Crypto Market Shifts from Momentum Trading to Contrarian Investing

The crypto market has been facing a significant downturn in recent times, with Bitcoin struggling to maintain its value. One of the main reasons behind this decline is the growing interest in AI stocks, which have become increasingly popular among investors.

According to Bitwise chief investment officer Matt Hougan, the crypto market is shifting from momentum trading to contrarian investing, as investors are now more focused on fundamentals than market hype. This means that instead of buying into the latest trending assets, investors are looking for projects with clear revenue, strong use cases, and working business models.

As a result, smaller tokens such as Hyperliquid, BNB, Zcash, and Stellar have seen significant gains in May, while major assets like Bitcoin and Ethereum remain under pressure. This rotation shows that the market is no longer rewarding broad crypto exposure in the same way, but instead is favoring assets with clearer stories and stronger data.

While this shift may seem daunting for some investors, Hougan remains optimistic about the future of the crypto market. He believes that the next phase will depend on fundamentals, regulation, and whether investors return after the AI trade cools down.