Important Notice: I will be out of the office through Friday and will publish selectively if warranted by market conditions.

Portfolios

NOTE: See the end of this note for additional details on the latest rebalance.

Stops Get Hunted

The crypto selloff accelerated throughout the weekend, with BTC falling to ~$74k, ETH to ~$2,150, and SOL to ~$96.

24-hour liquidations across perpetual futures markets reached roughly $2.5 billion, a meaningful portion of which appears to have come from a single trader on Hyperliquid who was liquidated to the tune of ~$700 million on Saturday.

The liquidations were so severe for ETH that coin-denominated open interest was reset to December levels.

There were several factors at play:

• Liquidity Tightening: Rising rate expectations and a strengthening yen had been tightening liquidity at the margin.
• Warsh Nominated: President Trump announced Kevin Warsh as the next Fed Chair nominee on Friday. While this initially pushed rate expectations modestly lower and helped stem the yen rally, Warsh’s reputation for potentially hawkish balance sheet policy may have offset those otherwise supportive dynamics.
• Crowded Trades Unwinding: Following the Warsh nomination, we saw historically large intraday selloffs in gold and silver, down roughly 14% and 37%, respectively. The magnitude of these moves raises the possibility of forced deleveraging spilling over into adjacent risk assets.
• Iran Tensions Bubbling: Geopolitical risk has also increased recently, with the rising likelihood of US action in Iran. This has led to a rally in crude and incremental cross-asset volatility.
• OAI Complex on Shaky Ground: Separately, over the weekend, it was reported that while NVDA still plans to participate in a $100 billion OpenAI equity financing alongside other investors, a separate $100 billion equity investment that was floated last September and tied to long-term NVDA chip leasing commitments now appears to be on ice. It is possible this development has contributed to broader investor unease.
• Stops Being Hunted: Finally, as noted above, a large and highly visible long position on Hyperliquid was seemingly “hunted” on an illiquid Saturday afternoon, triggering cascading liquidations and exacerbating downside momentum.

Taken together, these factors drove a continuation of the recent downtrend over the weekend.

As I outlined on Friday, the mid-$70k region stood out as a logical area for BTC to find some degree of support and stage some semblance of a bounce. This is supported by several converging reference points:

• ~$74k was the intraday high reached in March 2024, following the launch of the BTC ETFs
• ~$74k was the intraday low in April 2025 during the tariff-driven selloff
• ~$74k approximates the aggregate cost basis of BTC ETF holders (ex-GBTC)
• ~$76k is MicroStrategy’s current cost basis on its BTC holdings

Bottom Line: All else equal, the levels reached over the weekend and the degree of capitulation observed create a more attractive near-term risk/reward. As such, I view this as a reasonable opportunity to deploy a modest amount of dry powder (~10%) within portfolios, while acknowledging that we are still trending lower and there is still an ample amount of positioning risk in traditional markets that could adversely affect crypto markets.

BTC vs. Gold

The BTC/gold ratio has sparked considerable debate across crypto and broader investment circles. Over the past few years, there has been an observable lead–lag relationship between BTC and gold, each seemingly benefitting from the “debasement trade.” However, over the past couple of months, there has been a noticeable lack of rotation from analog to digital gold, leading some to question BTC’s long-term thesis.

For the record, it remains my view that BTC is a superior product to gold. It is seizure-resistant, has a capped supply versus gold’s ~2–3% annual inflation, is highly portable, and is more liquid than physical gold. Over the long term, I continue to expect BTC to eat into gold’s store-of-value market share. The primary risk to this thesis, in my view, is quantum computing, which I plan to address in a longer write-up in the coming weeks.

In any case, this is a ratio that many investors are closely watching. A turn higher in the BTC/gold pair does not necessarily imply that BTC must rise on an absolute basis, but it would be a constructive signal for the relative value trade to begin working again.

Currently, BTC’s market cap is roughly ~11% of gold’s total market cap (excluding industrial and jewelry applications). When viewed through rolling z-scores across multiple time horizons, this ~11% level appears increasingly oversold, with the 360- and 720-day z-scores firmly in what could be described as capitulation territory. While these readings could certainly extend further, the evidence is building that the ratio may have bottomed, and that BTC offers a more attractive ~12–24 month risk/reward from here.

Bottom Line: At current levels, the BTC/gold ratio appears deeply oversold, and while near-term volatility remains possible, the risk/reward increasingly favors BTC outperforming gold over the next 12–24 months.

Portfolio Updates

As noted above, I am deploying some dry powder across the model portfolios. Specifically, I am reducing stablecoin exposure in the Core Strategy portfolio by 10%, reallocating 5% to BTC, 2.5% to SOL, and 2.5% to HYPE. I am maintaining ETH at its current weight.

Within the crypto equities portfolio, I am making changes that broadly rhyme with the adjustments in the token portfolio. However, I am only redeploying 5% of cash into risk. Specifically, I am adding 2.5% to MSTR, which is trading pretty close to ~1x mNAV, making the risk/reward attractive relative to BTC. I am also adding 1.25% to PURR (the Hyperliquid DAT) and 1.25% to GSOL to increase spot SOL exposure.