Markets staged a robust comeback after a string of losses this week, with investors regaining confidence amid speculation around the rollback of Trump-era tariffs. Both equities and the cryptocurrency sector saw significant gains, prompted by renewed optimism from a pivotal Supreme Court hearing on trade policy. Let’s examine what drove this upswing, which sectors benefited most, and why subnet tokens and protocol governance debates like Hyperliquid’s HIP-5 proposal have captured the spotlight post-crash.
Broad Market Rebound Fueled by Policy Optimism
After an extended period of negative momentum, all major financial indices registered gains. Bitcoin (BTC) spearheaded the recovery, surging 2.36%, while the technology-rich Nasdaq Composite climbed 1.15%. This turnaround wasn’t isolated to digital assets; it was part of a wider risk appetite returning across global markets.
The rebound stemmed from growing speculation that the U.S. Supreme Court could potentially roll back some of the tariffs imposed during the Trump administration. The probability of the court upholding these tariffs reportedly dropped from 45% to only 29% on popular trading platforms, substantially improving investor sentiment. As the likelihood of more open trade increased, risk assets like equities and cryptocurrencies rallied, reflecting the market’s hope for more accommodative policy directions that could drive growth.
Crypto Sector Leaders: DePIN, DeFi, and the AI Rotation
Within the cryptocurrency ecosystem, certain sectors stood out for their strong performance. The Decentralized Physical Infrastructure Networks (DePIN) and Decentralized Finance (DeFi) sectors outperformed, posting gains of 6.7% and 6.1% respectively. The DePIN sector was buoyed by substantial rallies in tokens such as Helium (HNT) and Render, both of which surged 11.1% and 8.7%. Together, these two tokens constitute about a quarter of the overall DePIN index, highlighting their outsized influence.
DeFi tokens also posted robust gains. Tokens like Aerodrome (AERO), Pump (PUMP), and Aster (ASTER) advanced by more than 10% each. The momentum in Aerodrome was particularly notable, as it coincided with the launch of Slipstream v2 — an upgrade aiming to enhance transaction efficiency and refine dynamic fee structures. This technical progression demonstrated the sector’s ongoing commitment to innovation and value creation, further fueling investor interest.
In contrast, the artificial intelligence (AI) token sector lagged behind, dipping 4% on the day after marking impressive gains over the previous month. This retracement appeared to be part of a sectoral rotation, with capital moving from recently overbought AI projects to those that were previously oversold during the market correction. However, this pullback was not uniform across all AI tokens. Internet Computer Protocol (ICP), for instance, bucked the trend with a remarkable 14.6% rally, while other AI tokens like IP and TAO experienced downward pressure.
Sector Resilience Post-Crash: AI & Subnet Tokens Shine
Nearly a month has passed since the dramatic crypto market crash of October 10th, which erased approximately $390 billion in total market capitalization. Such corrections often leave scars, but they also highlight sectors and tokens with exceptional resilience — often the best places to find the next wave of strength during a rebound.
The AI sector has consistently proven itself among the strongest. Since the October selloff, the AI index remains up by 7.3%, demonstrating notable relative strength. Specific tokens contributed heavily to these gains, with ICP up a staggering 31.8% and Virtuals (VIRTUALS) rising 18.5%. Notably, TAO, which now makes up nearly a third of the AI index, jumped 10.8% in the month following the correction. The sector’s continued vigor suggests enduring investor interest in the intersection of blockchain technology and artificial intelligence — a narrative that remains compelling amid technological innovation across industries.
Looking deeper into the top 500 cryptocurrencies by market capitalization, subnet tokens emerge as a rare breed trading above their pre-crash levels. Tokens such as Chutes (SN-64), Ridges (SN-62), Lium.io (SN-51), and Targon (SN-4), which are among the largest Bittensor subnets, have all maintained — or exceeded — their pre-crash valuations. These surges are further validated by rising demand and staking activity. The amount of Bittensor’s TAO staked in the Alpha subnet continues to climb, reflecting a robust appetite for such new network architectures.
This enthusiasm is mirrored in the growing split in stake between Alpha and Root subnets, which has widened from 13.2% in July to 21.1% presently. The growing sophistication of subnet tokenomics and increasing real-world usage underscore genuine utility that transcends short-term speculation. Despite their low initial supply and inflationary early stages, various subnets are beginning to generate real revenue. For instance, Targon, Lium, and Chutes are collectively estimated to produce $20 million in annual recurring revenue — an impressive feat for emerging protocols.
With the upcoming TAO halving scheduled for December, recent changes to emission structures, and a succession of potential catalysts ahead, the Bittensor ecosystem finds itself in a strong strategic position. As fresh capital seeks resilient assets when sentiment recovers, subnets and AI tokens alike could become focal points for growth-oriented investors.
Governance Spotlight: The Debate Around Hyperliquid’s HIP-5 Proposal
Beyond price dynamics, protocol governance has come into sharp focus — particularly regarding Hyperliquid’s HIP-5: Staker-Governed Assistance Fund 2 proposal. Developed by community members, HIP-5 seeks to allocate a small but significant portion (starting at 1%, scaling to 5%) of Hyperliquid’s transaction fees toward buybacks of underappreciated “Strict List” tokens such as PURR and HFUN. The plan would be governed via real-time, staker-driven voting, with funds distributed through continuous time-weighted average price (TWAP) execution.
Under HIP-5, fees would accumulate in USD Coin (USDC) within the Assistance Fund 2 (AF-2). HYPE stakers would periodically allocate voting weights, guiding which tokens receive buybacks. Strict List tokens would benefit, but Liquid Staking Derivatives (LSDs) would be excluded unless they implement transparent, holder-level rewards passthrough. At current run rates (circa $91 million in monthly Hyperliquid fees), a 5% allocation would translate into $55 million annually channelled toward targeted buybacks, while maintaining the overwhelming bulk (94%) of total protocol revenues for core purposes.
The proposal presents a series of arguments both for and against its adoption. On the one hand, proponents claim that redirecting some revenue could “bootstrap ecosystem projects” by providing reliable buy pressure for teams engaged in Hypercore staking. This could incentivize both existing and new projects to participate more deeply in the Hyperliquid ecosystem, ultimately fostering more vibrant community and development activity.
However, skeptics argue that the proposal risks attracting lower quality projects, forcing premature token launches, and disproportionately benefiting early investors and insiders over genuine protocol contributors. Notably, some warn that such mechanisms often amount to short-term price manipulation without fostering enduring network effects or incentivizing true innovation. Furthermore, there’s concern that diverting revenue into buybacks could undermine the unique value proposition of HYPE as a deflationary asset earning returns purely from exchange activity — a rare distinction in an industry plagued by convoluted tokenomics and endless incentive programs.
Breaking Down the Arguments For and Against HIP-5
Bootstrap Ecosystem Projects
Supporters of HIP-5 suggest that buyback-driven demand could breathe life into existing and emerging projects on Hypercore, offering powerful incentives for teams to stake HYPE or attract staker communities. In the context of current low market capitalizations — with tokens like PURR and HFUN valued at roughly $65 million and $35 million, respectively — a $55 million annual buyback injection could be transformative. However, critics argue that artificially stimulating token prices rarely yields long-term innovation or user adoption. Forcing projects to launch tokens prematurely may dilute the overall project quality and create misaligned incentives.
Enhance HYPE Resilience
Another argument in favor is the idea that diversifying value accrual beyond pure exchange revenue could strengthen the network. The proposal draws parallels to other DeFi protocols employing “bribes” or vote incentives, suggesting this could become a competitive sector-wide mechanism. Yet, this narrative is met with skepticism: such strategies may primarily benefit project insiders and create adverse selection problems, as opportunistic teams aggressively seeking buybacks may not always align with sustainable protocol growth.
Preserve Competitiveness
HIP-5’s designers point out that a 5% fee redirection is relatively small compared to the total capital flowing through Hyperliquid, implying minimal impact on HYPE’s macro price metrics. That said, opponents counter that even modest changes could erode HYPE’s unique status as a “pristine asset” with a simple, compelling value proposition — all revenues are used to buy and burn HYPE, a system easy for both new and experienced crypto users to understand. Introducing complexity could muddy the narrative and complicate value capture in a crowded market filled with confusing models and opaque governance.
The Road Ahead: Resilience and Renewal
As the cryptocurrency and risk asset markets recover from a steep October correction, new leadership is emerging both in price and utility. The AI and subnet sectors demonstrate remarkable resilience, attracting renewed investor interest and staking activity. The governance debates around proposals like HIP-5 highlight the ever-present tension between fostering innovation and maintaining core protocol values. Whether the trend of capital rotation toward oversold sectors, revenue-generating subnets, and new governance models heralds a lasting transformation or proves another chapter in crypto’s cyclical evolution remains to be seen. However, one thing is clear: as policies evolve and market structure adapts, the search for sustainable value and real utility will continue to determine tomorrow’s crypto leaders.
