The Weekly: Changing Currents

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Weekly Summary

We cover:

• Why crypto’s latest washout may be creating opportunity rather than signalling structural weakness.

• The growing divergence between compressed crypto valuations and improving on-chain fundamentals.

• Whether peak enthusiasm in AI equities could set the stage for a rotation back into crypto.

Market Update

Oversold records

Crypto markets slumped -12.5% last week as we saw $2.58B total long liquidations in the space of 2 days. Drivers likely included sentiment around Saylor selling 32 BTC and continued rotation into tech/AI.

The net effect is that we’ve briefly re-tested the lows but has been unable to sustain a break below them.

Lower lows have been common structures before legs higher materialise. In fact, BTC is potentially forming a bullish divergence on the weekly timeframe. If confirmed, this would be only the second recorded instance, the first being around the FTX lows in November 2022…

It’s also finding stability at the 200W MA for now.

Meanwhile, ETH also reached its most oversold daily RSI reading on record, at just 13.

Adoption Without Appreciation

Crypto valuations have compressed, but the underlying usage base continues to mature.

RWA lending is a good example: despite the broader DeFi lending cycle cooling from its late-2025 peak, RWA-backed borrowing has continued to grow and now represents ~1.5% of DeFi borrowing, approaching $1bn outstanding.

The market is discounting crypto broadly, even as select categories demonstrate real adoption, deeper credit formation, and increasingly institutional use cases, with underlying DeFi protocols directly facilitating and monetising that growth.

That divergence matters. It suggests parts of DeFi are becoming less purely reflexive and more tied to durable financial activity.

In our view, RWA lending is one of the clearest examples of crypto infrastructure being used for real credit intermediation rather than just speculative leverage.

There are plenty of other examples. Take perpetual futures. Despite a weaker market backdrop, Hyperliquid has continued to grow daily active users, volumes, and fee generation. HYPE’s valuation appears to have largely tracked that adoption curve.

Hyperliquid active users vs. HYPE/USD.

The broader point is that while crypto prices have been under pressure, several leading applications continue to compound fundamental usage.

In many cases, token valuations have proven far more resilient where user growth, activity, and revenues remain intact.

This is also probably why altcoin dominance has remained resilient despite broader market volatility.

Crypto’s adoption curve is still being supported by the economic cycle, and that is showing up in fundamentals across users, volumes, fees, and credit activity.

What has not happened yet is valuation outperformance. AI equities have absorbed most of the market’s attention, leaving crypto fundamentals improving beneath compressed valuations.

Changing Currents?

Two weeks ago, we covered the reasons why the gap between crypto and high growth tech/AI equities may close over the coming weeks.

Fast forward to today, we now have three prospective IPOs across SpaceX, Anthropic, and OpenAI implying a with reported/prospective raises that could exceed $190B in aggregate and valuations of $3.5T+.

At the same time, we’re seeing exhaustion signals in NDX on both daily and weekly timeframes. In other words, these IPO issuances are accelerating into peak enthusiasm.

But the most interesting chart remains the crypto/NDX ratio. Crypto is now trading relative to the NASDAQ at levels that have historically coincided with major relative bottoms.

Multiple long-term exhaustion signals have triggered, while the ratio is sitting directly on a support trend line that has held since 2019.

It is also now the most oversold on record.

(Crypto/NDX is showing 2x 13 exhaustion signals on the weekly timeframe).

On the monthly timeframe, momentum indicators are also beginning to suggest the multi-year period of crypto underperformance may be becoming stretched.

(Crypto/NDX ratio showing a DeMark 9 on the monthly timeframe).

With liquidity still supportive, the setup increasingly looks less like a broader market top and more like a potential leadership rotation.

Capital may be rotating from crowded AI equities into crypto, where valuations have weakened even as underlying fundamentals continue to improve.

State of Yields

Stablecoin lending yields:

• ~3% on Aave (USDC) — utilisation rates have come down slightly from the 90%+ peaks to ~87%.

• 4.8% on Aave (MegaUSD) — same as last week again. Utilisation rates remain elevated at ~70%.

Fixed-rate DeFi lending: yield premium in fixed markets marginally expanding from last week:

• Pendle NUSD: 5.86% (Jun 2026)

• Pendle sUSDAi: ~10.1% (Jun-Oct 2026 maturities)

• sUSDe: ~5%

ETH yield benchmarks:

• Lido staking: ~2.38% - no change from prior week.

About Re7

Re7 Capital is a research-driven digital asset investment firm specialising in DeFi yield and liquid alpha strategies.

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The content is for informational purposes only. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments. The opinions expressed in all Re7 public research articles are the independent opinions of the authors at the time of publication and not the opinions of the affiliates of Re7.

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