The Big Rotation

Good Morning to all my fellow Bitcoiners out there.

Bitcoin just had its best week since September 2025, up over 8% and trading at ~$74k, while the Fear and Greed Index went from 12 (Extreme Fear) to 40 (Neutral) in less than a week.

Under the surface there are three major rotations underway.

Each one is early and none are fully priced in. And if even one of them completes, you will wish you’d been stacking sats before the broader crowd noticed.

Here is what we are watching this week:

• Why the oil shock is cracking gold's most crowded trade and where that capital is heading.

• Why the 60/40 portfolio is breaking down in real time and what replaces it.

• Why the most important rotation might be the one happening inside the Fed and the banking system itself.

1. Oil Cracked the Gold Trade

The Strait of Hormuz still is not fully open. Roughly 15 million barrels of oil flow through it every single day, and G7 strategic reserve releases cover maybe 1 to 2 million of that.

Oil pulled back this week on the news and everything bounced with it.

Although Gold ran to $5,296 an ounce on the back of the oil shock and has been the trade of 2026, the SPDR Gold Shares ETF just recorded its largest single-day outflow in over two years.

When the most crowded trade on the planet starts unwinding, that capital has to go somewhere. So where is it going?

Well, some of it seems to be going into Bitcoin.

Global crypto investment products recorded $1.06 billion in weekly inflows last week, the third consecutive week of positive flows (Bitcoin took $793 million of that, nearly 75% of the total).

James Butterfill at CoinShares noted this week that since the Iran conflict began, Bitcoin is up 6.5% while gold is up just 1.5% and equities have declined. He called it "analytically significant".

🚨 NEW VIDEO ALERT 🚨

2. 60/40 Is Broken

Now its time to looks into something significant your financial advisor most likely hasn’t updated you on just yet.

You remember that 60/40 portfolio (60% stocks, 40% bonds) he recommended to you? The one built on one assumption: when stocks fall, bonds rally.

He may have neglected to mention that in a stagflation environment, both fail at the same time. Inflation erodes bonds. Recession fears crush stocks. And the current 60/40 investor is getting hit from both sides with no textbook answer.

What to watch this week? If oil stays elevated and Treasury yields start falling rather than rising, the market has flipped from inflation to recession pricing. Five central banks are making decisions this week. The tone matters more than the decision.

Meanwhile Bitcoin has gained roughly 10% over the past five weeks while the S&P 500 is almost flat (chart above). The correlation everyone cited as proof Bitcoin was ‘just a leveraged tech stock’ shows signs of cracking exactly when the mainstream said it would not.

3. The Fed Is Rotating (So Too Is The Banking System)

Two things happened recently that almost no one in Bitcoin circles are giving sufficient attention to:

1. Kraken became the first cryptocurrency company in history to gain access to a Federal Reserve master account, putting it on the same Fedwire payment rails as JPMorgan and Goldman Sachs. The Bank Policy Institute, representing the biggest banks in America, immediately issued a statement of "deep concern" and is reportedly considering suing the OCC.

2. Powell's term ends in ~2 months on May 23. Kevin Warsh takes over. In his own words at the Hoover Institution: "Bitcoin does not make me nervous. I think of it as an important asset that can help inform policymakers when they are doing things right and wrong." Michael Saylor called him "the first pro-Bitcoin Chairman of the Federal Reserve" (video below).

The most Bitcoin-aware Fed Chair in history takes the helm in May. The first crypto firm just walked through the Fed's front door.

Goldman, Barclays, and Morgan Stanley have all pushed their first rate cut to September at the earliest, meaning every month of sustained pressure makes the hard money case for Bitcoin structurally stronger.

The rotation inside the banking system will not make headlines the way a rate cut does for financial markets. But over the next four years, it may matter more to Bitcoin than anything Powell ever did.

The Bottom Line

Oil cracked gold's ‘most crowded trade’ status. The 60/40 is being exposed by stagflation. And Kraken just walked through the Federal Reserve's front door.

Three rotations - each one still only just forming. Financial markets reward those who position themselves before the crowd figures out the direction.

Right now, most of the crowd is still watching oil prices and waiting for Powell.

Stack accordingly…

Chat next Tuesday.

Hector