Viewpoint: This bull run is driven by capital overflow in the AI sector, and the momentum will continue.

Author: arndxt

Compiled by: Deep Tide TechFlow

This is a liquidity-driven bull market, but it lacks the support of traditional liquidity.

The Federal Reserve continues to maintain a tight policy, fiscal stimulus is gradually weakening, yet risk assets keep rising. What is the reason? It is because capital gains driven by artificial intelligence (AI) and capital expenditures (Capex) in the top-tier economy are being transmitted layer by layer, while Crypto Treasury Companies (referred to as TCos) have designed a new transmission mechanism that converts stock market enthusiasm into on-chain bidding.

This "flywheel effect" can withstand seasonal weakness and macro noise until the capital expenditures of super-large enterprises begin to decline or ETF demand stagnates.

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Analysis of Three Main Perspectives

Source of liquidity shift: Liquidity no longer comes from the Federal Reserve or the Treasury, but from the equity earnings and capital expenditures of AI hyperscalers. The wealth effect brought about by companies like NVIDIA and Microsoft, coupled with a wave of over $100 billion in capital expenditures, is gradually passing through to the labor market, suppliers, and especially retail investor portfolios, thereby pulling the curve of risk assets toward the cryptocurrency space.

New large buyers in the cryptocurrency space: treasury companies (such as MicroStrategy's investment in BTC; Bitmine and other companies' investment in ETH) have become a bridge between public equity capital and spot tokens. This structural buyer is a key factor that has been lacking in past cycles.

Macroeconomic cross-influences are temporarily controllable: Although the data shows risks of inflation stickiness (tariffs, wages, US dollar) and a weak labor market, the productivity options brought by artificial intelligence and the positive regulatory environment in the crypto space still compress risk premiums.

1. Artificial intelligence at the top of the pyramid

Capital gains → Risk rotation: As the S&P 500 index valuation is relatively high (high forward P/E ratio), retail investors begin to shift towards loss-making tech stocks, high short baskets, and crypto assets.

Capital expenditures have become a source of liquidity: record spending by mega-sized companies has acted like a private sector liquidity pump, channeling funds to suppliers, employees, and shareholders, which then flows back into the market.

Side effects: The construction of artificial intelligence infrastructure (data centers, chips, electricity) is currently manifesting in the form of investment growth, while productivity improvements require a lag time. Lag time → wealth effect is immediate.

2. Treasury Company for Cryptocurrencies (TCos) = Digital Asset Treasury Company (DATs)

From "zero generation" to price-seeking TCo: Early TCo (such as Michael Saylor's strategy) served as a price-insensitive bottom support. The new generation of ETH-focused TCo is more price-seeking, capable of defending key price ranges and driving breakouts while accelerating upstream equity value.

Reflexive cycle: Equity financing → Purchase of reserve assets (BTC/ETH) → Token price increase → TCo equity value rises → Lower cost of capital → Cycle repeats. This is known as the "flywheel effect."

Fatal Weakness: Gaps between key intervals. If the ETF treasury or retail funds cannot fill the gaps in between, failed breakout attempts will force TCos to conserve cash, and prices will quickly fall back.

3. Favorable policies and market positioning

Positive policies in the cryptocurrency sector: The deregulation of cryptocurrencies and a more friendly policy stance have opened up channels for the inflow of traditional financial capital.

Tariff "solutions" are nothing but a mirage: companies still cannot clearly understand the exemption clauses and court rulings related to China, Mexico, Canada, and the United States-Mexico-Canada Agreement (USMCA). This uncertainty leads companies to prefer financialization over capital expenditures—more funds flow into asset markets.

The current status of Ethereum (and why it is making a comeback)

Treasury demand and ETF inflows: The combination of treasury demand and ETF capital inflows has provided a new narrative turning point for ETH, allowing it to make a comeback after years of underperformance against L2.

"Cup and Handle theory" perspective: The price-seeking ETH treasury companies defend the key $3,000 level and push the price towards the $3,300–$3,500 → $4,000 range; ETF funds fill the gap in between. If the approximately $27 billion in queued demand materializes in phases, the current upward trend may continue; if it fails to materialize, the price gap will become a key issue.

Interpretation: ETH now has a buyer group that is completely different from past cycles. It is no longer a competition of "retail vs miners", but rather "ETFs + TCos vs liquidity gaps."

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Macro: The Wall of Worry (and Why the Market is Climbing Over It)

Inflation

Survey channel pressure: The sales price index has risen for three consecutive months (reaching the highest level since August 2022), indicating commodity-led price pressure. This is consistent with tariff cost transmission, a weakening dollar, and wage stickiness.

Interpretation: The implied inflation rate is close to about 4%. Although it has not reached crisis levels, it complicates the process of interest rate cuts. The Federal Reserve can only tolerate a growth-friendly inflation level if there are no significant cracks in the labor market.

Labor market

The soaring youth underemployment rate (averaging about 17% over the past three months) is a warning sign of the early stage of the economic cycle. Young workers are the first to feel the economic fluctuations; if this situation spreads to the core employment market, risk assets will be affected.

Growth, Debt, and Artificial Intelligence

The fiscal adjustment role of artificial intelligence: If, in the long term, total factor productivity (TFP) increases by 50 basis points annually due to artificial intelligence, then by 2055, the ratio of public debt to GDP could fall to about 113%, compared to a baseline of 156%, and per capita real GDP would be approximately 17% higher. In other words, artificial intelligence is the only reliable growth lever capable of reversing the debt curve.

But the time lag is crucial: just as the productivity gains from computer capital expenditure in the 1980s only became apparent by the late 1990s, the widespread application and efficiency improvements of artificial intelligence also require time. The current market is already valuing future efficiency gains.

Tariffs and Uncertainty

Policy fog = Valuation clarity risk: Uncertain tariff rates, ambiguous trade agreements (such as EU/Japan), frequently changing exemption policies, and legal disputes lead to uncertainty in future cost curves. This causes chief financial officers to tend to increase allocations to financial assets while reducing long-term physical investments—this phenomenon, in turn, supports the market in the short term while raising mid-term inflation risks.

Bear Market and Bull Market: My Assessment Factors

bearish factors

The Treasury General Account (TGA) funds are decreasing + quantitative tightening (QT) remains restrictive.

Seasonal weakness will persist until September.

The labor market is showing early signs of loosening; inflation acceleration factors (tariffs/wages).

Bullish Factors (Bias)

Artificial intelligence capital expenditure + wealth effect is the current source of liquidity.

The shift in cryptocurrency policy has opened the floodgates for capital flow in traditional finance (TradFi).

Cryptocurrency treasury companies/ETF structures have become persistent mechanical buyers.

The composition of the members with dovish tendencies in the Federal Reserve in 2026 is a credible long-term catalyst.

Summary: As long as the chain of AI → retail investors → crypto treasury companies → spot market remains intact, I will remain constructive.

Factors that may change my perspective:

Large-scale enterprise capital expenditures decline: Orders for artificial intelligence infrastructure have seen a significant drop.

ETF demand stagnation: continuous capital outflow or failure of secondary issuance.

Cryptocurrency treasury company equity market closed: financing round valuation decline, ATM issuance failure or net asset value premium collapse.

Labor market fractures: Weak youth employment spreads to the prime age employment group.

Tariff Impact → Consumer Price Index (CPI): Product inflation forces the Federal Reserve to tighten monetary policy again, rather than cut interest rates.

Seize the cycle positioning (not financial advice)

Core strategy: Focus on investing in high-quality growth-oriented artificial intelligence companies; selectively invest in the "tools and infrastructure" sector (computing, energy, networking).

Cryptographic Assets: Bitcoin as a systemic risk exposure of risk assets, and Ethereum as a self-reinforcing reflexive flywheel mechanism. Focus on key defensive levels and estimate potential gaps that may appear in the market.

Risk Management: Adjust positions based on ETF fund flow data, the issuance schedule of cryptocurrency treasury companies, and guidance information from large enterprises. Increase positions at key support levels; for fervent breakout trends lacking follow-up, reduce positions in a timely manner.

Core Summary

This round of the cycle is completely different from 2021.

Its driving force comes from the liquidity in the private sector generated by artificial intelligence equity returns and capital expenditures, which are transferred to the cryptocurrency space through new corporate structures and are recognized and promoted by ETFs.

The growth flywheel is real: it will continue to operate until the super-large enterprises at the top of the pyramid show signs of instability.

Prior to this, the market's minimum resistance path was still upwards and continued to rise.