Portfolios

Market Thoughts

AI Still Driving the Bus: Another strong day for tech stocks reinforced the idea that AI remains the dominant force in markets. Crypto price action was more muted, with BTC and ETH largely flat, though SOL and select alts outperformed. Crypto equities also held in well, particularly the financial services cohort, which bounced despite disappointing earnings from Coinbase. At this point, AI capex and downstream adoption trends appear to be taking precedence over traditional macro drivers such as liquidity conditions and rates.

Labor Data Complicates Near-Term Monetary Policy Path: This week’s labor market data came in stronger than expected, with a higher-than-expected NFP print and steady unemployment rate suggesting labor conditions may be stabilizing near-term. Six-month moving averages for NFPs and unemployment have started to inflect in a more constructive direction. Combined with elevated commodity prices and persistently hot ISM prices paid components, this creates a more complicated setup for a new Fed. Markets are already pricing a relatively restrictive path, with implied policy rates now reflecting net hikes into early 2027. While this may not matter much for immediate price action (see comments above), it does reinforce the idea that this could present a challenge for markets into mid-year.

Tech Has Stolen the Animal Spirits: One interesting development is the convergence between realized volatility in BTC and the tech sector. Rolling 30-day realized volatility for BTC is now approaching parity with tech equities, which is notable given BTC’s historical volatility premium. This reflects where the current speculative impulse resides: overwhelmingly within the AI complex. Historically, periods where BTC volatility compresses relative to tech have sometimes preceded stronger forward BTC performance, though we are not quite at that threshold yet.

STRC Still Trading Below Par: The next STRC ex-dividend date is approaching on May 15^th, which historically has supported incremental BTC flows. However, one detail worth monitoring closely is that STRC remains below par despite being just seven calendar days away from the ex-dividend date. In prior months, STRC was already trading at or above par at this stage. This divergence could simply reflect temporary positioning, but if it persists into next week, particularly by midweek, it may signal weaker incremental demand for STRC issuance this cycle and potentially smaller BTC inflows as a result.

Bottom Line: AI continues to dominate risk appetite and absorb much of the market’s speculative energy, while crypto broadly remains more selective beneath the surface. Macro data is incrementally strengthening the hawkish case for the Fed, though this has yet to materially impact risk appetite. Near term, the key variable remains STRC demand into the May ex-dividend window.

Medici Network Takeaways

This week, I had the privilege of attending the Medici Network’s conference. I am a fan of the Medici Network because they bring together a highly curated, high-signal group of market participants. I thought I would share a few of the takeaways.

Takeaways

• The group consisted of a decent portion of the crypto-native buyside, operators in the space, as well as institutional allocators. The buyside cohort remained broadly despondent about the crypto market, altcoins more specifically. There were a handful of conversations featuring high-conviction altcoin pitches. This could mean that funds are beginning to allocate and simply do not want to reveal their hand yet, or it could reflect a genuine lack of confidence in the broader crypto complex (I am partial to the latter). Most areas of interest were found in longing BTC, BTC volatility, miners, and HYPE. There were also a couple of discussions about ZEC, which I will touch upon later.
• There was lingering concern about DeFi. The onslaught of hacks has left the industry discouraged about the prospect of institutional venues plugging into existing projects (for example, a credit platform tapping into AAVE liquidity). The acceleration of AI models has compounded those concerns. I have strong views, loosely held, on this front. My current view is that a few battle-tested platforms may emerge as winners in the “DeFi mullet” scenario (TradFi distribution / crypto-native DeFi infrastructure), but there may need to be additional churn along the way. It is difficult to compete with global, composable liquidity. However, I suspect that given time constraints, institutions may push forward with their own semi-permissioned solutions built on crypto rails while the industry figures out how to combat the hack issues. It is going to be a race, and the DeFi space needs to get its act together fast.
• The disappointment from crypto-native fund managers was contrasted with a steady bullish dialogue around tokenization and stablecoins. This is clearly a megatrend that both crypto natives and TradFi-adjacent investors agree on. Financial markets will move onto 24/7 global financial rails and inherit the same composability and property rights as endogenous cryptoassets. This should help companies expand their addressable market, innovate on new products, and drive both growth and cost reduction.
• I will say that there also remains an appetite from traditional allocators to find exposure to the space across both liquid and venture. This is encouraging.

The ZEC Trade

As mentioned above, there were a couple of conversations with fund managers that featured Zcash as a topic. I also had the privilege of co-hosting a panel with Barry Silbert, the founder and CEO of DCG, who provided some constructive thoughts on ZEC. I must admit, it was a compelling thesis.

What is it?

Zcash is a proof-of-work blockchain with a fixed 21 million coin supply. It resembles BTC in many ways, but with one key distinction: Zcash gives users the option to transact privately by shielding transaction data rather than exposing all transaction details publicly on-chain.

The network supports both transparent transactions that are publicly visible and shielded transactions that verify validity without revealing the sender, recipient, or transaction amount.

Privacy is achieved through a shielded pool secured by zero-knowledge proofs. Zcash also supports selective disclosure through viewing keys, allowing users to share visibility into shielded activity with specific counterparties when necessary.

To get ahead of the questions, the trade here is not that ZEC displaces BTC. Bitcoin is unlikely to lose its position as the preeminent crypto store of value to Zcash because monetary dominance is driven less by technical features and more by social trust, liquidity, neutrality, and institutional entrenchment. Bitcoin benefited from a uniquely fair and simple launch with no premine or founder allocation, alongside a transparent monetary policy that is easy for institutions, governments, and individuals to verify. Over time, this created powerful network effects: the deepest liquidity, largest mining network, strongest brand recognition, most institutional infrastructure, and broadest regulatory acceptance in the industry.

While Zcash offers stronger privacy guarantees, that complexity introduces greater trust assumptions and regulatory friction, which ultimately weakened its ability to emerge as a globally accepted reserve asset. In practice, the market chose Bitcoin not because it was the most technologically advanced system, but because it became the most trusted and universally recognized form of digital scarcity.

That said, it does seem plausible that private digital cash siphons some marginal market share from BTC over time.

The ZEC Thesis

Demand for Financial Privacy

The thesis for privacy coins had always seemed somewhat flimsy to me. I value privacy, as I think most individuals do when pressed with the question. However, actions speak louder than words. People routinely exchange biometric data for convenience at the airport, click through privacy policies without reading them, and freely discuss personal matters with AI agents. At the end of the day, the right to privacy is ostensibly agreed upon by most people, but it is not something that occupies much mindshare on a daily basis. Thus, it seemed like a difficult theme to build a sustainable mass-market narrative around.

However, financial privacy may increasingly become more “top of mind.”

Several jurisdictions globally have proposed increasingly aggressive wealth and capital taxation frameworks. I certainly appreciate the driving force behind these discussions, as wealth inequality is a serious topic. However, when governments increasingly expand financial reporting regimes and surveillance capabilities without corresponding discussions around spending restraint, it is understandable that individuals begin seeking greater financial autonomy.

As a result, technologies that allow individuals to store and transfer wealth more privately may see growing demand if these trends continue.

Beyond tax policy, there is also a growing sense of geopolitical instability and concern around the expansion of AI-enhanced financial surveillance. For individuals living under oppressive regimes, or even classically liberal systems that gradually expand financial monitoring capabilities, the ability to transact privately may provide an important safeguard for financial freedom.

Cypherpunk Rebellion

It is difficult to quantify, but conversations suggest that a modest “cypherpunk rebellion” may be emerging among some Bitcoin OGs.

They do not view BTC as replaceable, but many are increasingly uncomfortable with the institutionalization of Bitcoin. Some are unhappy with the growing influence of entities like MSTR and BlackRock on the broader ecosystem and are looking to diversify into something more closely aligned with the cypherpunk ethos that originally birthed the industry.

Given ZEC’s comparatively small market cap, even modest rotations from legacy BTC holders could drive a sharp rerating.

Sound Supply-Side Tokenomics

As noted above, ZEC has the same capped 21 million supply as BTC. Thus, there is not much to worry about on the monetary policy front.

Opt-in Features

Unlike other privacy coins, ZEC features opt-in privacy. Users do not need to shield their transactions if they do not want to. This gives ZEC a meaningful regulatory advantage over coins like Monero, which feature mandatory privacy and therefore face greater challenges around exchange listings and regulatory compliance.

As a result, ZEC arguably has superior access to liquidity and institutional infrastructure relative to other privacy-focused assets.

Network Effects Starting to Take Shape

There are also some potentially powerful network effects beginning to emerge around shielded adoption.

ZEC allows users to move funds into a shielded pool, where transaction details become obscured through zero-knowledge proofs. While it is not literally a mixing service, the intuition is somewhat similar: once funds are inside the shielded pool, it becomes increasingly difficult to associate specific inflows and outflows with individual users.

Importantly, this system becomes more effective as participation increases. The larger the shielded pool becomes, the stronger the anonymity guarantees for its users. In other words, privacy in Zcash is partially a function of the size of the anonymity set.

Historically, one of the major criticisms of Zcash was that shielded adoption remained relatively low, limiting the effectiveness of the network’s privacy guarantees in practice. However, while transaction counts have only modestly improved recently, the share of ZEC held within shielded pools has expanded materially. To me, this suggests there may be genuine underlying demand for financial privacy rather than purely speculative activity.

If that trend continues, the network’s privacy guarantees should strengthen alongside adoption, creating a potentially reflexive dynamic where greater usage improves the utility of the network itself.

Performance

ZEC has been quite the outperformer over the past several months.

It rallied from roughly $40 to more than $700 in Q4 2025, before drawing down nearly 75% into February. Over the past couple of months, however, we have seen a resurgence, with the latest rally accelerating this week.

I had initially been skeptical of the first rally and felt momentarily validated during Q1 of this year. ZEC has demonstrated episodic bursts of strength during each bull market cycle since launch. I was also skeptical of the privacy narrative for the reasons outlined above and did not fully appreciate the growth in shielded ZEC balances. It was also revealed that there was substantial DAT buying during the first bout of strength.

However, the latest resurgence, coupled with the thesis outlined above, suggests to me that there may still be more meat on this bone (eventually, see more below).

I Prefer to Wait for a Dip / Long a Breakout

If there is legitimate underlying demand here, and the thesis has legs, then we should expect ZEC to siphon some non-negligible portion of BTC’s store-of-value market share. Presently, the ZEC-to-BTC market cap ratio remains below 1%.

If ZEC were eventually to reach even 5% of BTC’s circulating market cap, we would be looking at a price of ~$5k per ZEC. That is clearly an aggressive scenario, but it helps contextualize the asymmetry. Note that I am using the circulating market cap for this calculation.

Zooming in, some important context here is that this coin is HOT. It has rallied violently this week. The rally was likely aided by Multicoin revealing that they had initiated a position in February. In fact, I started writing this note when ZEC was trading at ~$560, and as I look at my TradingView screen, it looks as though ZEC just tapped $625.

Generally speaking, it is often better to buy strength than weakness in crypto. However, as is always the case with altcoins, pullbacks can test one’s conviction. It is also worth noting that there is substantial leverage in the market, with coin-denominated OI nearly back at all-time highs.

Thus, my conclusion here in the immediate term is to add to the watchlist and wait for a pullback or a break of ATH, at which point, perhaps we participate in price discovery.

Tickers in this video: BTC 0.35% ETH -1.08% SOL -1.01% HYPE 1.64% ZEC 2.41% STRC

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