June 30, 2026
Commentary
Year-to-date to June 30, the Ninepoint Crypto and AI Leaders ETF generated a total return of -0.90%. For the quarter, the Fund generated a total return of +21.19%.
NINEPOINT CRYPTO AND AI LEADERS ETF - COMPOUNDED RETURNS¹ AS OF JUNE 30, 2025 (SERIES ETF USD- TKN.U) | INCEPTION DATE: JANUARY 27, 2021
1M |
YTD |
3M |
6M |
1YR |
3YR |
5YR |
Inception |
|
|---|---|---|---|---|---|---|---|---|
Fund |
-8.43% |
-0.90% |
21.19% |
-0.90% |
3.50% |
28.67% |
12.24% |
12.19% |
The crypto and AI markets told two very different stories in Q2 2026, with a forceful recovery across the AI ecosystem even as crypto extended the decline it began the year with. Throughout the quarter, the market’s focus shifted away from the Iran conflict that had gripped it in Q1, with investors increasingly seeing light at the end of the tunnel as a potential peace framework and accompanying memorandum of understanding took hold, easing energy prices and tempering the outlook for rising inflation. With those overhangs receding, attention turned squarely back to the earnings and fundamentals underpinning the AI trade, which proved exceptionally strong, and capital rotated intensely and almost single-mindedly back into it.
Beneath the headline recovery, the more instructive dynamic of Q2 was the divide between hardware and software. Capital flowed overwhelmingly toward the physical layer of the AI trade, tracking the hundreds of billions of dollars in hyperscaler capital expenditures downstream and buying the companies on the receiving end. In effect, the market came to favor the capital receivers over the capital spenders. Software, beaten so badly to start the year that it birthed the term "SaaSpocalypse," clawed back some ground, though it remained buried deep in double-digit-negative year-to-date territory. Crypto, meanwhile, slid deeper into what felt like a full-blown crypto winter, starved of the marginal dollar in a market consumed almost entirely by AI. In doing so, it stayed faithful to its four-year market cycle pattern, which has historically culminated in a sharp fourth-year correction of exactly this kind. Ultimately, just as AI valuations caught up to their fundamentals in Q2, we believe crypto will in time do the same, as its own fundamentals have only continued to strengthen despite the weakness in prices.
Within this environment, the Fund generated a total return of +21.19% in Q2 2026, materially outperforming large-cap crypto assets including Bitcoin (-13.88%), Ethereum (-26.34%), and Solana (-12.24%). For perspective, this compares to the Nasdaq Composite (+20.02%), the Magnificent Seven (+9.58%), and the iShares Expanded Tech-Software Sector ETF (+13.58%).
Nowhere is the Fund's value proposition clearer than in its one-year return of +3.50%, set against Bitcoin's -45.47%, Ethereum's -37.26%, and Solana's -53.31%. Year-to-date, the Fund has nearly erased its Q1 drawdown at -0.90%, even as those same assets remain deep in negative territory at -32.87%, -46.86%, and -40.60%, respectively. This is by design. We deliberately converted the Fund from a spot Bitcoin ETF into an actively managed crypto and AI mandate in May 2023, precisely because we saw the ecosystem evolving well beyond just Bitcoin, and that decision matters most in environments like this one. Crypto has always been prone to sharp, cyclical drawdowns, particularly in the fourth year of its market cycles. Our ability to soften that drawdown this year while retaining full upside exposure and optionality across the entire theme is powerful, and it calls into question whether passive Bitcoin exposure is really the most appropriate way to own the asset class. By capturing the entire opportunity set - networks, applications, and the growing universe of public companies - and pairing it with leading AI names in a single, actively managed, dual-theme vehicle, the Fund is purpose-built to navigate market cycles and shifts in leadership.
From a sector attribution perspective, Q2 2026 saw Information Technology (+2,248 basis points) drive the bulk of the Fund's gains, followed by Financials (+216 basis points) and Communication (+123 basis points). On an individual basis, the largest contributors were Advanced Micro Devices, Inc. (+668 basis points), Cipher Digital Inc. (+360 basis points), and Riot Platforms, Inc. (+287 basis points), spanning both the semiconductor and high-performance compute infrastructure names at the core of the AI buildout. The lone material sector detractor was Crypto ETFs (-452 basis points), while the largest individual detractors were Bitcoin (-209 basis points) and Ethereum (-197 basis points), reflecting the continued weakness in spot crypto asset prices.
Throughout Q2 2026, we stayed true to our active mandate, continuing to reposition the Fund in line with the evolving backdrop. At the sector level, this centered on reducing our Crypto ETFs exposure, which declined from 26.88% to 17.77%, alongside a modest trim in Financials, with the proceeds redeployed across the remaining sectors and concentrated primarily in Information Technology. We also raised our cash position from 0.60% to 4.16%, both to help fund those additions and to take some profits following a strong quarter, while preserving dry powder to deploy as trends shift and favorable opportunities arise. At the individual position level, our activity was more nuanced.
Within crypto assets, we meaningfully trimmed exposure to core assets such as Bitcoin and Ethereum, though we did initiate a new position in Hyperliquid (indirectly via a listed U.S. crypto ETF). Hyperliquid is crypto’s leading decentralized exchange built on its own high-performance blockchain, which has become the leading 24/7 venue where traders go to take on positions on a fast-growing range of markets spanning crypto, stocks, commodities, and more. In our view, Hyperliquid represents one of the most compelling opportunities within the entire asset class and it appears the market is catching on: it’s up +154.20% year-to-date at a time where leading crypto assets have experienced sharp drawdowns. This is not without reason. Hyperliquid has established itself as one of the most profitable projects in crypto history, generating roughly $770 million in revenue over the past year (compared to Ethereum’s $380 million and Solana’s $450 million). More distinctive still is how that value accrues to token holders: Hyperliquid directs over 97% of its economics toward buying its native HYPE token back from the open market, a mechanism that works much like a corporate share buyback. Since the project's inception in late 2024, these buybacks have permanently removed 15.29% of HYPE's circulating supply, steadily shrinking the float. Polymarket and Kalshi turned prediction markets into the go-to source for real-world perceived probability; we believe Hyperliquid is doing the same for price discovery across every asset and asset class, particularly during the 81% of the year that traditional markets sit closed. This is our North Star in action, capturing the full opportunity set wherever it emerges, and our exposure to Hyperliquid, unmatched among Canadian products to our knowledge, is the clearest expression of it yet.
Beyond that, we continued to reshape the portfolio across both themes with the same active discipline. Among crypto-related equities, we reduced our exposure to businesses most tightly tethered to trading volumes and spot crypto prices, rotating instead toward names whose fundamentals have meaningfully decoupled from the underlying asset class, companies with more diversified, durable revenue streams capable of compounding regardless of where crypto trades in the near term. On the AI side, we broadened the Fund's exposure through a few new positions across the trade, while taking the opportunity, after an exceptionally strong quarter, to rotate a portion of our profits out of higher-beta names and into larger, more established leaders where we see a more favorable balance of risk and reward. At the same time, we selectively closed out positions to modestly trim our overall software exposure, mindful of the mounting pressure AI-native tools continue to place on the sector.
Before turning to what may lie ahead as we enter H2 2026, let's take one final look in the rearview mirror at what has unfolded.
To put it plainly, crypto is in the depths of a bear market. Bitcoin ended Q2 at $58,600, down 32.87% year-to-date and 53.57% from its all-time high of $126,200 set on October 6, 2025. The total crypto market capitalization has fallen 33.00% year-to-date to $2.0 trillion, while stablecoin dominance has climbed steadily from 10.70% to 15.10%, even as overall stablecoin supply contracted 1.00%, a combination suggesting that capital is not merely rotating within crypto but exiting the ecosystem altogether. The same story is playing out across traditional markets, where crypto ETPs have seen $2.0 billion in net outflows year-to-date, driven by heavy redemptions of $3.8 billion in June alone. Digital Asset Treasuries, for their part, purchased $9.4 billion of crypto in Q2, down 22.87% year-over-year, the majority of it from Strategy, whose capacity to keep aggressively accumulating Bitcoin deteriorated materially over the period, weighed down by market-to-net-asset-value (mNAV) compression, the "depegging" of its STRC perpetual preferred equity, and a growing burden of annual dividend and debt commitments relative to the size of its Bitcoin holdings.
The more specific risk on our radar lies with the Digital Asset Treasuries themselves: many now trade at deep discounts to the net asset value of their crypto holdings, and further price weakness could force larger players to sell crypto outright to fund share buybacks of their discounted shares or meet financing obligations. We have already seen tremors, with Strategy, the largest Digital Asset Treasury, selling 32 BTC at the end of May for $2.5 million to signal it would sell Bitcoin if required to fund dividends, interest, and USD reserves. Though that was an immaterial sum against its 847,363 BTC worth $53.0 billion, Strategy announced a few weeks later that it may sell up to $1.25 billion of Bitcoin to do exactly that. Crypto bear markets have a way of flushing out overleveraged players and igniting downside reflexivity before a bottom forms, and this is exactly the kind of dynamic we’ll be watching closely. Crypto ETPs and Digital Asset Treasuries were two of the largest sources of demand behind crypto's run to new highs in 2025, and the sharp slowdown in their buying is a microcosm of the broader picture: capital is moving elsewhere. Given the frenzy of outsized, parabolic gains across the AI universe, it is not hard to see where. The gravitational pull of the AI trade has been immense, drawing capital from every corner of the market, with crypto among the most acutely hit. Unsurprisingly, sentiment has remained largely remained in "extreme fear" throughout H1 2026, at levels last seen during the FTX collapse in November 2022 and the COVID selloff in March 2020.
All that said, seasoned crypto investors are no strangers to conditions like these. As we highlighted in our previous commentary, 2026 marks the fourth year of a crypto market cycle that has, in every prior instance, ended in an intense and sharp correction. From peak to trough, Bitcoin declined 77.60% in 2022, 84.30% in 2018, and 87.70% in 2015, taking 376, 363, and 411 days, respectively, to reach those bottoms before a new cycle began. Today, Bitcoin sits -53.57% below a peak that occurred just 267 days ago. Viewed through that historical lens, Bitcoin could well see another leg down and extend its drawdown further before bottoming sometime in Q4. Viewed structurally, however, the calculus may differ: the emergence of institutional allocators and crypto's growing convergence with traditional markets have fundamentally reshaped this cycle, and just as that institutionalization tempered the scale of the gains on the way up, it could equally cushion the depth of the drawdown on the way down.
So, what's next for crypto markets? The first major domino, and the one most likely to shape the short-to-medium-term trajectory, is the Digital Asset Market Clarity Act. If passed, this market structure legislation would establish a comprehensive U.S. regulatory framework for digital assets, dividing oversight between the SEC and CFTC and providing long-sought legal clarity on when a token is classified as a security versus a commodity. Despite strong optimism on its passage earlier in the year, Polymarket and Kalshi now price its odds of approval at just 49% and 43%, respectively. Those odds continue to dwindle: no floor vote has yet been scheduled, the window to pass the bill before the August recess is shrinking, and unresolved bipartisan issues could push consideration into the fall, when midterm-election politics make passage far more difficult. Only time will tell, but the outcome stands to be a significant catalyst in either direction.
Prices aside, we expect crypto's growth drivers and adoption curve to keep accelerating through H2 2026. Wall Street institutions have been rapidly building out their digital asset teams and rolling out crypto products and tokenization initiatives, while consumer platforms and fintech firms increasingly embed crypto infrastructure and stablecoins into their workflows and operations. Just as telling, several of the most prominent crypto VC firms have raised, or are actively looking to raise, significant capital to deploy, something that has historically occurred in the depths of bear markets, when valuations are most attractive and the real building takes place: a16z raised $2.2 billion in May, Blockchain Capital $700 million in April, Paradigm $1.5 billion in March, and Dragonfly $650 million in February. Taken together, the signal beneath the surface could hardly be clearer.
Finally, on key price levels: at $58,600, Bitcoin sits below a cluster of major technical markers, including its 50-day ($68,600), 100-day ($71,400), and 200-day ($75,400) moving averages, the 2021 cycle's high of $69,000, and the psychological $60,000 mark. As in every prior bear market, the two levels we are watching most closely are the 200-week moving average ($62,400) and Realized Price, the aggregate cost basis of all coins in circulation, at roughly $52,800. Bitcoin has already broken below the former and now sits just above the latter, which has historically served as the market's floor of last resort. In past cycles, Bitcoin has dipped beneath these levels only briefly before reclaiming them, with each such move marking a cycle bottom.
In closing, Q2 was the quarter our core thesis came to life. As AI surged and crypto lagged, the Fund's dual-theme, diversified, and actively managed approach let it lean into strength, recover the bulk of its drawdown, and deliver for Unitholders in a way single-asset exposure simply could not. Our conviction in both crypto and AI remains as resilient as ever, and if anything this period has only deepened it: crypto's fundamentals have continued to strengthen even as its price has lagged, setting the stage for the same catch-up AI enjoyed this quarter. We remain focused on deploying capital into the best opportunities across both ecosystems to generate the highest risk-adjusted returns for Unitholders, and we are confident in our ability to position the Fund to participate meaningfully in the next phase of growth for each.
Until next quarter,
Ninepoint Digital Asset Group
A division of Ninepoint Partners LP