Bitcoin continues to flash warning signs, according to Quinn Thompson, CIO at Lekker Capital, as his fund remains heavily bearish on crypto heading into summer.
Thompson argues that the market faces a combination of structural challenges, including ongoing concerns about the digital asset treasury (DAT), unresolved questions about Strategy’s preferred stock STRC and lingering fears of quantum computing risks to Bitcoin’s security model.
Combined with weakened liquidity conditions and heavy selling pressure, these factors have contributed to one of the biggest divergences between bitcoin and tech stocks in recent history, with crypto clearly underperforming despite continued strength in much of the tech sector.
Thompson’s broader concern extends beyond crypto, believing that a wave of blockbuster IPOs (SpaceX, Anthropic and OpenAI) could absorb trillions of dollars in investor capital and create a liquidity drain.
One of the clearest signs for Thompson is the Magnificent Seven’s underperformance relative to the broader Nasdaq. Historically, healthy bull markets are characterized by leaders leading. Today, however, much of the index’s gains are driven by semiconductor and AI supply chain names rather than the hyperscalers that sparked the initial rally.
The challenge for these hyperscalers is growing, says Thompson. Massive AI-related investment commitments squeeze free cash flow, increase debt levels and reduce share buybacks.
Still, spending cuts could undermine the semiconductor trade and AI infrastructure that has underpinned the broader tech complex.
Thompson concludes that the rising IPO supply is poised to compete for capital and investor attention, while he sees a difficult path forward for both AI leaders and the broader market.
