Three weeks of heavy selling have reshaped the short-term narrative for digital assets. US$5.8B has flowed out of digital asset ETPs since the run began,1 placing the current episode among the sharpest sustained outflow periods in more than a year. The asset class is still roughly flat year to date. James Butterfill, Head of Research at CoinShares, frames this as a sentiment shock, not a structural one.
Two forces explain the reset. The first is geopolitics. The Iran conflict has proven more resistant to resolution than markets had priced, and that uncertainty has fed directly into rate expectations. Two months ago the market was forecasting one to two cuts in 2026, a backdrop that would have been supportive for Bitcoin. That outlook has now inverted: the curve implies roughly 40bps of hikes.1 This repricing, more than any single macro data point, is doing the most damage to Bitcoin. Hard data has held up and payrolls, while potentially soft, have not yet signalled a meaningful deterioration.
The second force is AI. Capital is rotating heavily into AI-related exposure, drawing liquidity away from digital assets and compressing multiples in US software and services equities simultaneously. Butterfill is now willing to use the word “bubble” in the context of AI, with a caveat: the inefficiency will take years to become visible. The mechanism to watch is the revenue trough. An enormous wave of capex is being deployed now, with a gap between that spend and the revenues needed to justify current multiples.
On Strategy (ex-MicroStrategy)’s recent Bitcoin sales: the sentiment impact has been real, but Butterfill sees it as symbolic rather than systemic. Strategy’s holdings represent roughly 1% of all Bitcoin in existence.1 The sale appears linked to dividend obligations and mirrors a similar move in December 2022, which was tax-driven. The supply-demand picture is unchanged.
On Bitcoin’s near-term outlook, the current outflow cycle is on course to be the largest weekly reading in over a year, and a genuine breakout is unlikely until the Iran situation resolves and rate expectations turn. When Bitcoin was at US$80k earlier this year, CoinShares was already cautious about a decisive break higher. That caution has been borne out.
The longer-term thesis points to tokenization as the next structural theme. Stablecoin supply has grown from US$300B to US$360B over six months.1 Scott Bessent has publicly suggested the market could reach US$2T by 2028.1 If the CLARITY Act is enacted around 4 July as optimistically projected, institutional adoption is expected to accelerate.
Two central bank meetings are in focus: the ECB on Thursday and the Fed the following week, its first under Kevin Warsh. Warsh has indicated he will provide less forward guidance than his predecessor. CoinShares Research will publish a comment on the Fed decision and its implications for digital assets.
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Sources
1 CoinShares Research, 05 Jun 2026