Narrative Overview — May 2026

May was a month of selective capital rotation across crypto narratives rather than a broad-based risk-on rally. Investors concentrated liquidity in specific sectors and tokens, which is clearly reflected in the gap between cap-weighted returns and median performance across most narrative baskets.

AI emerged as the clear leader of the month

The basket delivered a +31.9% cap-weighted return, while the median token gained +14.5%. Unlike many other narratives, the rally was relatively broad and supported by a significant portion of the sector. AI had a weak start to the year, falling -12.0% in January and -5.5% in February, but momentum flipped in March with +18.6%.

May became the breakout month: +31.9% cap-weighted return, +14.5% median return, and the highest monthly volume at $63.1B.

DePIN also posted strong performance with a +16.5% cap-weighted return. 

However, median performance was nearly flat, indicating that gains were concentrated in a handful of large projects while most tokens lagged behind. DePIN was mixed in the first four months: slightly negative in January, weaker in February, then mildly positive in March and April.

May was the strongest month at +17.0% cap-weighted, but the median was only +1.2%. The category had a solid top-weighted rebound, but performance was still concentrated in larger winners.

The RWA sector ended the month in modest positive territory.

Cap-weighted returns reached +3.7%, while the median token gained just +0.2%. The narrative continues to attract market attention, but participation across the sector remains limited. RWA had a rough January and February, with -18.9% and -11.0% cap-weighted returns. From March onward, the category stabilized: +0.7% in March, +4.6% in April, and +3.7% in May.

The May median was almost flat at +0.2%, showing that RWA improved, but without strong breadth.

Layer 2 underperformed relative to the market leaders.

Despite a slight +1.5% cap-weighted gain, the median token declined by -5.2%, highlighting continued weakness beneath the surface. L2 was one of the weakest early-year narratives: -20.4% in January, -13.1% in February, and -9.3% in March. April and May were positive on a cap-weighted basis, but only mildly: +0.8% and +1.5%.

The May median remained negative at -5.2%, meaning the sector stabilized by weight, while the broader basket stayed weak.

A similar pattern was observed in GameFi.

The category gained +8.7% on a cap-weighted basis, yet median performance remained negative at -3.9%. This suggests that returns were driven by a small number of outperformers rather than broad sector strength. GameFI started under pressure: -6.9% in January, -18.2% in February, and -6.5% in March. The sector turned positive in April and May, ending May at +8.7% cap-weighted, but the median stayed negative at -3.9%.

This suggests the recovery was narrow and driven by selected assets, not broad participation.

Meme coins ranked second in terms of liquidity