Macro update

This week marked a shift in tone more than direction. The dust from the October washout has mostly settled, positioning has reset, and while crypto continues to lag broader risk assets, the tone feels less fragile. The headlines helped, Trump’s proposed $2k “stimi” via tariff rebates briefly reignited risk sentiment over the weekend before being reframed as a tax break, but it still served its purpose: reminding markets that fiscal support remains in play. That, combined with renewed hopes around the end of the U.S. government shutdown and softer macro prints, gave traders an excuse to put on selective risk. Still, digital assets remain the worst-performing cross-asset class, highlighting that sentiment may be improving, but flows haven’t yet followed through.

BTC has held around 105–107k throughout, ETH sits near 3.7k, and both have shown resilience despite another week of outflows from ETFs. Alts bounced into Monday, but the recovery was highly uneven. The GMCI-30 finished +0.7% on the week, with leadership coming from DePIN (+22%), L2s (+13%), and Mid Caps (+15%). AI (+9.6%), DeFi (+8.8%), and Utilities (+5.9%) followed, while L1s (-1%) and Memes (+4.6%) lagged.

The exhibit above rolls Monday-Monday, hence discrepancy vs first exhibit

The rotation speaks to where risk appetite currently sits, investors are adding exposure, but only at the margins. The GMCI gains were largely a product of the weekend recovery, not a structural shift in flows. Market breadth remains extremely narrow, with just a handful of winners, FIL, AR, and a few others, carrying most of the performance. As a result, narrative breakouts still feel forced, concentrated in thin pockets of momentum that are fragile and prone to fading just as quickly as they appear.

As discussed before, the macro backdrop remains supportive, cuts are underway, QT is done, and global easing continues. The SOFR rate is collapsing, broadly tracking the direction of policy rates with some lag, so it’s no surprise. Yet crypto isn’t responding like other risk assets: the speculative layer has thinned, rallies are narrow and rotational, and capital is sticking with majors over peripherals.Based on where majors are trading today, it seems less likely that altcoin season is just around the corner. Historically alts perform well with majors sitting closer to ATH which leads to a spillover in wealth.

The below is a quick back of the envelope exercise looking at BTC performance of the aggregate of altcoins. It looks at how often BTC outperforms alts (Y-axis %) in the 30 days after BTC is % from ATH (X-axis).

When BTC sits between 10-20% from all-time high (16% today, 10-20% bracket), BTC outperforms alts ~54% of the time. When BTC drops close to 100k, the probability of BTC outperforming based on historicals even goes up to ~58%

While it’s somewhat simplified, it suggests that spillover dynamic by the numbers and also explains why for example the dinocoin rally from last week (FIL, ICP, FET, etc) felt so fragile and has already completely lost steam as the market fails to find confirmation of trend continuation from BTC. 

That doesn’t mean everything outside the majors is dead. A handful of blue-chip names with catalysts, HYPE, ENA, UNI, and a few others, continue to outperform on relative strength, supported by clearer U.S. regulatory signals and chatter around domestic market reopening. But the broader alt complex still trades like an options market: short bursts of momentum with no follow-through unless BTC is trending. Until majors regain leadership, it’s hard to call a sustained alt rally.

Our take:

“Strong market backdrop and renewed momentum gives confidence in its continuation. It’s now a matter of majors recovering back to higher levels before breadth will likely return"

Positioning has reset, sentiment has improved, and the market finally feels more balanced after weeks of chop. Crypto is still the worst-performing cross-asset, but the tone has shifted: the October flush feels behind us, and selective risk is returning. The bounce in DePIN, L2s, and AI shows there’s appetite for exposure, however market breadth remains narrow and narratives fragile.

For the next leg, majors need to lead. History suggests alts only follow once BTC trades closer to its highs, at ~105k (-16% from ATH), that rotation hasn’t triggered yet. This looks less like stagnation and more like a turning phase: structure’s cleaner, macro’s supportive, and the market feels ready to build again. With potential U.S. regulatory reopening headlines on the horizon, the next bout of volatility will likely come from policy and politics, not positioning.