As global yields rise, crypto remains resilient and power needs become a major bottleneck for AI compute. We are positioning accordingly.
October 2026
Dear Investors,
September was a month of dispersion. The Federal Reserve raised rates by 25 basis points to 3.75–4.00% on 16 September, its first hike since 2023, and the 10-year Treasury yield rose more than 50 basis points to about 5.3%, a level last seen in 2002. Oil traded above $90 for almost the entire month and briefly topped $105, and August inflation printed at 3.4%. Equities split along familiar lines: the S&P 500 lost 0.4%, the Dow fell 4.3% and the Russell 2000 dropped more than 5%, while the Nasdaq Composite gained 1.9%. Nine of eleven S&P sectors declined; financials, utilities, staples and real estate each fell 5–7% as yields rose. Gold fell close to 7%.
Surprisingly to many, digital assets did better than the classic havens! Bitcoin ended the month up about 6%, and ether gained close to 9%. The path was not smooth: the Senate's failure to pass the CLARITY Act on 15 September (49–50 on cloture) and the Fed hike the next day pushed bitcoin to a mid-month low near $75,600, before the SEC's five-year "innovation exemption" for on-chain trading of tokenized US stocks on 17 September and nearly $3 billion of spot bitcoin ETF inflows in seven sessions carried the price to a monthly high of about $86,600 on 21 September. For the month, US spot bitcoin ETFs took in roughly $2.6 billion, with the largest single day (+$999 million) on 21 September.
Our Digital Technologies Fund, which invest at the intersection of technology and finance. has gained 4.1% (Class A, USD) between the 1 September and 29 September valuation dates. The CHF and EUR (Share class B), which are unhedged, gained 6.9% and 6.5% in their own currencies as the dollar strengthened with US yields.
Portfolio Activity
Over the full calendar month, spot digital asset ETFs were the main contributor, adding close to 3% of NAV, with the AI-infrastructure and miner sleeve adding a further 0.6%. The drag came from tokenization and fintech equities (Figure, eToro, Block), as financials de-rated on higher yields and cost the portfolio about 2.5% of NAV. We used the month to take profit in crypto beta, rotate toward power-backed AI infrastructure and raise protection, while keeping the portfolio positioned for the themes we outline below.
Took profit in crypto beta near the highs. Over the month we cut net exposure to the spot bitcoin, Hyperliquid, ether and Solana ETFs, most of it on 21 and 24 September around the highs. All these sales realized gains, in total roughly 4% of NAV. We still hold significant allocations, and this is purely a “trimming into strength” exercise, and not a shift in our long-term conviction.
Exited the card networks. We sold our remaining Visa and Mastercard holdings. Agentic payments are moving to stablecoin rails built for sub-cent, per-call settlement, and the SEC's September exemption and the GENIUS Act framework favor the firms building those rails. Both stocks fell a further 2% after our exit as financials sold off.
Added to AI infrastructure with power moats. We added Cipher, CleanSpark and Core Scientific, and earlier in the month Hut 8 and Keel, lifting the miner and data-centre sleeve from 11.5% to 14.0% of NAV. The 21 September additions were early: the names fell 13–15% into month end as the sector cooled, although all except Core Scientific still finished September higher than they started. We continue to believe that power bottlenecks will provide a cushion and a potential tailwind as agentic AI era picks up pace.
Tactically raised protections and dry powder. We rolled bitcoin covered calls and wrote calls on ether, collecting roughly 2% annualized in premium on the whole fund. We also bought puts on Nvidia and TeraWulf, two names we believe have lower relative-value potential than our long AI basket, spending about 1% of NAV. As part of these rotations, we now hold a tactical cash buffer, which we gradually redeploy into opportunities as they reprice; this is not a strategic cash position but dry powder to take advantage of moving markets.
Kept convex upside in AI. We hold long-dated calls on Meta and AMD. Meta rose 27% and AMD 30% in September on the Muse agent launch and data-centre guidance. We are exploring more ways to express this upside view.
Market View & Outlook
As we look into the final months of the year, we summarize our forward-looking view as follows:
The AI buildout is still the only pro-cyclical impulse, and power is its bottleneck.
Hyperscaler capex is tracking close to $800 billion in 2026 and is expected to exceed $1 trillion a year from 2027, cloud backlogs have doubled year on year, and technology is up more than 20% this year on earnings growth of 56% while its multiple has compressed by about a fifth. Grid connections in the main US hubs take four to seven years, so data-centre operators that already own power remain the scarce asset. Returns in this cycle are driven by real earnings, not multiple expansion.
Chart 2: Announced US AI data-centre capacity versus capacity under construction, by planned online year. Source: Sightline Climate, Bloomberg. 
Chart 3: Year-to-date price return decomposed into earnings growth and multiple change, S&P 500 sectors, as of 30 Aug 2026. Source: Duality Research via a16z. Regulation is arriving through the agencies, and it favors crypto rails over incumbents.
The CLARITY Act's failure was followed within two days by the SEC's tokenized stock exemption and CFTC relief for software providers. With that, on-chain trading of US equities can start now, with the exemption running to 2031! We believe if incumbents build these rails fast, even a future hostile administration would be hard pressed to revert on these rulings. Exchanges, brokers and tokenization platforms remain 28% of our portfolio’s NAV.
Rates are the risk, while bitcoin remains stable.
The Fed hiked into a 5.3% 10-year yield, markets price another hike in December, and US interest costs now exceed defense spending at about 3.3% of GDP. In that environment gold fell and Treasuries sold off, while bitcoin gained; it sits outside every sovereign balance sheet and behaved that way again. Measured on downside moves only, bitcoin's 30-day volatility ended September near 19% annualized, about a third below its 13-month average, while the downside volatility of 10-year Treasuries, at about 77 basis points annualized, was 1.7 times its average and back at the peak reached during the March conflict. Higher-for-longer compresses multiples on long-duration crypto equities, which is why we go into the fourth quarter with call coverage on bitcoin and ether and a tactical cash buffer that we intend to redeploy as opportunities reprice.
Chart 4: Downside volatility, bitcoin (30-day semi-deviation of negative returns) versus 10-year Treasuries (21-day semi-deviation of yield increases), with 13-month averages. Source: Yahoo Finance, BIT AM calculations.
If you would like to discuss any of our current market observations, please reach out to us via email.
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