The Breakdown - Crypto Still Sees Massive Returns On Par With Stocks

Episode Date: June 3, 2026

Everyone's saying crypto has been left behind by the stock market. David digs into the numbers — VVV outperformed SanDisk YTD, Hyperliquid beat NVIDIA and AMD, Stellar beat NVIDIA. The market is selecting winners. Plus: $4B of Bitcoin ETF outflows in 13 days (it's not as bad as it looks), and Microsoft's new "quantum-breaking" chip. TIMESTAMPS: (00:00) Intro (01:05) Crypto Left Behind? (10:24) Bitcoin ETF Flows (14:35) Microsoft Quantum Chip FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › The Breakdown Newsletter — https://blockworks.com/newsletter/the-breakdown Get top market insights and the latest in crypto news. Subscribe to the Blockworks Daily Newsletter: https://blockworks.co/newsletter/ DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

It is Wednesday, June the 3rd. I'm your host David Canales and this is the breakdown. chatting about a few things this morning. We're looking at this idea that crypto has been left behind by the stock market. Seen a lot of takes about that over the past few days, over the past few weeks. We're going to take a look if that's truly the case and how crypto stacks up against the stock market over the year gone and the year to date. We're also looking at ETF flows. I mean, Bitcoin ETFs, we're seeing a lot of outflows.

We're going to be looking exactly how much and how that. compares to the overall arc of cumulative flows and so on. What's going to be looking at Microsoft's new quantum computing chip that it says is accelerating the timeline to Q-Day. We would take looking at those claims and some of the reactions to that. So enough jibba-jabba. This is the breakdown. Let's get to it.

Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. All righty. So first up, yeah, I have this tweet from Blockworks co-founder, Mikey Polito, that kind of outlines the general vibe out there when it comes to crypto versus the ever-pumping stock market right now. I'm just going to read it out. If you're wondering why crypto has been left behind while the stock market takes off,

look no further than the everything is a meme crowd. That type of thinking, which birthed ideas like ultrasound money, meme coins, dats, etc., is why we're lagging. It's not because the regulators are out to get us or because crypto has an access problem, is because the value prop of most crypto assets is not as good as other sectors. We must, we must accept that crypto assets are subject to the same rules of gravity as every other asset on Earth. They will have to compete in the same arena as other industries like robotics, AI, etc.

for capital. We should accept that 99% of crypto assets will be valued on cash flows and dedicate all of our efforts to making those cash flows as high as possible. Just look at which coins are outperforming today, tells you everything you need to know. So, I mean, super reasonable take here. And it is just something that we have seen happening over the past, I mean, especially since the 2021 bull market. I mean, that was earmarked by NFTs. Like, I know that there was so much going on in other parts of the market. I mean, Solana was ripping all of this sort of stuff. But I mean, NFTs, there's no cash flows for

NFTs. That's not a thing. But they were still, they were still super successful in breaking through into the mainstream. And I just want to throw back to one of the first episodes of the breakdown when I took it over, this chat with Paul Dylan Ennis about just crypto as a culture and all of that kind of stuff. And he made the really good point that for the longest time, we're all wondering when we're going to hit mass adoption with crypto. Well, 2021 was a mass adoption moment. But this concept of cash flows was not at all prevalent back then. but a lot has changed in the past four or five years. I'm sure you already know.

So we are entering this era of crypto. We're not really early anymore. We might be early to certain metas like agented finance, perhaps or agented commerce. Perhaps we're early there. Perhaps we're early on in tokenization, I suppose. But this stuff has been going on for years now. and whatever innovation those parts of the market are going to do is kind of happening. I mean, it's kind of happened.

So we do need to start respecting this idea that external investors, new investors coming into the crypto space, institutional type investors, family offices or whatever they are, they're going to be looking at cash flows and revenue and have their own frameworks for how to value these tokens. that is not the same metrics as what the crypto Twitter of yester year would use to value assets. So all of that said, I thought it might be interesting to take a look at the top end of the crypto market and compare it to the stock market over the year to date and over the past year. Just to get to grasp how much is the crypto market really being left behind

compared to semiconductor stocks, space stocks, what have you? So I have this up on my screen here, which is, if you're listening, again, I'm going to do my best to convey what's happening on my screen here. This is the one-year performance of basically the hottest, most best-performing stocks on the market against the hottest, most best-performing cryptocurrencies on the market. And every stock, everything that's a stock is labeled in blue, everything that's a cryptocurrency is in red. And this is over the past one year. So as you can see, the best performing by a long stretch is Sandisk with a 46X over the past year, 4,600% return. And this is like due to the RAM shortage or NAND flash memory and storage. And Sandist was actually spun out of Western Digital in February 2025 and then exploded on this notion that AI data centers would really flock to Sandist for their storage needs.

You know, and so, but down from there, I mean, it's not too bad. Within the top 10 or so, we actually have two cryptocurrencies. We have Zcash, which has returned 900% in the past year. We also have VVVV, Venice, which is up 500% in the past year. These are giving stocks a run for their money in terms of returns. And I mean, it is only just those two in the top 10. We have to go all the way to about number 30. I think it's number 28. And we have, and we have, and we have, and we have. of Hyperliquids hype token, which is doubled in the past year. And obviously now it is again sitting around all time high and that rally seems to be ready to continue. So it's not like there are no cryptocurrencies that are doing as well or even better than many of the stocks out there on the market. And these include like Google, ASML, a lot of semiconductor stocks as well. And if we look at the worst performers, it is not like there are no stocks under worst performance. I mean, PayPal is down 36% in the past year. That is worse off than BitTensoor, which has only dropped 35%.

So it is not like it's like the market has outright rejected cryptocurrencies that only flocked to equities in the right sectors. It's just not the case. But I'll show you something interesting. When we flip to just year-to-date returns for this same cohort, you will see that the best performing asset in the group is actually a cryptocurrency. It is VVV over the year to date. It has exploded. It's gone 10x over the year to date for a thousand percent for a thousand percent returns. That is over double what Sandist has done. And of course, there's the rallies don't exactly line up. So you know, Sandist has outperformed VV over the past year, but not over the year to date.

But this is just a little bit of hopium. Just to give you an understanding that the market is selecting winners. It is selecting. narratives to pump, and they are doing just as well as some of the stocks. Another one is Hyper Liquid over the year to date. It's done 190% over the year to date. That's better than what Intel has done over the year to date. And of course, there was a big pump for Intel earlier, but it's also more than what AMD has returned.

So Hyperliquid has outperformed AMD in the middle of a chip maker explosion when it comes to stock market interest. And even if we go down, even if we go down, Stella is over the year to date up 21%. That is better than Google. That is better than Nvidia over the year to date, which is quite impressive when you think about it. And of course, I mean, Nvidia, beat his company in the world compared to Stella, not exactly a huge cryptocurrency when it comes to market cap. So there is some market dynamics that might explain why a smaller asset would outperform a larger asset.

I'm sure you already know. But along those lines, I just want to point something out. That is that the total market cap of the stock market is around $150. It is around $151 trillion. The total size of the crypto market is about $2.4 trillion. So crypto is about 1.6% of the stock market. But we still have coins massively outperforming many other stocks, hundreds of stocks, thousands of stocks, even more.

When you're looking at VVV return 10x over the year to date, you have hype returning 190% over the year to date, beating stocks that many people would be in trying to capitalize on the AI boom, semiconductor boom, what have you. So it is not like crypto has been totally left out in the cold, and it's a loser's game. We obviously have many people making serious returns. by buying and holding coins in amongst one of the momentous stock rallies in modern history.

But there's some hopium for your Wednesday morning. If you are thinking of completely exiting crypto and never looking back, we're just in a we're in a recalibration phase when it comes to understanding what crypto offers a wider investment base and not just ones that are only interested in trading coins. I would say that it is that the novelty factor of trading cryptocurrencies is somewhat worn off by now, especially for people who have been around multiple cycles, but also just newer investors coming on board. I would hedge a bet that cryptocurrencies are no longer the, no longer in the minds of people who are chasing massive returns as the only avenue to do so,

because we have just seen enormous returns on the stock market, but not as big as some of the coins even to this date. So, all right, on to the next one. Okay, so now about Bitcoin ETF flows, we've actually had about 12 or 13 straight days, trading days, of negative flows for Bitcoin ETFs, spot ETFs in the US. And that has amounted to almost $4 billion. of Bitcoin value, being pulled out of Bitcoin ETFs.

And I have a chart up here on my screen that plots the price of Bitcoin against those flows. Positive daily flows are in green and negative daily flows are in red. And you can see that this stretch of 12, 13 days with no positive inflows, it looks to be the worst on record from a cursory glance, which does appear to be quite rough. I mean, yesterday alone, about half a billion dollars, $520 million was pulled from Bitcoin ETFs the day before, about the same $483 million.

The worst of this particular stretch was on the 27th of May when $733 million was pulled from Bitcoin ETFs. So that certainly does seem bad, but it's not like this doesn't happen when the price of Bitcoin goes down. as you can see on my screen that it's not like the flows are the worst on record. They probably wouldn't even make the top 10 days, individual days on record. But what I found a little easier to stomach was this view.

You can see that the daily flows are still down the bottom. So we still have that red and green flip-flop between red and green flows as the price goes up. But I just want to draw your attention to this yellow line, which is the cumulative net flow. So how much is still retained by the Bitcoin ETFs over time? And you can see that that has held quite strong, even throughout the massive correction in the first half of the year after the Bitcoin all-time high at the tail end of last year.

So the relationship between the amount of Bitcoin held by spot ETFs and the Bitcoin price, you can see that they were pretty much directly positive, positively correlated since their launch in 2024. The price of Bitcoin went up as the cumulative net flows increased into Bitcoin ETFs, cumulative net flows even drawed down. The lines were basically matched all the way through right up until the Bitcoin all-time high when the price of Bitcoin began to correct as of October, November last year.

But it's not like the ETF investors completely unwound all of their positions. as soon as the Bitcoin price began to correct. Overall, the Bitcoin ETFs have retained most of their flows and we are still a little bit away from even reaching a low in the cumulative net flows. And we're still a fair ways away from the cumulative net flows reaching a low, even a six month low. So when I look at this chart, it does give me a little bit of hope that this idea, this notion that Bitcoin ETF holders are truly in for the long haul, because obviously not all Bitcoin ETF holders are in for the long haul, if we are seeing massive outflows when the price does correct.

But still, we have many, many, many Bitcoin ETF holders that are interested in retaining their positions as the Bitcoin price consolidates. Now and throughout the rest of the year, it seems. So when you're looking at the daily flows and you're wondering, well, will there be a 14th day? Will there be a 15th day? How connected is the price of Bitcoin to these ETF flows? I would pay attention to this chart in particular and see that there is still a massive gap between the price of Bitcoin and the amount of Bitcoin still held in the ETFs.

So there's Hopium round two for this particular episode. Okay, what have we got next? Okay, so this out of Microsoft yesterday, it is announced its new quantum chip, Majorana 2, which it says was made a thousand times more reliable with the help of Microsoft Discovery's agentic AI. So we have a chip built or at least developed in part using an AI system. So the sloppification for his quantum chips is truly here. So what it's saying, what Microsoft is saying is that Majorunas, that Marjoramia is that Marjor

Majorana, Marjorana 2's new features include a new material stack enabling a thousandfold improvement in reliability over prior generations of qubits with a mean cubit lifetime of 20 seconds and instances lasting as long as one minute, which we're going to get into a minute. That's not exactly that thrilling. Microsoft now expects to achieve a scalable quantum computer by 2029 cutting its original timeline in half, which anyone paying attention will be quite interested in that date, which we're kind of to refer to as Q-Day when quantum computing breaks crypto is here and by warrant of that leap could break encryption, including the encryption for for cryptocurrencies.

But, I mean, I'll leave it to you to kind of explore the mumbo-jumbo that is in this blog post. I am deferring to Henry Legg here, who is an assistant professor at the University of St. Andrews for quantum research. And he has this thread here that kind of debunks a lot of the claims here by Microsoft. And he calls it, this is, of course, massive PR bullshit, which is quite some harsh words. And so he says the apparent difference between Marjorana 1 and 2 is that the new device uses lead as a supertriarch. conductor rather than aluminum. And so, so Legg's main quibble with Microsoft's claims is that, you know, for the performance of the chip to be legitimate in the eyes of researchers and so on, they need to be

reproducible. Microsoft says it doesn't really need to do that because it has shared enough data privately with DARPA and it can't release everything because of trade secrets. So, I mean, the main part of criticism here is that Microsoft is really, really making a big deal that it has made a, that it's made its quantum chip a thousand times more reliable by taking, by increasing the cubit lifetime, by increasing the cubits lifetime from, for up to 20 seconds and even as much as a minute, which going by Henry Legs post, that is not exactly totally impressive. You need to have a cubit sustainer superposition. You need to have a cubit sustainer

superposition as in both one and zero for a long period of time. But what Microsoft appears to be showing, we don't really know because it hasn't actually given up the actual usable, reproducible results, the reproducible data. It's that its chip can maintain a position of one or a zero for that period of time, which is quite different. So again, we are, we are slowly inching towards quantum computers, I suppose, if you take these incremental updates as proof of progress without actually being able to verify a lot of the claims and reproduce them ourselves.

But it does appear to be quite a while away. And of course, whether or not this implies a direct threat to Bitcoin and all other cryptocurrencies, I suppose that is how deeply you believe that the rate of technological advancement outstrips the ability for teams, projects, and so on to respond by updating their cryptography and everything like that. That said, I'm not sure it makes a complete difference. The actual truth of the matter.

I have this tweet here from Joe Wisenthal, from Bloomberg's Oddlots, that detailed basically why crypto is old hat in the eyes of, many outsiders. And in there, I mean, there's, he gives 10 reasons why this is the worst crypto winter ever. And the reasons go from that the crypto drawdown is happening at a period of rising anxiety about the dollar. So if it was an, if it was a hedge for instability, perhaps it should go up, but it's going down. If you're in crypto, you can no longer plausibly say things like, we're so early. We spoke about that earlier. Three, crypto Twitter is dead. Yeah, okay. Four, institutional adoption already happened.

removing any future tailwinds. I'm not too sure about that one. The regulatory environment is already about as favorable as it gets. Yeah, okay. Since the AI boom is crowding out access to electricity, a crucial input for miners. I'm not sure like that is really the biggest concern, but it is, it is a, especially with so many coins running on proof of state and so on. And I mean, I digress.

But number eight here is that there's growing concern about quantum computing and the potential to break Bitcoin's security model. So I suppose the biggest problem is not that quantum computing is coming or how far away it is or whether Microsoft's new chip really moves the needle so far that we are closer to Q-Day. It doesn't really matter. What matters is how regular people interpret that news. I mean, it's very difficult for normies to even understand what quantum computing.

is, let alone what cryptography is and so on. They will just read headlines. So I'm not sure if Microsoft's PR stuff is really helping the cause when it comes to rational discussion around quantum computing and crypto, but there might need to be an offensive from major, from major companies, major protocols in the crypto space to start communicating what the plan will actually be to overhaul systems to become quantum resistant and quantum ready. I just think we did to get the messaging all in line about that before we start trying to figure out the realities of where the technology is right now. Because going by Joe's post, the damage is already done when it comes to understanding

how robust the response from the crypto space will and should be to the quantum computing, to the advent of quantum computing. But in any case, this is enough for me today. As always, please hit like and subscribe. Send us some comments. Reach out to me at David at blockwurst.com or tweet at me at DTnellis. And we'll see you on Friday. Bye.