Rekt Mkts: Crypto bounces. Who pays the AI bill?

A less grim start for crypto...the majors are bouncing and ZEC and VVV are doing considerably better, while the AI equity trade still looks uncomfortable. My point yday was that inflation doesn't necessarily explain all the selling. Bonds rallied anyway, but cheaper Treasury yields don't automatically make investors comfortable lending to the companies buying all these chips.

The 10Y is around 5.12%, up roughly 3.4bps from yday's 5.09% close, while the 30Y is around 5.46%, up 2.9bps. Some of the bond rally is reversing, but the 10Y is still below the 5.19% close before Thursday's move and it's tough to ignore a decent move lower in the past couple of sessions - perhaps with the AI narrative struggling a little it brings back some potential growth concerns into the foray. WTI futures are around $95.92, down roughly 2.1%, while gold futures are around $4,179, up about 0.2%. Cheaper oil helps at the margin but once again it feels like the market "fear of the day" has shifted to AI.

Stocks have had a rough-ish start with SPX unch'd and NDQ down 1%. CoreWeave bounced roughly 6% yday after Nvidia's vote of confidence, but is now back down almost 8%. Its October 2031 bond briefly yielded more than 16% on Thursday. Ppl buying the stock after a selloff and lenders wanting a much bigger return can happen at the same time...the rebound doesn't settle the funding question. There's a difference between customers wanting more compute and customers being able to finance it on terms that make sense. Lower Treasury yields help, but not much if lenders demand a bigger premium to take the company risk. The memory competition question discussed this week is separate again: how much pressure on future pricing is already in the stocks, and do the next production and customer-demand updates justify it? A bounce in one AI name doesn't answer that. The narratives above I think present continued doubts for memory/data centre stocks at valuations that are still pretty lofty...it's a tough one coz I, like probably you, am max bullish on "AI", but I think it's important to not conflate that "trade" with stocks that could still struggle despite its growth...that is the tricky part here...and it seems like today's selloff after just a day of relief is probably giving us some signs.

BTC is up roughly 2.2% over 24H, with ETH up 5.1%, SOL 4% and HYPE 4.1%. A much better showing after the selling, with ETH and SOL recovering faster than BTC. The support area discussed yday remains the useful conditional setup: losing it would make things harder for alts, while holding above it gives this recovery room to build. For now, the demand for BTC in the low 80 area seems sufficient to keep the dream alive. US spot BTC ETFs took in just $5.1m yday after Wednesday's $261.4m outflow. ETH ETFs lost $60.3m, less than Wednesday's $129.5m but still money leaving. Both remain net negative for the week through Thursday. Better PA, but not a convincing turn in ETF demand yet. ZEC is up roughly 11.4% over 24H and VVV around 8.6%, comfortably ahead of the majors. That's the recovery in relative strength that was missing in yday's brief. The privacy and AI-related names discussed this week are getting a bid again. ZEC's reversal in particular shows how quickly the same name can go from leading the selling to leading the bounce. There's still room for sideways PA rather than immediately giving bulls or bears the big move they want. The more useful test is whether these names keep outperforming once the initial rebound fades. Liking the longer-term idea doesn't make every dip small, and being early with leverage can get expensive even if the view ends up being right. It's a tough one coz everything inside me wants to get ballz deep long but I think the right answer is to not be greedy, and practice patience...you wanna be able to pounce when the big opportunities present themselves. Good luck today.