How AI and Crypto Will Drive “Hyper-Financialization” VIEW IN BROWSER By Michael Salvatore, Editor, TradeSmith Daily In This Digest: - Why bitcoin prices could peak this winter…
- Crypto has found its late-cycle narrative…
- AI is at the center of “hyper-financialization”…
- This will power the late 2020s tech bubble…
- Our AI helps you trade the uncertain, speculative era…
The biggest money in bitcoin has already been made… That’s true of bitcoin since inception, and it’s just as true about bitcoin in the current cycle. Longtime readers know what I mean by the current cycle. For the short-time readers, a refresher may be in order. Bitcoin has a habit of going up after its so-called “halvings” – when the reward bitcoin miners receive falls in half. This is core to bitcoin’s monetary policy, and is part of the reason it tends to accrue value relative to dollars over time. We can see it clearly on the chart. The black lines below mark bitcoin halving dates. The blue arrows trace the amount of time it takes for bitcoin to peak after the halving (give or take a few days, this is a weekly chart). As we can see, the “post-halving cycle” has lengthened over time and returns have diminished: 
And while there’s only been three cycles to look back on, we can still average them out to a cycle length of about 480 days. But each time, the cycle has gotten about 86 days longer than the last. If we follow this logic, that means the current bitcoin cycle is on track to peak somewhere around December 2025 or January 2026, the red line. Again, note the small sample size. But this would not be surprising to see. And it offers a good plan to sell some of the bitcoin you bought months or even years ago. All well and good if you read TradeSmith Daily, as we’ve been bullish bitcoin for quite some time. You might remember I put it on your radar all the way back in October of 2023. Back then, bitcoin was changing hands for about $35,000. Sounds like a steal now, but bitcoin was still “rat poison squared” – to quote Mr. Charlie Munger, may he rest in peace – to most investors at the time. As much as we’d like it to be otherwise, most of the world’s untold millions of investors do not read TradeSmith Daily. Therefore, most investors have a habit of forgetting about bitcoin price cycles until about halfway through the cycle, at which point they become amazed by bitcoin’s price rise and decide to get in. That time started around November when bitcoin crossed $100,000 for the first time ever. This is, of course, not the best time to buy bitcoin. The best time to buy bitcoin is, as we showed you, in the run up to the halving. So investors get frustrated at bitcoin’s relatively slow performance. They want the run from $35,000 to $100,000, almost tripling their money. Not the agonizing chop between $100,000 and $110,000 we’ve seen this year. So what do they do? | Recommended Link | | | | According to Fox, the U.S. Government has already collected a record $15 billion from President Trump’s tariffs. And now, thanks to Title 15 of the U.S. Code, you can start collecting your own tariff-driven instant cash payouts, as much as $100 to $1,000 upfront using this income strategy. The great part is you can collect these payouts right off your smart phone and have them deposited directly to your account. Go here now for the full story. |  | | They start seeking new schemes to make money in crypto… And this gives rise to what I like to call the late-stage crypto narrative machine. In 2017 it was the rise of altcoins and initial coin offerings (ICOs). In 2021 it was decentralized finance (DeFi), non-fungible tokens (NFTs), and the metaverse. And now in 2025, it’s stablecoins and tokenization… And if you squint, you can see AI in there too. Let’s start on stablecoins. Stablecoins are simply cryptocurrencies pegged to the value of the dollar and backed by real dollars and Treasurys. Circle Internet Group (CRCL), one of the largest stablecoin issuers with $61 billion USD Coin (USCD) in circulation, recently went public. It ran as much as 333% in 12 trading days, before giving some of those gains back: 
That comes as Amazon and Walmart have announced plans to introduce their own stablecoins. In other words, they’d mint their own “cash” – or, to make a less gracious comparison, “Disney Dollars” – that can be used on their platforms, with their own unique benefits to shoppers. Importantly, they’d also operate outside the traditional payment rails. That’s not all stablecoins are good for. Stables are also a key pursuit of countries that want to accelerate the move away from the U.S. dollar global reserve currency standard. They want their money to work on something that isn’t SWIFT… And after 2022, when the U.S. kicked Russia out of the global banking system, you can’t really blame them. Then there’s the granddaddy of speculations – FedCoin, DollarCoin, whatever you want to call it. The government would love to issue a stablecoin, probably because it’s easier to trace, it’s easier to seize, and it’s easier to block access to than the traditional printed dollar. It’s the full digitization and therefore complete centralization of dollars. The recent GENIUS Act, which aims to regulate stablecoins and just passed the Senate, is a stepping stone to this and a big reason why companies like Circle have seen a big run-up. Suffice to say, expect a ton of investment in this space both for this cycle and beyond. Circle is just one play in equities. But the real action (and risk) is in the coins… All the major stablecoins are built on Ethereum… for now. And Ethereum (as well as the rest of the altcoin universe) is currently trading at bargain-bin prices relative to bitcoin. Below is the Ethereum vs. bitcoin ratio (ETH/BTC), which is fighting to stay alive in a downtrend channel it’s been in for two-plus years. It recently broke back above yearlong resistance into the channel after bouncing off the 2019 low: 
If the bottom is in for ETH/BTC, that means altcoins will shine to some extent for the rest of this cycle (through to December and January). Anything having to do with stablecoins, their financialization, or tokenization could benefit. Solana (SOL) is also interesting. It’s smaller, but still a major coin worth $75 billion. Think of it like a more centralized Ethereum. Check how much better it’s been trading against bitcoin (red line below) since the start of 2023. Where SOL has gained 77% against bitcoin, ETH/BTC has fallen by more than two-thirds. And this is coming out of a bear market! 
SOL-based altcoins and SOL itself are worth a look as that ecosystem attracts more interest. Now, let’s talk tokenization… Tokenization has been talked about for a long time, but hasn’t got much traction. The idea is that we can trade many real-world financial assets via crypto tokens that offer all the same utility – digital wallet storage, deep fractionalization, and leverage via DeFi. Coinbase (COIN) recently announced plans to tokenize equity securities so you could trade stocks on its platform. COIN stock itself rose almost 15% intraday and is now trading at new highs: 
Clearly, Wall Street sees a future for tokenization. It sees a future where stocks trade quite differently… that is, like crypto. Imagine a world where, if you wanted to send your granddaughter a stake in Berkshire Hathaway as a graduation gift, you could drop it right into her crypto wallet versus setting up an investment account (and convincing her to manage it). Imagine tokenizing a piece of property and having people invest in fractions of it, thousands or even hundreds of dollars’ worth at a time. Maybe their ownership even lets them stay in it, timeshare style. You could even issue tokens for ownership of a rental property at specific times of year. Imagine easily and conveniently fractionalizing shares of not just equities and property, but art (digital or otherwise), startups, and more. In a tokenized world, anyone can “IPO” anything… at any time. Even completely stupid things. And if you think there’s no market for stupid things, just look at Polymarket (which operates on the Polygon platform and settles in, you guessed it, stablecoin) where people are betting on whether Federal Reserve Chair Jerome Powell says “Good afternoon” during his July FOMC presser. 
That’s a funny example with less than $1,000 in volume right now. But make no mistake: People bet big on Polymarket. The platform did over $1 billion in volume last month, and the forecasts on everything from political races to global conflicts have been more accurate than expert opinions. It’s a big deal. The world is becoming increasingly financialized in these ways… leading to what we might call “hyper-financialization”… And tokenization and stablecoins are what enable it. And yes, AI is involved too… Agentic AI – that is, AI that operates independently after given instructions – can much more easily use crypto than it can use traditional finance rails. If retailers start taking stablecoins, agentic AI can start not just designing grocery lists for you, but doing the online shopping as well before an AI-powered robot comes to drop off your delivery. Take it a step further – AI can receive payments, too. AI can then build businesses… invest… And the imagination really takes over. To me, all of this hyper-financialization reeks of a new technology-driven asset bubble that will rival the dot-com times. This plays directly into the fact that liquidity is expanding, inflation is slowing, and productivity (GDP) is set to grow more quickly. When everything is financialized, everyone is investing in one way or another. Everyone is participating in a radical, new, tech-driven economy powered by blockchain and AI. And when everyone is participating, the technology firms providing these platforms are set to benefit. I called out Coinbase (COIN) and Circle (CRCL) earlier, and they’re obvious key players. I also think the smaller financial firms like Robinhood (HOOD) and SoFi (SOFI) have the size to more easily navigate this new future than the larger banks and credit issuers do. (Disclosure, I own HOOD at time of writing.) On that note, Visa (V) and Mastercard (MA) may be in trouble. Their survival relies on the legacy financial system staying in place. And pivoting to the stablecoin-driven future will not come as easily to them as it will for the upstarts. We’re looking at a brave new world here, and it’s not too tricky to play a part in it. Allocate some amount of your portfolio to these themes, and expect them to outperform not just for the rest of this crypto cycle, but for as long as the “Party Like It’s 1995” thesis stays intact. TradeSmith is preparing for a speculative, volatile future… And we’re fully embracing it with our new AI, TradeSmithGPT. We debuted this newest tool earlier this week as part of the newest update to Predictive Alpha Options. With the new toolset, you have access to an AI-based projection model that’s constantly learning from market data and improving itself. Let’s talk just a little bit about how it works and look for a nice trade setup. And while crypto isn’t part of the strategy, what do you know – we do have one in Coinbase stock: 
There are four key parts to the new tool: - The current Prime Projection (from Predictive Alpha Prime).
- The Trend Zone, which tracks various price data on different intervals to determine the current trend.
- The VolScore, which measures a stock’s underlying volatility and determines recommended options trading strategies.
- The Correlation, which gets a blue checkmark when the Trend Zone and Prime Projection are in line.
COIN above has a Prime projection of +16.6% by July 23. It has a Bullish Trend Zone and an 8 VolScore. (A score of 0-40 indicates bullish strategies, like buying calls or selling puts.) That makes it a Correlated trade, which indicates more confidence in the strategy. COIN is one of the top 10% of Predictive Alpha Prime stocks by historical accuracy, with the stock hitting projections more than 76% of the time in our dataset. And believe it or not, Predictive Alpha has even better trades for you in terms of historical accuracy. Its Top Bullish Opportunities have double-digit expected moves (in less than a month!) and 85%-plus win rates with those stocks in the past. Now that we’ve upgraded Predictive Alpha Options the same way we did with Predictive Alpha Prime a few weeks prior… We’re kicking things off with three top trades for July 1. That only gives you a couple trading days to check out TradeSmith CEO Keith Kaplan’s free briefing on the strategy and get involved. When you do, there’ll be a special intro offer to get you started. To building wealth beyond measure, 
Michael Salvatore
Editor, TradeSmith Daily P.S. Thanks to everyone who wrote in with feedback on the new portfolio rotation strategy. We're hard at work in the lab cooking up more on this, so stay tuned right here in TradeSmith Daily for the first word on what's coming. While I'm here, what do you think about the hyper-financialization trend? Do you own any crypto or crypto-related stocks? Is there a future for blockchain-based stock trading? Write us at feedback@TradeSmithDaily.com with your thoughts. (Michael Salvatore held positions in BTC, ETH, SOL, COIN, and HOOD at time of writing.) | 
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