Volatility leads to new opportunities

7 days ago
5 min read

May was defined by deflating risk appetite for crypto and global rates, but increasing risk appetite in technology stocks, particularly within the AI space. The divergence highlights that investor sentiment is primarily driven by AI (for now). Our technology-focused portfolio benefited from this move, whilst our crypto-only portfolio detracted slightly during the period. We believe that the AI focus will continue for the time being, but we increasingly emphasize a cautious allocation approach.

Portfolio Updates

During May, our portfolios performed in line with expectations, with the Crypto Market Index Fund down -7.3%,¹ from 29.04.2026 to 28.05.2026, as the overall crypto asset market experienced a volatile episode.

Our Digital Technologies Fund on the other hand outperformed the broader digital asset ecosystem with an absolute return of +7.97%,² based on published NAV releases from 28.04.2026 to 02.06.2026.

There were a few notable highlights in our DTF portfolio this month. Whilst Bitcoin, Ethereum and Solana lagged this month, our hybrid crypto + equities approach yielded strong results from Keel Infrastructure (KEEL, +112.5%), Hut 8 (HUT, +84.5%), and Hyperliquid (LIQD, +80.1%). The worst performing holding was our Ethereum position with (-17.0%), followed by Bitcoin (IBIT, −12.1%) and Coinbase Global (COIN, −10.4%).

Despite recent volatility, we are confident in our long-term positioning of the portfolio and see the weakness on the digital asset side as temporary, given lack of retail demand and narratives. But from a fundamental perspective, we see increasing evidence for the maturity of the industry and the wide adoption of the underlying technology, and will use volatility as an opportunity to build positions.

Our portfolio remains allocated across major themes depicted below that will define the next phase of financial markets. Over time we continue to allocate and reallocate as we see valuations and opportunities adjust to market conditions.

(1) Share class A USD used for CMI Fund performance calculations

(2) Share class A USD used for Digital Technologies Fund performance calculations

Portfolio Allocations

For an in-depth look at our positions, please do not hesitate to contact us at info@matrixportam.com.

Market Outlook

The current market dynamics are clearly shaped by one major theme: AI. It is and likely remains for a while the predominant driver of markets with a few sideshows such as defense, robotics and quantum computing, in that order.

We use this period to leg into names that are currently under-appreciated but with long-term potential based on broad, secular pressures.

Whilst our portfolio is intentionally exposed to the AI theme via our allocation to companies and protocols that we argue sit at the intersection of AI and digital assets, we emphasize quality and fundamentals for the portfolio. We under-index on hype-driven names and over-index on those with a supportive undercurrent and less coverage by markets. In our view, the AI theme will continue for the foreseeable future but increasingly requires a balanced and disciplined attitude as “tokenmaxxing” realities start to set in (see chart below).

Expectations...vs...reality

In digital assets, market interest is currently subdued. While that may appear negative at first glance, we prefer deploying capital in quieter markets rather than in periods driven by hype. Zooming out, the fundamentals that will positively define the next decade are all converging:

Regulatory environment is strictly improving across all jurisdictions, and we have reached the point of no return. I.e. no regulator or jurisdiction can sustainably break the movement anymore (Even China; They try but obviously struggle at it)
The US is opening the floodgate of financial innovation by allowing Defi firms to operate within the US over next five years without enforcement actions by the SEC. Link here.
Asset allocators and wealth managers are increasingly losing arguments not to invest:

There are now safe ETFs, which are open by default to all investors with the largest wealth platforms onboard (Morgan Stanley, Charles Schwab, Fidelity, even Vanguard is shifting the tone, etc.)
Through index inclusion of various crypto firms, those who don’t allocate are effectively short, which most won’t dare to be for long.
Allocators cannot afford to continue passing on opportunities like Hyperliquid and not understand its business and its technology.

Lastly, we are actively tracking interesting projects that operate at the intersection of AI and Blockchain in very novel ways. Since we opened a long view on one of our currently tracked projects related to privacy focused AI, its price has moved 3x. At its current valuation however, it is still more attractive than many mainstream AI plays, trading at a ~30% discount! This is precisely because no one focuses on the crypto-related sectors anymore – we love this environment as it hands us opportunities that otherwise would be gone too quickly.

There is another reason why we believe the AI explosion has real implications on Bitcoin for example: with the explosion of transformational AI, we will move into what many call the “age of abundance”. But when skills and knowledge become abundant, what becomes valuable? Scarcity! For that reason, we believe Bitcoin will attract renewed attention as we move further into that phase, though this shift is likely still a few years away.

If you would like to discuss any of our current market observations, please reach out to us via email.

info@matrixportam.com

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