BTC Decoupling from Equities

Over the past two weeks, BTC has begun to decouple from other risk assets. While the broader macro environment experienced choppy conditions from November 12th through yesterday, BTC has appeared indifferent to fluctuations in risk appetite, continuing its upward momentum and approaching the $100K milestone.

A chart of BTC correlations highlights this decoupling, with sharp declines in its correlation to the QQQ, SPX, and IWM. The disconnect from IWM, in particular, stands out, as BTC has maintained a relatively strong correlation with small-cap equities since the start of this bull market. The last time we saw such a divergence was over the summer, when BTC was weighed down by a significant supply overhang.

We attribute this recent decoupling to two primary factors:

• Large Corporate Buyers (e.g., MicroStrategy, Marathon Digital, Semler Scientific, Metaplanet)
• Regulatory Risk Repricing

Impact of Corporate Buying

The influence of large corporate buyers is certainly apparent. MSTR has aggressively leveraged its premium to book value by raising capital through equity sales and convertible notes to acquire more BTC. Since early November, the company has sold over $6 billion in equity and just yesterday closed a $3 billion convertible note, much of which is expected to flow into BTC in the coming days.

We mapped MSTR’s equity sales using a 5-day TWAP assumption and overlaid these flows on BTC ETF inflows. This analysis highlights the magnitude of buy pressure MSTR has contributed. Notably, during the week of November 11th, ETF inflows slowed and even turned negative, likely in line with U.S. equity flows. However, MSTR’s aggressive buying offset this decline.

Other companies are also accelerating their BTC acquisition strategies. This week, SMLR—a name in one of our recommended equities baskets—announced the purchase of 215 BTC, increasing their holdings to 1,273. Similarly, MARA—also in one of our equities baskets—raised $1 billion through a convertible note to buy more BTC. There is no doubt that corporate buyers are having a material impact on BTC’s price trajectory and influencing the decoupling discussed above.

Regulatory Risk Repricing and Broader Adoption

While corporate buying has played a significant role, we believe regulatory risk repricing remains a key factor contributing to crypto outperformance. Optimism around a more crypto-friendly Trump administration, coupled with broader portfolio shifts in anticipation of regulatory changes, may still be providing additional tailwinds.

We note the performance of two popular “Trump Trades”—Geo Group (GEO) and Fannie Mae Preferred Stock (FNMAS). Both have performed strongly during recent market volatility, with charts resembling BTC’s upward trajectory.

This suggests that beyond corporate buying, broader portfolio reallocations are still underway.

In summary, Bitcoin’s decoupling from traditional risk assets is being driven by substantial inflows from corporate buyers like MicroStrategy, Marathon Digital, and Semler Scientific, alongside a continued repricing of regulatory risks and optimism surrounding increased adoption in a new regulatory regime.

Solana Reaches New All-Time High, “Casino Stack” Trade Still Has Upside

SOL achieved a new all-time high yesterday, a remarkable recovery from its bear market low of $8 per SOL. Perhaps the most impressive aspect of Solana’s performance in this bull market is how its price strength aligns with on-chain activity and adoption. Unlike other assets rallying without significant on-chain demand for their native tokens (e.g., SUI and APT), SOL has distinguished itself with substantial transaction volumes and trading activity.

Much of this activity stems from speculative memecoin trading on the Solana blockchain—a dynamic we’ve highlighted through our “Casino Stack” trade idea, which has performed exceptionally well over the past 30 days. For those unfamiliar, we first detailed the trade in our 10/24 note, framing Solana as the “on-chain Vegas.” The trade involves owning:

• The native currency of Vegas (SOL)
• A casino operator (RAY)
• The infrastructure underpinning Vegas (JTO)
• A casino game itself (BONK)

While this strategy has already delivered strong returns, we believe it could still have legs as long as on-chain activity remains robust.

Jito (JTO): Best Risk/Reward Out of The Bunch

As we noted in Tuesday’s Crypto Comments, for those entering the trade now, JTO appears to offer the best risk/reward out of JTO, RAY, and BONK. Admittedly, concerns around JTO’s upcoming token unlock—where circulating supply will double overnight in two weeks—are valid. However, two factors to consider:

Macro and On-Chain Environment – Token performance post-unlock heavily depends on prevailing macro conditions. If liquidity remains plentiful, SOL continues to demonstrate relative strength, and on-chain activity stays high, the market has a better shot of absorbing the unlock smoothly. While we will certainly reassess JTO and manage risk around this position as the unlock date draws near, current conditions are favorable for JTO outperformance.

Fundamental Strength – Jito is a fundamentally unique and valuable project. It combines the offerings of a liquid staking provider (like Lido) with MEV solutions (similar to Flashbots). Over the past four weeks, Jito has generated $2 billion in annualized fees and nearly $100 million in revenue. This positions its fully diluted valuation metrics—Price/Fees at 1.7x and Price/Revenue at 35.7x—at a premium compared to Lido’s Price/Fees multiple of 1.2x and its Price/Revenue ratio of 12.4x. But, given Jito’s broader MEV infrastructure offerings, we believe this premium is justified, and further price discovery is likely to occur at higher valuations.

With Solana reaching a new ATH and on-chain activity remaining robust, the “Casino Stack” trade still offers attractive opportunities. For those initiating positions now, JTO stands out as the best risk/reward play in the basket, provided macro conditions and on-chain trends continue to support the broader Solana ecosystem.

Core Strategy

Corporate buying and strong regulatory/political tailwinds bridged us through a choppy time for risk assets. Our current base case is that these tailwinds extend through inauguration day. We remain overweight on SOL with and still like altcoins such as BNB, HNT, JTO, BONK, RAY, STX, and CORE, emphasizing assets with high SOL and (potential) BTC beta. As a reminder, our Core Strategy allocation model, along with crypto equity baskets and trade recommendations, are included at the conclusion of each note.

Tickers in this report: BTC -1.49% , XRP -2.13% , SOL -0.07% , ETH 1.89% , HNT -3.42% , STX 2.03% , MKR, BNB, CORE, JTO -3.69% , BONK 1.99% , RAY -0.21% , MSTR -0.95% , SMLR 1.47% , COIN -2.76% , HOOD 0.49% , MARA -2.62% , RIOT 1.42% , WGMI -1.72% , CLSK 1.32% , WULF 1.20% , IREN -1.69% , CORZ -2.01% , BTDR -5.35% , BTBT 0.63% , HUT -2.08% , HIVE -1.37% , AVAX 1.52% , XRP -2.13% , GDLC, BITW -2.72%