Bitwise chief investment officer Matt Hougan warned that crypto has become a contrarian bet as artificial intelligence stocks absorb capital and attention previously directed toward digital assets. Total crypto market capitalization fell 5.3% to $2.38 trillion on the day of his market note. The market currently sits 46% below its October 2025 peak, according to Hougan's analysis.
AI Capital Absorption Redirects Institutional Flows
"The crypto market is brutal right now," Hougan wrote in his market note. "One major reason is that crypto is no longer the belle of the ball. AI stocks, robotics companies, SpaceX … who needs crypto when the Nasdaq-100 is up 43% year-over-year?"
NVIDIA shares have gained nearly 1,500% since OpenAI launched ChatGPT to the public in late 2022, redirecting institutional allocators toward AI infrastructure spending. Hyperscaler companies alone plan to deploy over $600 billion on AI buildouts this year, dwarfing the entire crypto market's venture funding pipeline.
Fundamentals-Driven Token Rotation Emerges During Downturn
"Investors still believe in crypto, but now that it's a contrarian bet, they favor fundamentals over vibes," Hougan noted. He argued that unlike past bear markets where capital retreated to Bitcoin, this cycle is seeing rotation into smaller tokens with strong usage metrics. Hougan named Hyperliquid, Zcash, and Stellar as examples of fundamentals-driven outperformance during the downturn.
Hyperliquid has gained more than 120% year-to-date, demonstrating selective strength during the broader market decline. Hougan's analysis indicates this pattern differs from the indiscriminate sell-offs of 2018 or 2022, where nearly every token declined in tandem.
Industry Analysts Identify Contrarian Investment Pattern
LVRG Research director Nick Ruck told Cointelegraph that crypto is "quietly emerging as the true contrarian bet for sophisticated investors seeking directional upside in a maturing market." Ruck attributed the shift to real adoption metrics, growing regulatory clarity, and demonstrable on-chain utility rather than speculative momentum or social media hype cycles.
"In the heart of a crypto winter, everything's red. When the green starts to look like real growth, the season is changing," Hougan concluded. The SpaceX IPO is expected to price around June 11.
Frequently Asked Questions
What did Bitwise CIO Matt Hougan say about the crypto market?
Matt Hougan warned that crypto has become a contrarian bet as AI stocks absorb capital that once flowed into digital assets. He noted that the crypto market capitalization fell 5.3% to $2.38 trillion on the day of his note and sits 46% below its October 2025 peak.
Why is AI affecting crypto market performance?
Hougan stated that AI stocks, robotics companies, and SpaceX have captured investor attention, with the Nasdaq-100 up 43% year-over-year. NVIDIA shares gained nearly 1,500% since ChatGPT's late 2022 launch, and hyperscaler companies plan to deploy over $600 billion on AI buildouts this year.
Which tokens did Hougan identify as fundamentals-driven outperformers?
Hougan named Hyperliquid, Zcash, and Stellar as examples of tokens with strong usage metrics that outperformed during the downturn. Hyperliquid specifically gained more than 120% year-to-date despite the broader market decline.
