Hashdex and Schwab Forecast Reversal
Bitcoin has had a punishing first half of 2026. The world’s largest cryptocurrency began the year above $93,000 and by July 1 had fallen to $58,190 — a 21-month low and a year-to-date loss exceeding 33% — even as the S&P 500 and Nasdaq set repeated all-time highs. U.S. spot Bitcoin exchange-traded funds recorded $4.5 billion in net outflows in June alone, the worst month since those products launched in January 2024. Now two major financial firms argue that readers who hold or are weighing Bitcoin face a specific decision — whether the underperformance signals a structural breakdown worth exiting, or a temporary capital rotation worth sitting through.
Their answer, arrived at from different directions, is the same: this is a rotation, not a collapse, and the conditions that would reverse it are identifiable and finite.
“Capital Follows Attention” — And Attention Is Currently on AI
Samir Kerbage, chief investment officer at Brazilian-founded crypto asset manager Hashdex, made the rotation argument directly in a CIO note published July 2. The article was subsequently covered by CoinDesk on July 4. In his note, Kerbage wrote that crypto’s weakness “says more about where investors are allocating capital than about the health of the digital asset ecosystem.”
The mechanism is straightforward: when a compelling new narrative emerges, capital floods toward it and temporarily starves other asset classes of inflows. Generative AI has generated one of the most powerful such narratives in recent memory. U.S. technology firms — Microsoft, Amazon, Alphabet, and Meta — are on track to spend more than $650 billion in combined capital expenditures in 2026, most of it AI-focused. SpaceX’s June 12 market debut absorbed a further wave of risk capital, pulling an estimated $20 billion into semiconductor ETFs over the same window that saw $12 billion exit gold and Bitcoin funds, according to The Kobeissi Letter.
That competitive pressure for speculative capital is what Kerbage calls “the AI infrastructure plays, IPO pipelines, macro positioning around rate expectations, are absorbing the flows.” His evidence for Hashdex’s optimism about the second half of 2026 lies not in price charts but in underlying network data. In Q2 2026, crypto ecosystem transaction counts reached all-time highs, according to Hashdex data sourced from Messari. Stablecoin transaction volume in the first six months of 2026 already exceeded everything processed in all of 2025, and tokenized real-world assets have grown more than 60% year to date.
A critical caveat: the majority of stablecoin volume growth and tokenized real-world asset activity occurs on Ethereum and other smart-contract platforms, not Bitcoin specifically. The stronger Bitcoin-specific bull argument lies in different data — exchange reserves that have fallen to a 7-year low of approximately 2.21 million BTC, and long-term holder supply that has reached a record 16.3 million BTC with no distribution, according to data from Bitfinex. Coins leaving exchanges into patient hands do not create near-term selling pressure; a structural supply squeeze of that scale, when demand eventually returns, tends to move prices quickly. That is the on-chain argument for Bitcoin specifically, and it is meaningfully different from a general claim about the crypto ecosystem’s health.
Kerbage’s conclusion: the gap between Bitcoin’s market capitalization and its on-chain activity has reached its widest point ever, and dislocations between price and network fundamentals do not typically persist indefinitely. “Rotations, by definition, reverse,” he wrote. His advice to financial advisors: size positions for the cycle rather than mistake a temporary rotation for a structural breakdown, because when capital returns to crypto, it tends to move quickly.
How Schwab’s Halving Model Sets a $95,000 Recovery Ceiling
Charles Schwab arrived at a similar conclusion from a different starting point. In a June 24 analysis titled “Will the Bitcoin Halving Cycle Persist?” Jim Ferraioli, the firm’s director of digital currencies research and strategy, examined Bitcoin’s historical post-halving patterns and found the current weakness broadly consistent with prior cycles.
The technical framework Ferraioli uses is grounded in mining economics. Bitcoin’s fourth halving, in April 2024, cut miner block rewards from 6.25 to 3.125 BTC per block. According to Glassnode data as of May 31, 2026, the cost of production for the least efficient miners — those with the highest electricity and overhead costs — is approximately $95,000. In past bear market recoveries, Ferraioli found that Bitcoin has historically taken more than a year after a market bottom to clear this threshold, and until it does, those miners operate as a structural source of selling pressure: they hold enough coins that their economics become a near-term ceiling on price.
Bitcoin appears to have found its 2026 cycle bottom in early February, per Ferraioli’s analysis, which was as of mid-June 2026. If that bottom holds, the historical pattern suggests the path to $95,000 is long but not unprecedented. Ferraioli also noted that the average investor’s cost basis sits near $80,000 — approximately $83,000 for ETF product holders and $78,000 for all investors excluding miners — creating a layer of overhead selling pressure as holders look to recover losses before reducing positions. These specific cost-basis anchors explain why Bitcoin’s recoveries from bear market lows tend to be halting rather than vertical: there are real sellers at real price points along the way.
What makes Ferraioli’s framing notable is his treatment of the halving cycle itself. He stopped short of declaring it a law of markets. Instead, he argued that the four-year cycle has become embedded enough in trader psychology that it now functions as a self-fulfilling focal point: investors act as though the cycle is real, and in doing so, help perpetuate it. Bitcoin’s annualized volatility has also declined meaningfully across successive cycles — approximately 80 in the cycle before last, roughly 60 in the previous one, and around 40 in the current cycle — a measurable sign of market maturation that, over time, should make the asset more attractive to institutional allocators who have been deterred by price swings, according to Glassnode data compiled by Schwab.
On the AI question specifically, Schwab’s data points to an interesting correlation: Bitcoin remains highly correlated to megacap AI stocks, but its correlation to broader equity indexes has been falling. That finding reinforces the Hashdex narrative — AI has captured Bitcoin’s former role as the “high-beta growth narrative” of choice among risk-seeking investors, and until that changes, the correlation works against Bitcoin.
The Headwinds Are Real: $4.5B Exit, Citigroup’s Zero, and Grantham’s Warning
Neither Hashdex nor Schwab dismisses the genuine difficulties Bitcoin has faced in 2026, and neither should readers taking those outlooks seriously.
The ETF outflow picture is severe. The 13-day outflow streak that began May 15 drained $4.4 billion and flipped 2026’s cumulative spot ETF flows negative for the first time since the products launched. June’s total outflows of $4.5 billion set a separate monthly record, surpassing the prior worst of $3.48 billion set in February 2025 by roughly 29%. BlackRock’s IBIT — the largest spot Bitcoin ETF by assets — accounted for approximately 75% of June’s total outflows.
Citigroup put a number on its bearishness on July 1. Citigroup cut its 12-month Bitcoin price target to $82,000 from $112,000 — its second downgrade of 2026, after an earlier cut from $143,000 — and simultaneously reduced its net ETF inflow assumption for the coming year to zero, from a prior estimate of $10 billion. Citigroup research found that every $100 million in net ETF inflows correlates with a same-day Bitcoin price move of approximately 53 basis points, with the cumulative effect reaching nearly 96 basis points over 10 trading days. With $3.3 billion in YTD outflows before June, the mechanical selling pressure has been substantial. Citi’s bear case prices Bitcoin at $53,000.
The structural headwinds Citi identifies are consistent with what other Wall Street analysts have flagged: elevated interest rates under Federal Reserve Chair Kevin Warsh, whose June meeting produced no rate cuts and saw nine of 18 Fed officials project a hike before year-end; the CLARITY Act stalled in the Senate, holding institutional capital on the sidelines; and continued competition from the AI equity trade. The next major data point is June CPI, due July 14; the Fed meets again July 28-29.
Jeremy Grantham, the GMO co-founder who correctly predicted both the dot-com crash and the 2008 housing crisis, offered the most direct bearish framing in a June 26 CNBC Squawk Box appearance. He called Bitcoin a “useless, speculative mechanism,” predicted it would “dwindle away, not with a bang, but a whimper” over years and decades, and pointed to its 52% decline from its October 2025 peak as evidence that it fails as a stable store of value. Grantham’s critique is not new — but its timing, with Bitcoin near a 21-month low while gold notched significant gains, gave it sharper market context than usual.
A tentative reversal emerged on July 2, when a weak June jobs report — 57,000 non-farm payrolls against a forecast of approximately 115,000 — cut Federal Reserve rate-hike pressure, and spot Bitcoin ETFs recorded $221.72 million in net inflows, snapping the 10-day, $2.7 billion outflow streak that had followed June’s record month. Fidelity’s FBTC led with $166 million; BlackRock’s IBIT still recorded a $40 million outflow on the same day. A single session does not confirm a trend reversal, but it confirmed that institutional demand can return when macro conditions shift. By Independence Day, Bitcoin had rebounded above $63,000.
What the AI-Crypto Rivalry Actually Looks Like in Market Data
The AI rotation is not just a narrative — it is measurable in how money has moved. According to data cited by The Kobeissi Letter, US gold and Bitcoin ETFs have posted roughly $12 billion in outflows since April, while semiconductor ETFs pulled in approximately $20 billion over the same period. The largest Bitcoin ETF is down around 12% over that window as money has moved into chip stocks.
Hashdex argues that AI and crypto are rivals for capital today but partners in the longer run. The firm’s 2026 annual outlook projected that agentic commerce — scenarios where AI agents execute transactions autonomously — will eventually generate demand for programmable, borderless financial infrastructure, precisely the infrastructure blockchains are designed to provide. In that framing, every dollar that currently flows into AI infrastructure is laying groundwork for a future in which crypto networks become operationally necessary rather than merely speculative.
That long-term thesis may be correct, but it does not tell investors when the short-term rotation ends. Schwab’s Ferraioli noted that Bitcoin’s summer seasonality has historically produced weaker performance — the institutional bid for Bitcoin tends to thin during summer months, adding another near-term headwind to the fundamental ones. The July 28-29 Fed meeting and the August congressional recess — considered the last realistic legislative gate for CLARITY Act passage in 2026, per Galaxy Research — are the next structural inflection points.
What Would Catalyze a Reversal in H2 2026
Both firms converge on a similar set of catalysts that could accelerate a second-half recovery.
Regulatory clarity tops the list. Passage of the CLARITY Act — even delayed past its originally hoped July 4 date — would unlock institutional capital that has been sitting on the sidelines awaiting legal certainty over how digital asset exchanges, token issuers, and custody providers are regulated. BlackRock’s Joseph Chalom, who oversees the firm’s digital asset initiatives, has said the chances of the bill being signed by Independence Day are now below 50%, but expects it to become law before the end of 2026. Polymarket puts 2026 enactment odds at approximately 39% — down from 74% a month earlier.
A shift in Fed policy would also remove a key structural headwind. Bitcoin is a non-yielding asset, and when real yields are elevated — as they are under Warsh’s Fed — the opportunity cost of holding it becomes acute. Any credible signal that rates are heading lower, such as a soft June CPI reading on July 14, tends to correlate with renewed institutional interest in risk assets. The July 2 jobs-data reaction, brief as it was, illustrated exactly this mechanism at work.
And then there is the AI trade itself. Markets rotate. Valuations bid up on AI enthusiasm will eventually face the gravity of earnings expectations and the simple math of a crowded trade. Deutsche Bank has forecast the Fed will raise interest rates twice in 2026; if that scenario plays out and growth stocks come under pressure, speculative capital will need somewhere new to go. Hashdex and Schwab believe that crypto, with its improving supply structure and genuine agentic-commerce use cases, will be positioned to absorb those flows when the rotation turns. Citigroup and Grantham believe that moment may be further away — or may not come at all — than the bulls project.
What is not in dispute: the structural supply data is historically unusual. Exchange reserves have not been this low since December 2017. Long-term holders are accumulating rather than distributing at the fastest pace in years. Bitcoin’s volatility is declining across cycles. Whether those conditions prove sufficient to drive recovery in H2 2026 depends on whether the catalysts the bulls are counting on — the CLARITY Act, a Fed policy shift, AI trade fatigue — arrive on schedule. Investors making decisions on Bitcoin’s current 33% loss need to make their own assessment of that probability, according to Glassnode and Bitfinex on-chain data.
Frequently Asked Questions
Why is Bitcoin underperforming record stock markets in 2026?
Hashdex and Schwab both argue the primary cause is a capital rotation rather than a Bitcoin-specific failure. AI infrastructure spending — more than $650 billion in combined hyperscaler capital expenditure for 2026 — and high-profile IPOs including SpaceX have absorbed the speculative capital that previously flowed into crypto. Bitcoin ETFs recorded $4.5 billion in net outflows in June alone, the worst month since those products launched, as institutional investors shifted exposure toward AI equities and other momentum trades. Citigroup’s research suggests every $100 million in ETF outflows mechanically depresses Bitcoin’s price by approximately 53 basis points — meaning the outflows are not just a sentiment signal but a direct price driver.
Will Bitcoin recover in the second half of 2026, and what would trigger it?
Hashdex and Schwab project a second-half recovery, but they are not alone in that belief and the catalysts are not guaranteed. Passage of the CLARITY Act — which Polymarket prices at roughly 39% odds for 2026 — would unlock institutional capital currently sidelined by regulatory uncertainty. A Federal Reserve policy shift toward rate cuts would reduce the opportunity cost of holding Bitcoin and other non-yielding assets. Exhaust of the AI trade — when AI equity valuations face earnings pressure — could redirect speculative capital back toward crypto. Citigroup, meanwhile, has zeroed its expected ETF inflows for the coming 12 months and cut its Bitcoin price target to $82,000 from $112,000. The supply-side data is historically supportive: exchange reserves have fallen to a 7-year low and long-term holders are accumulating, not distributing. But supply conditions alone cannot move price without a demand catalyst.
How do Bitcoin ETF outflows directly affect Bitcoin’s price — and what does the July 2 inflow signal?
When spot Bitcoin ETFs experience net outflows, the authorized participants responsible for creating and redeeming shares must sell underlying Bitcoin in the spot market to meet those redemptions. Citigroup’s quantitative research found that every $100 million in net outflows correlates with a same-day price decline of approximately 53 basis points, with the cumulative effect reaching roughly 96 basis points over 10 trading days. With approximately $3.3 billion in year-to-date outflows before June, that mechanical pressure has been a sustained price headwind. The July 2 inflow of $221.72 million — driven by a weaker-than-expected jobs report that eased rate-hike fears — snapped a 10-day, $2.7 billion outflow streak. Whether it signals a durable change in institutional appetite depends on the next several sessions’ breadth across funds, including whether IBIT, which still posted a $40 million outflow on July 2, reverses.
What are the specific Bitcoin fundamentals that bulls say are being ignored by the price?
The most Bitcoin-specific supply data is as follows: exchange reserves fell to approximately 2.21 million BTC as of mid-2026 — a 7-year low, equivalent to roughly 5.88% of circulating supply — as long-term holders moved coins into self-custody rather than positioning to sell. Long-term holder supply reached a record 16.3 million BTC with no meaningful distribution, according to Bitfinex. The average investor’s cost basis is approximately $80,000, while Glassnode puts the aggregate realized price — the average cost of all circulating supply — at approximately $53,000, historically a structural support floor. None of these supply metrics guarantee price appreciation; demand must also return for them to translate into higher prices. The key distinction is that these are Bitcoin-specific figures, whereas the broader crypto ecosystem metrics — stablecoin volume records, tokenized real-world asset growth — are primarily driven by Ethereum and other platforms and should not be read as direct evidence that Bitcoin is undervalued.
