Good News Is Bad News

Macro

On the equity side, the week turned on Friday's payrolls. The U.S. added 172k jobs in May against ~80k expected, with April revised up to 179k from 115k. Job openings hit 7.6M, the highest in nearly two years, and ISM services prices climbed to their highest since August 2022. On its own that's a strong economy. In this regime it's a problem, because it kills the near-term case for the Fed to ease and keeps the restrictive path intact for longer. The 10Y rose to 4.55%. Good news is bad news again.

There were cracks underneath the headline. Jobless claims rose to 225k, the highest since February, and announced layoffs climbed for a third straight month, with companies citing AI as the leading reason. So the strong print sits on top of a labour market thinning at the edges. But the Fed reacts to the headline, and the headline was hot.

The bigger event was the AI trade seemingly starting to roll over. Early-week optimism faded into a heavy selloff, with the Nasdaq down 4.7% and the S&P posting its first weekly loss since March. A growing pipeline of AI equity issuance, stretched earnings expectations, and oil volatility all hit at once.

Part of the weakness may also be positioning ahead of a wave of trillion-dollar-plus IPOs, the first being SpaceX on June 12. That capital has to come from somewhere, and trimming richly priced AI names to make room is the path of least resistance.

This is the exhaustion we called when Nvidia's blowout barely moved the stock. Now that the positive earnings tailwind is fading from memory, the market once again scribes value to macro at a point where it can feel relatively stretched.

Digital Assets

Strategy was the catalyst for the leg lower. Saylor disclosed the sale of 32 BTC between May 26-31, the first sale since 2022, and that tipped an already-weak market over the edge. The weakness was there well before the headline. BTC fell ~14% to below $62k, levels last seen in September 2024, with momentum and OTC participation grinding back toward the lows for days. 32 BTC is immaterial. Saylor selling for the first time in four years, into a market already bleeding flows, is not. A more selective pocket is actually welcoming it: Strategy has been an overhang for a month, and Saylor just ripped off the band-aid.

With prior support gone, there's not much underneath to lean on. BTC never spent meaningful time in the $50-59k range on the way up in 2024, so there are no real technical levels here. That leaves flow as the thing setting direction.

On our OTC desk, retail has been a net seller for a while, chasing equities, while US institutions turned bearish over the past few days, with some of that pressure fading overnight, too early to call a reversal. Asia and Europe are balanced. The selling is US-led, the same region that carried BTC from $70k to $83k a month ago and is now offloading. The ETF data agrees: 10 consecutive sessions of outflows through May 30, the longest streak since launch, ~$2.97B, dragging May to a $2.43B net outflow, the worst month of 2026.

ZEC was its own story. A critical soundness bug was disclosed in Zcash's shielded pool, a flaw that in theory allowed undetectable counterfeit supply. Even with an emergency fork and no exploit found, the damage was done. Arthur Hayes dumped his entire position and ZEC crashed 40-50% off its highs. For a privacy coin, confidence in shielded supply is the whole product, so a soundness scare cuts deeper than any macro print. HYPE just felt gravity with the rest. Nothing decouples in a week like this.

Our take:

“Saylor ripping off the band aid"

While Strategy is causing concerns of some incremental selling pressure, the reality is that ETF flow was already hinting at fading momentum, which is something we confirmed from OTC activity as well. The bid had thinned, retail was chasing equities, and there was no one left underneath to absorb a turn. The equity rally was the only thing masking it. This week it stopped. AI cracked, payrolls forced yields higher, and the asset with the thinnest support fell the furthest.

32 BTC is immaterial. Saylor selling for the first time in four years, into a market already bleeding flows however is not. The actual selling is US institutions offloading what they bought a month ago, with no bid on the other side. Now we seem to be bouncing off the 60s on the back of some ceasefire news. Tbc how long this lasts.

There's a constructive read. A break of yearly support, the worst ETF month of the year, and longer-term capital quietly TWAPing into these levels on the view that the risk/reward is becoming pretty attractive here on a long horizon (>1y). We're not calling the bottom here, because there's no sign of inflows returning and the macro is still difficult as we head into mid-term elections.

The next real catalyst is SpaceX coming to market on June 12. It's a clean gauge of retail and risk appetite: constructive if the placement is digested well, bearish for the whole complex if it shows exhaustion.