Bitwise CIO Matt Hougan says crypto has become a contrarian investment as capital rotates into AI and smaller fundamentally strong tokens.
Crypto News
Crypto is shifting from a momentum trade into a contrarian bet, according to Bitwise Chief Investment Officer Matt Hougan in a market note dated June 2. The total crypto market capitalization has fallen to about $2.38 trillion, roughly 46% below its October 2025 peak. About $800 billion of that decline came in the past month.
Investors are favoring AI instead. "Who needs crypto when the Nasdaq-100 is up 43% year-over-year?" Hougan wrote. Nvidia, which builds the chips behind most large AI systems, has gained nearly 1,500% since OpenAI released ChatGPT to the public in late 2022.
Hougan said the change rewards a different kind of buyer. "Investors still believe in crypto, but now that it's a contrarian bet, they favor fundamentals over vibes," he wrote. He added that contrarian positions call for patience and a long-term view rather than momentum.
Capital Rotates Into Smaller Tokens
This downturn looks different from past ones because instead of money flowing into Bitcoin (BTC) as a safe haven, it’s rotating into smaller tokens with stronger fundamentals. Bitcoin, Ethereum (ETH), and Solana (SOL) all remained under pressure as smaller names led the move in May 2026. Hyperliquid (HYPE) rose 72%, directing nearly all trading fees into buybacks, with about $1.16 billion repurchased since launch.
Stellar (XLM) climbed around 50% after the Depository Trust and Clearing Corporation (DTCC) said it would link its tokenized securities platform to the network by the first half of 2027, covering Russell 1000 stocks, ETFs, and US Treasuries.
Nick Ruck, director at LVRG Research, added that crypto is "quietly emerging as the true contrarian bet for sophisticated investors seeking directional upside in a maturing market." He tied the shift to real adoption, clearer rules, and on-chain use.
Hougan said the market may be closer to the end of the bear cycle than its start, noting that small pockets of green can signal a turning point. He also flagged uncertainty around the CLARITY Act as a barrier holding back institutional money.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
