Bitcoin continues to flash warning signs, according to Quinn Thompson, CIO at Lekker Capital, as his fund remains firmly bearish on crypto heading into the summer.

Thompson argues that the market faces a combination of structural challenges, including ongoing digital asset treasury (DAT) concerns, unresolved questions about Strategy's preferred stock STRC, and lingering fears about quantum computing risks to Bitcoin's security model.

Combined with weakening liquidity conditions and heavy selling pressure, these factors have contributed to one of the largest divergences between bitcoin and technology stocks in recent history, with crypto significantly underperforming despite continued strength across much of the tech sector.

Thompson's broader concern extends beyond crypto and believes a wave of blockbuster IPOs (SpaceX, Anthropic and OpenAI) could absorb trillions of dollars in investor capital, creating a liquidity drain.

One of the clearest signs for Thompson is the Magnificent Seven's underperformance relative to the broader Nasdaq. Historically, healthy bull markets are characterized by leaders leading. Today, however, many of the index's gains are being driven by semiconductor and AI supply chain names rather than the hyperscalers that sparked the initial rally.

The challenge for those hyperscalers is growing, Thompson says. Massive AI-related capital expenditure commitments pressure free cash flow, increasing debt levels, and reducing share buybacks.

Yet cutting spending could undermine the semiconductor and AI infrastructure trade that has supported the broader technology complex.

Thompson concludes that rising IPO supply is set to compete for capital and investor attention, while He sees a difficult path forward for both AI leaders and the wider market.