerged beyond speed: political and community acceptability. Data center development has become an increasingly contentious issue, with communities pushing back against new builds over concerns about electricity bills and environmental externalities. Recent polling of US registered voters found that 60% hold AI data centers at least partly responsible for rising electricity prices ⁸. Bitcoin site conversions avoid this friction because they reuse existing grid access rather than requesting new incremental interconnection. An operator adding compute at an existing Bitcoin site does not increase the community’s electricity burden in the way that a greenfield data center does.

The Historical Role of Bitcoin Mining Infrastructure

Bitcoin mining’s role in the AI infrastructure story is primarily historical and structural. Over the preceding decade, miners accumulated large-scale power infrastructure in Texas and other low-cost power markets, securing firm grid interconnection agreements that are now extraordinarily valuable given the scarcity environment. The industry collectively holds over 10 GW of approved capacity across US-listed operators, the single largest pool of readily convertible energized power available to AI developers anywhere in the country. A widely-used industry reference metric puts the revenue potential of this asset class into sharp relief: for every gigawatt of reliably delivered AI colocation capacity, operators can generate approximately $1-2 billion in annual revenue.

For the largest cloud providers, third-party colocation is typically a capacity bridge rather than the preferred long-term model. Hyperscalers and neoclouds turn to third-party colocation specifically when their own data center capacity has been exhausted and hardware risks sitting idle in warehouses unpowered. Given the alternative, GPU fleets generating zero revenue and depreciating while awaiting internal data center completions, the premium paid for ready third-party power is economically rational. The current environment, where internal capacity is fully spoken for across every major cloud provider, has effectively made colocation a necessity.

The economics of mining itself are deteriorating structurally. The scheduled Bitcoin halving, which cuts block rewards in half approximately every four years, progressively compresses mining profitability. With the next halving expected in 2028, the relative attractiveness of contracted HPC cash flows should continue to improve versus pure-play mining economics. This creates a natural and self-reinforcing conversion incentive: as mining margins compress, the relative attractiveness of long-term HPC lease revenues which are predictable, inflation-linked, and completely independent of BTC price grows commensurately.

Site Selection

Miners possess the four physical ingredients that AI developers most need but cannot quickly acquire: firm grid interconnection, large contiguous land parcels, experience managing high-density electrical infrastructure, and often below-market power contracts. There are a few other considerations when evaluating specific sites for conversion:

The convertible share of US mining capacity is more limited than aggregate power figures suggest given power contract terms. Some miners secured favorable power pricing precisely because they agreed to operate as flexible load: when the grid requests curtailment, they shut down. This arrangement is acceptable for Bitcoin mining, which can pause and resume without consequence, but is structurally incompatible with HPC workloads that require continuous, uninterrupted uptime. A data center that may go offline for hours during periods of grid stress cannot credibly host GPU clusters running training jobs or serving live inference traffic. Miners whose power purchase agreements include curtailment provisions, and whose contracts are not near expiration, are effectively unable to convert regardless of their physical infrastructure quality. Those who can renegotiate to firm, non-curtailable power typically face a meaningful price step-up, a cost increase that must be absorbed into lease economics but that unlocks access to the full AI tenant market.

The physical demands of AI infrastructure are also increasing with each GPU generation. Current Blackwell/GB200 systems draw approximately 120 kW per rack; Nvidia’s next-generation Vera Rubin architecture is anticipated to require approximately 180 kW per rack; and NVIDIA’s subsequent Kyber platform is expected to approach 1 MW per rack, a step-change in density that further widens the gap between what legacy mining facilities can support and what leading-edge AI clusters require. Sites that can support next-generation rack densities should command a premium over facilities limited to prior-generation power and cooling configurations.

Workload type also shapes footprint requirements. AI training, which involves running large model training runs across thousands of GPUs simultaneously, concentrates into a small number of very large clusters, often 1 GW or more, where GPU interconnect density and proximity matter most and geographic location is secondary. AI inference, serving live user queries, has fundamentally different requirements: latency sensitivity means inference infrastructure must be distributed across many smaller metro-adjacent sites close to end users.This bifurcation means that the addressable market for large-campus operators (training) and smaller metro-area operators (inference) is genuinely distinct, and that the supply of suitable sites for each workload type differs materially.

Network connectivity is an equally important and often underweighted site selection criterion alongside power. Fiber availability is a gating input for both training and inference workloads, moving large datasets in and out of training clusters requires high-capacity, low-latency connectivity, and inference sites must be well-connected to serve end users with acceptable response times. A site with abundant power but weak fiber connectivity is effectively unusable for high-value AI workloads, regardless of its electricity cost profile.

“Access to energized, large-scale power is the scarcest resource in the AI economy and it cannot be manufactured on demand.”

The Colocation vs. Cloud Services Spectrum

Operators converting mining capacity to HPC can pursue two distinct business models with meaningfully different risk and return profiles.

HPC Colocation is the dominant structure in the current market: the operator constructs a powered shell providing electricity, cooling, and physical infrastructure, while the tenant owns the GPU equipment and IT stack. This model delivers highly predictable revenues (fixed $/MW/year with embedded annual 2-3% escalators) strong EBITDA margins of 80–90%, and significant leverage capacity through debt at 80% LTC. Equity value is estimated at approximately $5–10 million per gross MW. Converting an existing mining site to a fully liquid-cooled AI data center carries an all-in cost of approximately $10 million per MW, reflecting the scope of the rebuild required, which underscores why the quality of the underlying power asset, rather than the legacy mining facility itself, is the primary driver of value in conversion transactions.

Cloud Services is a higher-risk, higher-reward full-stack model in which the operator builds the powered shell but also acquires and operates GPU fleets, selling compute capacity to end users. IREN is a BTC miner which is converting its data centers and buying GPUs to sell to Microsoft directly. This puts them in similar competition with other neoclouds, such as CoreWeave and Nebius. This captures the full economics of GPU utilization but requires substantial ongoing capital expenditure with GPU useful life of 4-5 years, deeper technical capabilities on orchestrating GPU fleets, and exposure to GPU pricing, availability and utilization.

The Hyperscaler vs. Neocloud Tenant Dynamic

The tenant landscape divides into two categories with distinct commercial characteristics. Hyperscalers (e.g. Microsoft, Meta, Google, Amazon) offer superior credit quality and access to cheaper project financing, but negotiate harder on unit economics, prefer to control data center infrastructure, and typically achieve slightly lower developer EBITDA margins. Neocloud operators (e.g. CoreWeave, Fluidstack, Nebius, Lambda, Crusoe) typically have higher financing costs and therefore need to pay higher premiums.

The optimal tenant portfolio blends both: a hyperscaler anchor provides credit quality and lower financing cost; neocloud tenants provide yield enhancement and are typically quicker to execute. Deals partially backstopped by hyperscalers, where a hyperscaler guarantees a neocloud’s lease obligations in exchange for rights as Google has done with Fluidstack and a handful of miners, offer a middle path that has emerged as a meaningful structural innovation in the market.

02 Transaction Comparables

A growing dataset of executed transactions now provides empirical grounding for HPC data center valuations. The following table summarizes the most significant recent colocation deals across US-listed operators, illustrating the range of commercial terms.

Several important observations emerge from this dataset. Revenue per critical IT watt has generally been trending upwards, reflecting intensifying demand and a tight power supply environment. The value creation per watt generated in successive transactions has been increasing materially, from approximately $5-8/watt in mid-2025 transactions to approximately $10+/watt towards the end of 2025. The broader comp dataset, which shows a rising trend across consecutive deals, suggests the market for energized power is tightening rather than normalizing. Contract tenors have also held consistent with 10–15 year initial terms, with 2–3 five-year renewal options, which improves the terminal value.

03 Operator Landscape: Live Comp Sheet

BTC miner prices are very volatile with an average of 3x beta to Nasdaq and 1.2x to BTC and 10-30% short interest. To keep the analysis useful over time, investors should use the live comp sheet to track where each operator is trading and how it compares with implied NAV.

The comp sheet is intended to be a live valuation tool and comparability across operators requires a standardized lens. One useful cross-sectional measure is adjusted equity value per approved megawatt, calculated as market cap plus debt, less crypto assets, cash, and conversion capex already spent, primarily construction in progress. This adjustment helps normalize for differences in capital structure and project timing, giving investors a cleaner read on how much approved HPC capacity the market is already pricing in.

As an example, using a $7 million per MW benchmark then shows where each operator trades relative to NAV.

How to use the sheet

• Start with the deals. The announced transactions here provide a useful reference for where key valuation metrics, including EV per gross MW, revenue per MW, EBITDA margin, and unlevered yield, have cleared.

• Select an approved MW value assumption. On the main comp sheet, the chosen value per approved MW can be applied across the peer set. While a single benchmark is useful for screening, individual operators may justify different values depending on power cost, tenant mix, and site quality.

• Assign a pipeline probability for each operator. The land and pipeline disclosures here show what each company has said about sites beyond currently approved capacity, allowing investors to apply their own probability of conversion. Pipeline value is currently defaulted to zero.

• Analyze the results. The sheet shows the EV/MW multiple implied by the market and the upside or downside relative to NAV. BTC balances update live, so digital asset value flows through in real time.

The sector has 13 GW of approved power and is valued at ~$4M equity value per approved MW. Since May of 2025 and following a wave of neocloud deal announcements, the miners on average have gained 142% vs. the S&P 500’s 10% vs. Bitcoin’s -35% over the same period. The market has started to recognize but not yet fully priced the conversion opportunity.

04 Valuation Framework

Businesses transitioning from Bitcoin mining to HPC data center operation require a multi-part valuation framework that separately values each company’s specific contracted deals and probability of pipeline and economics, cross-checked against the growing dataset of executed transactions.

Investment Framework

Discounted NAV: Key Inputs and Sensitivities

• Revenue per MW: Executed leases have cleared at $1.24–$2.17 per critical IT watt per year, with an average of $1.73. The largest single-campus assets, which can accommodate hyperscale training workloads, may command a premium for their scale advantages: resource pooling, simpler operations management, and proximity to major metro markets for inference latency.

• EBITDA margin: Pure colocation with tenant-owned IT achieves EBITDA margins of 80–97% with an average of 85%. Power is the primary operating expense, so margins are driven largely by the spread between the original power lease rate and current market rates, as well as data center premium.

• Construction cost and leverage: Capex buildout ranges widely from $3/MW to $14/MW depending on the quality of the existing facility, the planned upgrades (e.g. liquid cooling), time to build, labor costs and how much the tenant is willing to shoulder the construction cost (e.g. in the early Feb. 2025 CRWV/CORZ deal, CRWV shouldered the majority of the capex buildout). At 80% LTC debt financing at 7–9% interest, the observed range in recent project financings, the equity value range spans approximately $5–11 million per gross MW, with the widest spread driven by the interaction of capex assumption, leverage, and discount rate.

• Discount rate: The appropriate cost of equity for HPC colocation with contracted, infrastructure-like cash flows with high quality tenants is in the range of 9–13%. A 9% rate reflects a hyperscaler-anchored portfolio and 13% is appropriate for neocloud-only books with concentrated tenant credit. Cloud Services businesses, which carry GPU refresh risk and utilization cycle exposure, will require higher discount rates.

• PUE: Power Usage Effectiveness of 1.2-1.5 is the range observed across executed transactions. A 1.2x PUE, the best-in-class figure achievable with advanced cooling, generates 25% higher revenue per gross MW than a 1.5x PUE site at the same headline contracted capacity, creating a material differentiation between operators investing in cooling infrastructure versus those converting legacy mining facilities with limited cooling upgrades.

The REIT Conversion: Material Optionality

An underappreciated dimension of value is the REIT conversion or strategic acquisition optionality embedded in large-scale data center portfolios. An illustrative analysis on a fully built-out 1 Gross GW campus (666 critical MW) generates annual revenue of $1.3 billion at $2M/MW, EBITDA of $1.2 billion at 90% margin, and at a 20-25x EV/EBITDA multiple. These multiples are consistent with where traded data center REITs such as Equinix and Digital Realty have traded. This results in a $27 billion enterprise value. Assuming an initial buildout cost of $10M/MW ($6.6B) with 80% LTC results in an initial equity cost of $1.3B and debt of $5.3B. The resulting equity value is $22 billion. This represents ~17x on the equity invested in construction.

Even a partial monetization, such as a sale-leaseback of completed phases to a data center REIT, would crystallize embedded value at multiples well above current market implied valuations and provide capital to fund subsequent phases without dilutive equity issuance. This optionality is excluded from most base-case models and represents a layer of upside that is real, precedented in the broader data center industry.

05 Investment Selection Criteria

Not all participants in this space warrant equivalent conviction. The following criteria differentiate operators with durable competitive advantages from those exposed to commodity dynamics or execution risk.

Power Portfolio Quality

• Scale and quality of energized power: Operators with 500+ MW already contracted and revenue-generating have passed the most difficult execution hurdles. Large single-campus sites, where total potential capacity exceeds 1 GW, command a premium for their ability to serve hyperscale training workloads that require physically co-located compute. The benefits of scale include optimized resource pooling across GPU jobs, higher overall utilization, simpler operational management, and greater flexibility in tenant configuration. Critically, the power must be firm, contractually non-curtailable, rather than flexible load. Mining sites with interruptible power agreements are structurally incompatible with AI tenants regardless of their physical scale, and the ability to demonstrate firm, uninterrupted power delivery is now a threshold requirement in tenant due diligence.

• Pipeline credibility and queue seniority: Applications that have already been included in ERCOT batch zero. A significant share of pending interconnection applications are speculative, submitted without committed capital behind them, which clogs queues for legitimate applicants.

• Power cost advantages: Sites with below-market power contracts ($40–50/MWh versus $70–80/MWh in primary markets) offer a structural cost advantage that compounds over multi-decade tenors. Critically, they also provide a higher-quality conversion proposition for tenants, lower power cost at source means the developer can offer competitive lease rates while maintaining strong margins.

• Site attributes beyond power (fiber and community): Network connectivity is a gating input that is frequently underweighted in site-level analysis. A site without high-capacity fiber access is effectively unusable for inference workloads regardless of its power profile, and training clusters require robust connectivity to move large datasets. Equally important, and increasingly so, is community perception and local political positioning. Data center opposition has intensified as electricity prices rise; communities that feel they are subsidizing hyperscaler power costs become increasingly hostile to new builds. Operators who reuse existing mining sites avoid new interconnection requests and thus sidestep this friction.

Execution Capability and Financial Position

• Construction track record: Management teams that have successfully delivered data center builds on time and on budget at significant scale command a valuation premium. A small initial GPU or HPC proof-of-concept build, even at modest scale, provides validation of design and execution capabilities that substantially de-risks subsequent announcements of larger colocation deals.

• Balance sheet and self-funding capacity: Excess cash plus bitcoin holdings represent internal capital that can fund equity checks without dilutive external financing. Operators with meaningful mining cash flows can bridge between phases without returning to capital markets at inopportune times.

• Tenant diversification: No single tenant should represent more than 50% of contracted revenue. A mix of hyperscaler and neocloud tenants provides credit protection and commercial flexibility. The hyperscaler backstop structure, where a major cloud provider guarantees a neocloud lease, is the optimal structure for investors seeking credit quality while preserving yield.

Relative Value: The Market-Implied Conversion Screen

• Adjusted equity value vs. approved capacity: The central valuation signal in this space is the gap between the market’s implied HPC conversion (adjusted equity value divided by $7M/MW) and the operator’s actual approved power capacity. Operators where this ratio is below 50%, implying the market assigns zero value to more than half of approved capacity, represent the most asymmetric entry points, assuming the underlying conversion thesis is credible.

• Platform optionality beyond current campus: Operators who have reviewed multiple prospective sites beyond their primary campus and progressed a subset for further development transform the HPC buildout from a single-asset story into a replicable platform business. Each incremental site adds optionality not captured in base-case SOTP models and supports a platform multiple premium over single-asset valuations.

“The floor valuation is contractually anchored by long-dated leases. The optionality is not fully priced while having bounded downside.”

06 Key Risks & Mitigants

A few of the key risks and their corresponding structural mitigants are detailed below.

07 Catalysts

The following observable events are likely to materially re-rate valuations over the next 12–24 months.

• ERCOT approval announcements: ERCOT has transitioned to a batch approval process with batch zero likely being approved by 1Q27. Approvals are binary events that have historically produced significant single-session share price moves for affected operators. Critically, approval unlocks the immediate ability to announce tenant agreements, management teams have indicated the pace of tenant interest is such that announcements would likely follow within weeks of grid clearance.

• Continued large-scale tenant announcements: The commercial terms disclosed in lease announcements (revenue per MW, contract tenor, tenant identity and credit profile) allow for direct NAV recalibration. A hyperscaler anchor deal, indicating lower yield but superior credit relative to neocloud deals to date, would be read as de-risking the portfolio and could attract a REIT-style valuation multiple for the contracted portfolio.

• Strategic M&A (hyperscaler acquisition of an operator): Direct hyperscaler acquisition of a miner-developer would validate the strategic value of energized power assets at multiples well above current market levels, crystallizing embedded value and re-rating the entire comparable set. This precedent has already been partially set (Google getting equity via warrants in CIFR and WULF) and represents a plausible exit pathway for multiple operators.

• Activist pressure on reluctant operators: Several operators have been slow to pivot from Bitcoin mining to HPC, and activists have increasingly stepped in to force the issue. BTDR reversed course on conversion following shareholder pressure, and Starboard Value has publicly pushed RIOT to accelerate its HPC strategy. Additional campaigns are likely at operators whose market-implied conversion discount is widest, and each successful campaign acts as both a company-specific and sector-wide re-rating catalyst.

• Continued headlines on power and compute scarcity: Each new report of compute and power shortages reinforces the scarcity narrative. Sustained media coverage tightens the spread between energized power and the broader market, and has historically coincided with sector-wide multiple expansion.

• Next Bitcoin halving (expected 2Q28): Block rewards will be halved again, accelerating the economic rationale for conversion for any remaining pure-play miners and further reducing the opportunity cost of pivoting to HPC colocation, incrementally expanding the supply of motivated conversion candidates.

08 Conclusion

The AI infrastructure buildout is the dominant capital deployment theme of the current technology cycle, and power scarcity is its defining constraint. The United States faces a 50 GW power deficit for data centers through 2028, a gap that cannot be closed quickly through the normal grid interconnection process. Within this context, operators who already control energized large-scale power, assembled through Bitcoin mining operations over the preceding decade, hold a structural advantage that billions of dollars in fresh capital cannot quickly replicate.

The transaction dataset is now sufficient to anchor valuation with confidence: deals have cleared at $1.25–$2.20 per critical IT watt per year with 80–97% EBITDA margins and equity values of $5–10 million per gross MW in colocation. Applied against the publicly disclosed approved capacity of listed operators, the sector in aggregate is pricing approximately 50% of approved capacity as converted, with optionality in the pipeline.

The most asymmetric opportunities are where this ratio is lowest: operators with large approved portfolios, credible execution track records, and adjusted equity values implying conversion of only 35–45% of approved capacity. For these operators, each incremental grid approval and tenant announcement is a step-change event and the gap between the contracted-capacity valuation floor and the full-portfolio bull case is wide enough to generate compelling returns even under base-case conversion assumptions.

Footnotes

1. Applied Digital

2. METR

3. Morgan Stanley

4. ERCOT

5. 2026 Data Center Report, Data Center Frontier

6. ERCOT

7. Economics of Orbital vs Terrestrial Data Centers

8. The Center Square

9. U.S. Department of Energy

10. S&P Global Market Intelligence

Shortly after raising $800M from the likes of Jane Street, Citadel Securities, valuing the firm at $20B, Payward (Kraken’s parent company) confidentially filed an S-1 with the SEC signaling its intent to go public. This would make Payward the second publicly traded crypto exchange after Coinbase. 4 months later, in March 2026, they froze their IPO plans citing difficult market conditions.

A first pass would read this as a failed and shelved IPO. But in the five months since the filing, Kraken has accelerated momentum by:

• Becoming the first digital asset company with a Master Account at the Federal Reserve

• Closing its acquisition of Backed Finance, vertically integrating issuance for tokenized equities

• Announcing its partnership with Nasdaq to build a gateway for tokenized assets

• Closing its $550M acquisition of Bitnomial, and obtaining the full set of CFTC licenses

• Announcing that Deutsche Boerse acquired a $200M secondary stake

That is a lot of activity for a business the market views as simply a crypto exchange. The $20B was reaffirmed in April 2026 by the Bitnomial transaction, per Payward’s press release (Payward). This piece argues that at $20B, the payoff distribution is asymmetric: downside bounded by the crypto-exchange floor, upside open-ended on execution of the clearing, tokenization, and charter stack.

The Business Today

In 2025, Kraken generated $2.2B in adjusted revenue (+33% YoY), with $531M in adjusted EBITDA. On the operational side they ended the year with 5.7M funded accounts (+50% YoY), $48B in assets on platform (+11% YoY), and $2T in platform transaction volume (+34% YoY). Kraken’s revenue mix is more diversified than most would assume: 47% trading, 53% asset-based (custody, yield, payments, financing). On any given day, the majority of Kraken’s revenue does not come from trading. (Kraken Financials)

The Upside Levers

The Regulatory Stack

Kraken has spent over five years and billions of dollars assembling a regulatory and infrastructure stack that is unique in the crypto industry.

The Bitnomial acquisition is highly significant as it gives Kraken all three CFTC licenses required for a full-stack domestic crypto derivatives business. Designated Contract Market (DCM) is the exchange license, Derivatives Clearing Organization (DCO) is the clearinghouse, and Futures Commission Merchant (FCM) is the brokerage.

“The shape of a market is determined by its clearing infrastructure, not its front end. The US has had no clearing infrastructure built for digital assets. Bitnomial spent a decade building it: crypto settlement, crypto collateral, continuous 24/7 markets. These are capabilities that cannot be retrofitted onto legacy systems.” — Arjun Sethi, Co-CEO

Coupled with the NinjaTrader acquisition which gave them retail futures distribution to 2M users, this gives Kraken a vertically integrated derivatives stack from UI to clearing. Being first to combine DCM, DCO, and FCM with physically-settled, crypto-native collateral and 24/7 markets under one roof matters. Clearinghouses are natural monopoly businesses with strong economies of scale. Once institutional firms connect to Kraken’s DCO and build their risk systems around it, switching costs are significant. CME didn’t dominate futures because it had the prettiest front end, it dominated because everyone cleared there.

The broader crypto industry is converging on regulated infrastructure through different paths. Coinbase recently received conditional approval for an OCC national trust charter, which provides federal uniformity for custody and settlement across all 50 states — a natural fit for a company that custodies assets for most US spot crypto ETFs. Kraken’s Wyoming SPDI is a state-level charter but with broader functional powers: it can accept deposits, offer payment services, and operate under fiduciary duty. That distinction matters because it allows Kraken’s roadmap to extend into banking products (deposit accounts, stablecoin issuance, FedNow-powered payments) that a custody-only charter would not support. The Fed Master Account, secured in March 2026, is the infrastructure layer that activates those capabilities.

Tokenization and xStocks

Kraken launched xStocks in partnership with Backed Finance in June 2025, enabling 24/5 trading of tokenized US stocks and ETFs. In less than a year, the product has grown to +$320M in AUM, and 100+ tokenized stocks across Ethereum, Solana, Ink and Ton. xStocks is the largest tokenized stocks product in the world today.

In December 2025, Kraken announced its acquisition of Backed Finance, the Swiss issuer that mints the tokens. Kraken now owns the full vertical: issuance (Backed), trading (Kraken), settlement (Ink) and custody.

This momentum compounded with announcement of the Nasdaq partnership:

“Nasdaq’s partnership with Payward... will be focused on designing an equities transformation gateway to enable issuers and investors to move seamlessly between permissioned and permissionless environments.” (Nasdaq)

Kraken is becoming the owner of the critical infrastructure that connects legacy securities with public blockchains. Nasdaq’s Equity Token framework is expected operational H1 2027, with Payward as the primary settlement layer. (Nasdaq has partnered on tokenization before, including with Ondo and Republic. Commercial terms are undisclosed, and the product is not yet live.)

Coinbase and Robinhood have announced tokenized stock ambitions, but as of April 2026 neither has shipped a backed product. Kraken’s xStocks already have $323M in AUM, 140K on-chain holders, and DeFi composability across multiple protocols. Kraken has a first-mover position, but at $320M AUM it’s better understood as option value than as a moat. The Nasdaq partnership is the catalyst that could convert that option into something durable.

Ink: The Toll Booth

Ink is Kraken’s Ethereum L2 on the OP Stack. Mainnet launched December 2024; TVL is around $270M (after the KelpDAO exploit). App revenue grew from $500K in October 2025 to $5.77M in January 2026. Kraken runs the only sequencer, meaning 100% of gas fees flow to Kraken.

If xStocks settlement migrates fully to Ink, every tokenized equity transfer, DeFi interaction, and lending transaction will generate fees for Kraken’s sequencer. It functions as a toll booth between traditional finance and on-chain markets. Ink is early relative to more established L2s like Coinbase’s Base which generated roughly $75M in sequencer revenue in 2025, making it the largest L2 by that metric. But Ink’s trajectory is steep and it has a differentiated asset (xStocks) to drive activity that other L2s lack.

The Platform Vision

Management has been explicit about the growth vectors: expanding asset classes (”Tokenized equities, FX, futures, and real-world assets extend that same infrastructure…”), asset productivity (”Custody, payments, yield, financing, and settlement activity…”), and global expansion via a “single global core” supporting localized onramps (Kraken).

Asset productivity matters most for valuation. The pattern is familiar: Schwab’s 2003 bank charter was widely questioned for a discount broker; NII eventually became its largest revenue source. The analogy has limits, though. When Schwab got its charter it was already the largest US discount broker with $800B in client assets. Kraken has $48B on platform and a brand-new Fed account. The better near-term comp is SoFi: NII grew from $252M (2021) to $2.2B (2025), yet SoFi trades at ~$23B. The market credits banking economics but does not hand out a growth premium. Kraken’s differentiation has to come from the crypto-native angle.

The early evidence is there. Instant USD withdrawals (24/7/365, 1.5% fee, $50 cap) likely run on FedNow. Krak App has 450K+ downloads across 130 countries (The Block). The Unified Wallet already cross-margins spot, margin, and futures within crypto. The logical next step, unified margin across crypto + xStocks + NinjaTrader futures, would be a highly differentiated product, and Kraken’s license stack is uniquely suited to build it.

The Stablecoin Gap

Stablecoins remain Kraken’s most significant competitive gap. Coinbase’s USDC revenue-sharing arrangement generated an estimated $1.35B in 2025, high-margin and recurring. Kraken has no equivalent. USDG (a consortium stablecoin with Robinhood, Paxos, Galaxy) has a $1.95B market cap versus USDC’s ~$76B. Kraken also has a distribution partnership with Circle and plans to issue its own MiCA-compliant stablecoin via Ireland. Closing this gap, whether through USDG scale, a US stablecoin under the SPDI post-GENIUS Act, or some other mechanism, is a key strategic question.

Valuation

Kraken does not fit one bucket. It spans crypto exchange, futures clearing, tokenized securities, banking, and L2 infrastructure.

At $20B, Kraken is priced roughly fairly for what the market can verify today: a cyclical exchange at 8-9x revenue with a maturing derivatives stack. Sophisticated investors, including those in the November 2025 round, priced in what they could see. What’s less priced is the distribution of outcomes from here. The downside is anchored by the exchange floor: base case implied EV sits in the $20-27B range even if the platform thesis never materializes. The upside depends on execution across three independently live but unproven catalysts: Bitnomial clearing scale, xStocks in the US, and banking products on the Fed master account. A bet here is not a bet that the market is wrong about today’s Kraken. It’s a bet that the distribution of outcomes from $20B is asymmetric, with bounded downside and open-ended upside on execution.

Risks

• Crypto cyclicality is the biggest near term risk. Revenue swung from $696M (2023) to $2.2B (2025). Staking, margin interest, and custody fees all correlate with crypto prices. No matter how you slice the 47/53 mix, Kraken’s revenue is crypto-beta.

• US xStocks approval is the biggest catalyst and biggest uncertainty. Without the US, xStocks is meaningful, but not thesis-changing.

• The regulatory moat erodes over time. As crypto regulation clarifies, more companies acquire more licenses. Kraken’s advantage is the combination and head start, not permanence.

• The institutions will come. If tokenized equities will proliferate meaningfully as we believe, BlackRock, JPMorgan, Fidelity, and Goldman will enter with larger balance sheets, deeper relationships, and existing distribution.

What could go right

• US xStocks launch: step function in volume, users, and narrative

• Banking products on Fed master account: recurring, non-cyclical revenue

• Cross-margin product: attracts institutional capital without a current home

• Bitnomial clearing infrastructure: enables physically-settled crypto derivatives at scale

• Stablecoin issuance under SPDI charter: direct NII stream

• NinjaTrader cross-sell: 10% conversion of 2M futures traders = 200K high-value accounts

Kraken is the first crypto-native firm to assemble the full US clearing stack and holds the largest tokenized-equities product globally. Whether that advantage compounds or gets competed away will define whether this is a $20 billion exchange or something considerably larger. No other company has clearing, tokenized equities, a bank charter, and a Fed master account under one roof. Any single piece is replicable. The combination, assembled first, is what makes the bet.

A note on what’s new at Artemis. This newsletter marks the first issue under our new Artemis platform: our full digital-finance research and investment platform. Artemis now ingests the same public-company fundamentals you’d get from CapIQ or FactSet (filings, transcripts, KPIs, IR presentations) and combines them with our blockchain, stablecoin, and protocol data in one workspace. If you’re covering COIN and Aave in the same model, or modeling Circle’s float against USDC supply growth, this is the stack we built for you.

Market Overview: The Weekly Recap

Market Sentiment: cautious risk-on. Prices have continued to rebuild meaningfully off the February lows this week. The U.S.–Iran two-week ceasefire pulled geopolitical risk premium out of commodity and crypto markets, and spot BTC ETF flows turned net positive for the second week in a row. Sentiment sits in greed territory: 62 for crypto, 68 for equities (Artemis).

Assets across digital finance returned an average of 10.66%, led by AAVE, DRIFT, HOOD, COIN and CIRCLE, each of which returned above 20%. Crypto majors BTC, ETC and SOL returned about 5% each.

Today We Highlight

• Aave “Will Win” vote passes. The DAO now captures 100% of Aave-branded app-layer revenue. Arguably the most consequential DeFi governance event of the year so far.

• Artemis Research Spotlight:

• Robinhood leads digital finance stock growth as earnings approach April 28th.

1. Aave Just Rewired Itself Around $AAVE

The Aave DAO has spent the better part of four months re-litigating a deceptively small question: who owns the front end? The dispute traces to late 2025, when delegates flagged that a CoWSwap integration on Aave’s interface had quietly routed swap-related fees away from the community treasury to an external recipient. That surfaced a deeper tension. Aave Labs had been building application-layer products (Aave Pro, Aave App, Horizon, Aave Kit) that sat atop the permissionless protocol but whose economics bypassed AAVE holders entirely. The Labs vs. DAO split, in other words.

On April 12, the “Aave Will Win“ (AWW) proposal passed with overwhelming support: 75% of voters voted in favor (aave.com). The proposal does three things: (i) redirects 100% of revenue from every Aave-branded product to the DAO; (ii) pays Aave Labs a one-time package of $25M in stablecoins plus 5,000 AAVE; and (iii) consolidates brand and economic rights under the token itself. An on-chain AIP ratification still has to clear. That’s the real catalyst.

Aave protocol revenue hit $140M in 2025 and is tracking to roughly match that in 2026. The incremental piece is app-layer revenue: swaps on Aave.com and Aave Pro are already running at $10–20M/year that previously accrued to Labs, with Aave App, Horizon, and Aave Kit layered on top. A conservative 10× revenue multiple on ~$20M of incremental accrual is roughly $200M of implied fundamental value, or ~13% of AAVE’s fully-diluted cap. AAVE traded up nearly 30% after the vote.

Now execution has become the biggest question for Aave. BGD Labs, the DAO’s primary technical contributor, wound down its partnership on April 1 (BGD governance post, Feb 2026). ACI, another leading service provider for Aave, is choosing to leave the ecosystem in July of this year. V4’s cross-chain hub-and-spoke rollout, which Stani has publicly targeted as a trillion-dollar credit layer, now needs to ship without its most senior engineering counterparty.

2. Artemis Research Spotlight: $PURR

Artemis Research Spotlight: Hyperliquid Strategies ($PURR): The Only DAT With a Productive Underlying Asset by Zheng Jie Lim.

The framing: most DAT vehicles wrap an asset that either earns nothing (BTC) or runs at a negative operational cash flow once staking emissions are netted against fees (ETH: $526M fees vs. $3,035M in emissions; SOL: $680M vs. $3,936M). Hyperliquid is the outlier. It generated $857M in 2025 fees (of which $797M from perps at a 2.72 bps take rate), with 99% of earnings flowing to the Assistance Fund for buyback-and-burn ($837M on $857M of fees). Staking emissions come from a pre-allocated reserve rather than fee revenue, which the piece argues is the right way to evaluate operational cash flow. On that basis, HYPE is the only major crypto asset with positive underlying unit economics. Per outstanding HYPE (477M), that works out to roughly $1.76 of earnings per token. Hyperliquid is also the highest revenue generating company in the world per employee:

The vehicle: PURR (NASDAQ) is a zero-debt, zero-preferred, zero-convertible wrapper around 18.8M HYPE plus $112.6M cash, trading at ~1.12x mNAV with a $30M buyback program (~$10.5M deployed, retiring ~3M shares) and a $1B equity line as optional dry powder. Cap table anchored by Paradigm, D1, Galaxy, and Pantera; board includes Bob Diamond (ex-Barclays), David Schamis (Atlas Merchant / ex-JC Flowers), Eric Rosengren (ex-Boston Fed), and Larry Leibowitz (ex-NYSE COO). The piece frames the structure as the inverse of the Strategy trade: Strategy issued equity at premium to fund BTC accumulation (a mechanism that breaks when the premium compresses, which is where the category sits today at ~1.15x mNAV); PURR’s buyback program mechanically increases HYPE-per-share only when the stock trades below NAV.

Growth vectors laid out in the note: HIP-3 (permissionless perps, 500k HYPE stake per market, expanding TAM from $3–5T crypto derivatives toward the >$100T global derivatives market), HIP-4 (options + prediction markets, mainnet Q4 2026), builder-routed distribution (~40% of DAUs already flow through third-party frontends), and USDH (native stablecoin, 50% of reserve yield to the Assistance Fund, currently ~$1M/yr to buybacks at $93M supply, scaling to $40–100M/yr at $2–5B supply).

Valuation summary:

• Base: HYPE at $76 by 2030 on $1.71B of earnings at 20x P/E, PURR held at 1.1x mNAV → $10.59/share, +63% over 5 years.

• Bull: HYPE at $127, mNAV 1.3x → $20.84, +220%.

• Bear: HYPE at $27 at 16x P/E, mNAV 0.95x → $3.32, -49%. Bear-case mitigant: zero liabilities mean no forced-selling dynamic, the protocol still generates $782M of fees at trough, and the token remains deflationary net of emissions.

Key risks: HYPE drawdown, potential CFTC/SEC enforcement on Hyperliquid’s no-KYC operations (where PURR itself actually benefits as the regulated wrapper), equity-line dilution if drawn at the wrong price, and general DAT-premium compression.

Full note on Artemis Research.

3. Robinhood leads Digital Finance theme growth

HOOD was +31.16% on the week, the best-performing name on the crypto-adjacent equities list (ahead of COIN +22.93% and CRCL +20.30%). The stock had seen a nearly 60% drawdown since October highs before the rebound. A major catalyst this week was the SEC’s reversal of the “pattern day trader” rule, which had been an inhibitor to retail trading volume. This is expected to bring more trading volume to Robinhood, arguably the biggest beneficiary of this rule reversal.

Fundamentals:

Robinhood has also seen exceptionally strong fundamental growth. KPIs have grown significantly over recent quarters. The growth in Gold Subscribers is a particularly important metric to look at since it is a key component of Robinhood’s non-trading revenue.

Robinhood saw record quarterly revenue in Q4 2025, growing at 26.5% YoY. Revenue growth was driven by strong net interest income growth. NII made up about 30% of Robinhood’s top line in Q4 2025, and grew 38.9% YoY.

The sell-side view: Bernstein reiterated Outperform with a $130 PT on April 14, ~60% above spot. Their thesis centers on Bitstamp, the $200M institutional crypto exchange Robinhood closed in June 2025, which now drives ~60% of HOOD’s total crypto transaction volume. Bernstein models 2026 crypto revenue at $1.1B (+23% YoY, 31% above consensus) (Bernstein via Parameter, Apr 17; Robinhood/Bitstamp press release, Jun 2, 2025).

HOOD is one of the clearest expressions of retail brokerage and crypto infrastructure converging into one product surface.

Charts of the Week

Chart 1: HIP-3 Open Interest has stalled but remains above $2 billion

Chart 2: We highlight the effect of incentives on prediction markets in our new Prediction Markets dashboard: Dashboard Link, Analysis Link

Other Notable News

• Morgan Stanley launches MSBT at 0.14%: First spot BTC ETF issued directly by a major U.S. bank. Over $100M in week-one flows.

• Schwab introduces spot crypto trading: Schwab is one of the world’s largest brokerages, and is planning on a phased roll out of spot crypto trading to its 38.5m accounts.

• SEC CLARITY Act roundtable held April 16. Market-structure bill has bipartisan noise but no markup date. Watch the Senate Banking Committee calendar next week.

Thanks for reading! Stay ahead this week by using the Artemis Terminal to pull the underlying data on any of the stories above (Aave revenue, Robinhood financial and comps, HIP-3 OI by market type) or pull live numbers straight into your models with =ART() in Excel.

Disclaimer: This newsletter is produced by Artemis for informational and educational purposes only. It does not constitute investment advice, a recommendation to buy or sell any security or digital asset, or an offer to provide advisory services. Artemis and its employees may hold positions in assets discussed. Figures are accurate to the best of our knowledge as of publication; markets move quickly.

The market is pricing PURR as another digital asset treasury copycat — an MSTR-style vehicle where a premium lets management issue equity, buy more tokens, and accumulate more per share. We think that framing misprices the business. Strategy spends $2.3 million a day to service $835 million of annual preferred and convertible obligations on top of 780,897 bitcoin that earn nothing, and its mNAV has collapsed from peaks above 6x to 1.15x today. PURR carries zero debt, zero preferreds, and zero recurring obligations, and owns 18.8 million HYPE tokens in the only major protocol that produced positive earnings in 2025: $857M of fees ($797M from perps at a 2.72 bps take rate), 99% of which flows to the Assistance Fund — $837M of Earnings bought back and burned at near-zero operating cost. The token is structurally deflationary: ~19M HYPE bought back annually against ~7M emitted from staking reserves. The stock trades at 1.12x mNAV. Our base case carries HYPE to $76 on $1.71B of 2030E Earnings at 20x P/E, holds PURR at 1.1x mNAV, and implies a $10.59 share of ~63% upside over five years. Bull case at $127 HYPE and 1.3x mNAV implies ~$20.84, +220%. Bear case compresses HYPE to $27 at 16x P/E and 0.95x mNAV at −49%.

Comps:

PURR is the only DAT that combines a productive underlying, positive earnings, and zero liabilities.

What Does $PURR Do?

Hyperliquid Strategies Inc (NASDAQ: PURR) is a digital asset treasury company whose sole mandate is to accumulate and hold HYPE, the native token of the Hyperliquid protocol. The company was formed in December 2025 via an $888M business combination involving Sonnet BioTherapeutics, Rorschach I LLC (a Paradigm-affiliated SPAC), and a new entity spun up by Atlas Merchant Capital.

The balance sheet is the cleanest in the DAT category: 18.8M HYPE, $112.6M of cash, zero debt, zero preferreds, zero convertibles. A $30M stock buyback program was authorized in January 2026. As of February 3, 2026, $10.5M was deployed, retiring ~3.0M shares and pulling the fully diluted count to 150.8M. A $1 billion equity line sits on top of the cash position as optional dry powder for HYPE drawdowns.

The underlying is the asset that makes this structure unusual. HYPE is an equity-like claim on Hyperliquid, a perps exchange that generated $857M in 2025A fees with 11 employees (~$78M rev/employee, the highest of any company in the world).

The Fee Machine

Hyperliquid is an exchange.

The model is a volume × take-rate business with near-zero marginal cost.

The fee waterfall breaks down into six line items:

Thesis #1: The Only Underlying Asset That Earns

Every DAT on a U.S. exchange today wraps an asset that either earns nothing (BTC) or runs at a loss once you account for the tokens minted to keep the chain alive. Ethereum generated $526M of fees but paid $3,035M in staking emissions; Solana generated $680M but paid $3,936M. Hyperliquid generated $857M in fees. Earnings definitions matter here. For Hyperliquid, earnings = fees after the 1% HLP vault cut (3% pre-Aug 30, 2025), with 99% flowing to the Assistance Fund for buyback-and-burn: $837M on $857M of fees. For Ethereum and Solana, the comparable figure is fees minus staking issuance, since their chains cannot function without token emissions to pay validators. This is a true operational cost, and both are negative at time of writing. Hyperliquid’s $312M of staking emissions are drawn from a pre-allocated reserve, not from exchange revenue, so they sit below the line. On the adjusted basis ($545M), Hyperliquid is the only protocol with positive underlying cash flow assets. The performance gap shows up on DAT balance sheets. BMNR’s average ETH entry was $2,826; Forward Industries bought SOL at $232. Both are underwater.

PURR is the only DAT sitting on meaningful unrealized gains, up roughly $600M on its HYPE position. The underlying asset isn’t just productive, it’s appreciating.

Five growth drivers are compounding this advantage:

1. HIP-3: Hyperliquid becomes a listing platform. Live since October 2025, HIP-3 lets any builder stake 500,000 HYPE to deploy permissionless perps on any asset — commodities, equities (China, Korea, Japan), FX, exotics. This transforms HL from a crypto trading venue into a general listing layer. TradeXYZ’s crude-oil HIP-3 market processed $305M of weekend notional during the Strait of Hormuz crisis; cross-asset weekend prices tracked TradFi reopen at R² = 0.785 (Shaunda from Blockworks). The listing TAM expands from $3-5T of crypto derivatives to the >$100T global derivatives market. Each HIP-3 deployment requires a permanent 500k HYPE stake. HIP-4 carries the same requirement. Twenty markets at scale retire ~10M HYPE (2.1% of Outstanding Supply) from the float permanently.

2. DAT as a builder partnership. At current prices, 500k HYPE is roughly $23M. Most builder teams cannot self-fund that stake. A large holder like PURR (18.8M HYPE) is a natural counterparty: financing or partnering on HIP-3/HIP-4 deployments in exchange for a share of the market’s fees. This creates a revenue stream and ecosystem influence that individual HYPE holders cannot replicate at scale.

3. HIP-4: options and outcome contracts. Testnet launched March 2026; mainnet targeted Q4 2026. Deribit, which got acquired by Coinbase, traded over $1,875B in options notional value in 2025, making up over 85% of the market (~$2.2T). Options are just ~3% of crypto derivatives today (as Coinglass sizes the total crypto derivatives volume at $85.7T). If onchain options reach 15% penetration and HL captures half, that’s $165B of volume at ~8bps (options carry wider spreads than perps, deribit charges 12bps) = $135M/yr in fees. Our Base model assumes $50M in 2026E scaling to $130M by 2030E. Prediction-market outcome contracts open a second HIP-4 fee line (Annualized fees for Polymarket are reaching $700M).

4. Builder codes: negative CAC distribution. ~40% of HL DAUs already route through third-party frontends (Phantom is the largest). Builders earn a rev-share for every trade routed — $40M+ paid out to date (Dwellir). Compare Coinbase’s $400-600 retail CAC per funded account: HL’s is negative. This is why the model grows perp volume from $2.9T (2025A) to $5.2T (Base 2030E). The distribution layer is outsourced.

5. USDH: native stablecoin with revenue sharing. Native Markets won the USDH bid (Sept 2025). Reserves sit in a BlackRock-managed fund; 50% of reserve yield routes to the Assistance Fund.

At current supply (~$93M) and 3.7% T-bill yields, USDH contributes ~$1M/yr to the AF buyback. At $2-5B supply, that scales to $40-100M/yr. With the addition of HIP-4 which could only be traded on USDH, this could be a massive tailwind for the Native Markets stablecoin.

None of this expansion requires Hyperliquid to hire. Every growth vector (HIP-3 listings, HIP-4 options, builder distribution, and USDH float) is outsourced to external teams who take listing and distribution risk in exchange for a rev-share. The 11-person core team writes the protocol and the fee plumbing. This is a platform-scaling model: throughput, listings, and frontends grow without headcount.

Thesis #2: Buy the Wrapper at Cost

Strategy issued equity at a premium, converted the cash to BTC, and called it financial engineering. The mechanism inverts the moment the premium collapses, which is where the entire DAT category sits today (Strategy at 1.15x, down from 6x). PURR runs the opposite trade: the stock sits at ~1.12x NAV, and the $30M buyback program deploys only when the market prices PURR below the tokens it already owns. Every dollar deployed sub-NAV mechanically increases HYPE-per-share. The mechanism works both ways. Below NAV, management buys back stock and each remaining share represents more HYPE. Above NAV, they can issue shares at a premium and use the proceeds to buy more HYPE, also increasing HYPE-per-share. Either direction accretes value to existing holders.

No other DAT operates this way. Strategy, BMNR, and Forward Industries issue shares to buy tokens but have no buyback mechanism when the premium compresses. Their shareholders absorb the dilution on the way up and get nothing back on the way down.

Where direct HYPE wins: no corporate overhead, no dilution risk from the equity line, no regulatory risk specific to PURR management, and 100% of the token upside. Staking/airdrop optionality accrues only to direct holders.

But the wrapper offers four things direct HYPE doesn’t:

1. Automatic accretion without additional risk: the buyback described above is funded by cash already on the balance sheet. No margin calls, no liquidation risk, no action required from the holder. A direct holder can lever up through perps or borrowing, but that adds counterparty and liquidation exposure.

2. The regulatory moat: PURR and HYPD are the only two NASDAQ-listed vehicles for HYPE exposure, and any enforcement action on Hyperliquid’s no-KYC operations pushes institutional demand INTO the wrapper

3. Zero obligations: no debt service, no forced selling, no preferred shares.

4. Tax efficiency: PURR is taxed as a standard equity. Holders who hold for over a year pay long-term capital gains (20% federal max), can hold shares in IRAs and 401(k)s for tax-deferred or tax-free growth, and use tax-loss harvesting against other equity positions. Direct HYPE holders pay ordinary income tax (up to 37%) on every staking reward the moment it’s received, have no access to tax-advantaged retirement accounts, and face unresolved IRS guidance on airdrop cost basis. For a top-bracket U.S. investor, the wrapper roughly halves the tax drag.

The underlying exchange produces $1.76 of earnings per Outstanding HYPE ($837M ÷ 477M Outstanding Supply - we introduced this metric with Pantera Capital back in August 2025).

Valuation & Scenarios

Valuation is a two-step chain: first we value HYPE on fundamentals (2030E earnings × P/E ÷ Outstanding Supply), then we value PURR as NAV per share at that HYPE price multiplied by a target mNAV.

HYPE Scenarios

We value HYPE on earnings (fees × 99% after HLP) multiplied by a terminal P/E:

PURR Scenarios

Translating HYPE scenarios to PURR uses Adjusted NAV per share = (18.8M HYPE × price + $112.6M cash − $95.8M DTL + $4.5M adj) ÷ 150.8M FD shares, then applies a target FD mNAV. DAT stocks with productive underlyings have historically re-rated to 1.1x–2.0x NAV in up cycles; category norm at par is 1.0x.

Base case: HYPE at $76 by 2030, Adjusted NAV per share of $9.63, held at 1.1x NAV, implying a $10.59 stock and +63% upside over five years.

Bull case: HYPE reaches $127 by 2030, Adjusted NAV of $16.03, re-rate to 1.3x NAV, implying $20.84 and +220% upside.

Bear case: HYPE compresses to $27, Adjusted NAV drops to $3.49, mNAV slips to 0.95x, implying $3.32 and –49% downside. Base case returns ~10% annualized, but the distribution is asymmetric: bear downside is floored by zero liabilities and a protocol that still generates $782M of fees at trough, while bull upside compounds from both HYPE appreciation and mNAV re-rating.

Management & Cap Table

PURR is a balance sheet vehicle. The only job is capital allocation: when to buy HYPE, when to buy back shares, when to draw the equity line, and when to sit still. The team running that decision has 80+ combined years in capital markets, bank balance sheet management, and exchange infrastructure. Paradigm, the largest crypto-native fund in the world ($12.7B AUM), anchored the SPAC. D1, Galaxy, and Pantera round out a cap table that bridges TradFi and crypto. Diamond’s institutional network doubles as a distribution channel for allocators who want HYPE exposure but can’t custody tokens or navigate crypto tax complexity.

• Bob Diamond (Chairman) — Former CEO of Barclays; co-founder of Atlas Merchant Capital.

• David Schamis (CEO) — Co-founder of Atlas Merchant Capital; ex-JC Flowers partner.

• Eric Rosengren (Board) — Former President, Federal Reserve Bank of Boston (2007-2021).

• Larry Leibowitz (Board) — Former COO of the New York Stock Exchange; Operating Partner at Atlas Merchant Capital

Anchor investors include Paradigm, D1, Galaxy, and Pantera.

Risks

1. HYPE Price Drawdown

PURR is a levered claim on HYPE’s price. A broad crypto bear market compresses volumes, fees, and the buyback pool. Our bear case models this: TAM plateaus at $85T, HL share holds at 3%, take rate drifts to 2.3 bps, P/E de-rates to 16x, implying $27 HYPE and $3.32 PURR (−49%). Outstanding Supply is ~477M; Bear assumes a 35% team claim rate in 2026–27.

Mitigant: Zero liabilities mean no forced-seller dynamic. Even in the bear case, Hyperliquid still generates $782M of fees and $774M of earnings — the buyback-and-burn continues to exceed staking emissions, and the token remains deflationary (−23M HYPE/yr net). The $1B equity line is optional, not mandatory.

2. Regulatory Action on Hyperliquid

Hyperliquid operates without KYC. The Futures Industry Association has filed formal complaints with U.S. regulators requesting enforcement on U.S.-person access to offshore perps. An adverse action would compress HYPE directly. The HIP-3 expansion into TradFi assets (silver, oil, equities) increases regulatory surface area — commodity perps may draw CFTC attention beyond the crypto-specific enforcement actions seen to date.

Mitigant: PURR itself is a fully compliant NASDAQ-listed entity. A regulatory action would most likely push U.S. institutional demand into the PURR wrapper, which is the regulated way to own HYPE economics.

3. Equity Line Dilution

The $1B equity line can be drawn if HYPE dips, but drawing at the wrong price dilutes existing holders. At the bear-case $27 HYPE, PURR Adj NAV is $3.49/share — drawing at that level would issue shares below $6.51 spot.

Mitigant: The line is optional and at management’s discretion. Current posture is buyback, not issuance — $10.5M of the $30M authorized program was deployed by early Feb 2026, retiring ~3M shares and pulling FD count to 150.8M. The Paradigm-led cap table has no incentive to dilute itself.

4. DAT Premium Compression

Any premium that opens above NAV in a rally can compress quickly when sentiment turns. Strategy’s 6x mNAV premium collapsed to 1.15x FD in under 12 months. In the bull case, PURR re-rates to 1.3x NAV ($20.84); if sentiment reverses and the multiple compresses back to 1.1x, the loss is capped at the mNAV delta.

Mitigant: PURR trades at 1.12x mNAV today. The premium is 12 cents on the dollar versus Strategy’s peak of $5+ on the dollar. The asymmetry runs upward: 1.3x in a bull cycle is modest relative to the 2.0x+ that DAT stocks with productive underlyings have historically reached. At 1.0-1.1x, the wrapper’s value is the underlying asset.

Disclosure: This material is provided for informational purposes only and does not constitute investment advice, financial advice, trading advice, or any other form of advice. The views expressed are those of the authors and should not be relied upon as a recommendation to buy, sell, or hold any asset. The authors or affiliated entities may hold positions in the assets discussed. You should conduct your own research and consult appropriate financial professionals before making any investment decisions.