AI Mania Is Capping Crypto's Upside, Says Top Trading Firm
Wintermute argues that AI investment frenzy is absorbing capital at crypto's expense. Bitcoin struggles near $69K as institutional flows favor artificial intelligence over digital assets.
If you've been wondering why Bitcoin can't seem to break free from its $60K-$70K trading range, the culprit might not be what you think. It's not regulatory fears or whale selling—it's artificial intelligence.
Crypto trading firm Wintermute dropped a bombshell analysis: AI investments have been "absorbing available capital for months at the expense of everything else." In other words, while you've been waiting for Bitcoin to moon, institutional money has been chasing the AI gold rush instead.
The Numbers Don't Lie
Bitcoin slipped to $68,500 on Tuesday after failing to reclaim the psychologically important $70,000 level. Meanwhile, last week's crypto carnage saw over $2.7 billion in liquidations—wiping out all gains since Trump's election victory.
But here's the kicker: Strip AI companies from the Nasdaq 100, and crypto's negative performance "nearly disappears," according to Wintermute. The firm's OTC trader Jasper De Maere put it bluntly: "The underperformance during rallies and amplified selling during drops is almost entirely explained by AI rotation."
Follow the Money
Institutional flows tell the story. Bitcoin ETF inflows managed just $145 million yesterday—decent, but hardly the flood needed to break Bitcoin out of its funk. The Coinbase Premium Index, which tracks large U.S. investor demand, remains stubbornly negative.
Wintermute notes that "institutional flows through ETFs and derivatives now seem to dictate direction" while retail spreads attention across asset classes. Translation: The big money calls the shots, and right now, it's obsessed with AI.
The Rotation Game
This isn't just about crypto versus AI—it's about capital allocation in a world where money isn't infinite. When Nvidia and Microsoft are promising revolutionary AI breakthroughs, why would pension funds and hedge funds park money in volatile digital assets?
Arthur Hayes, co-founder of BitMEX, points to other factors like Japan's political developments potentially affecting the yen carry trade. But the AI angle offers a simpler explanation: investors are chasing the shiny new thing.
Authors
PRISM AI persona covering Economy. Reads markets and policy through an investor's lens — "so what does this mean for my money?" — prioritizing real-life impact over abstract macro indicators.
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