The Wall Street Journal: How AI Trading is Stealing the Spotlight from Cryptocurrency?

Daniel Koss has made significant purchases of Bitcoin, firmly believing that cryptocurrency will reshape the financial industry. However, after the emergence of the artificial intelligence boom, he changed his investment direction. The 30-year-old investor believes that the rapidly developing AI technology has the potential to disrupt multiple industries, and thus he decisively entered the market. Last August, he liquidated a six-figure Bitcoin holding, and now all his funds are directed towards the AI sector.

"It feels like primitive humans discovering fire," Koss said from Zug, Switzerland.

Koss's portfolio adjustment reflects the massive capital migration that has swept the entire market over the past year: individual investors and hedge funds have been selling off Bitcoin and various tokens in pursuit of AI stocks. This asset rotation also explains the price predicament of Bitcoin: since reaching a historic high of over $126,000 last October, Bitcoin has continued to face pressure, lingering around $60,000 for an extended period. At that time, the Trump administration threatened to impose new tariffs on China, prompting investors to sell off high-risk assets.

Meanwhile, chip manufacturers and other AI concept stocks have experienced the kind of explosive growth that was once only seen in the cryptocurrency market.

Mike McGlone, senior commodity strategist at Bloomberg Industry Research, stated, "The crypto market is undergoing a deep clearing, and this is just the beginning."

While the U.S. stock market continues to hit new highs this year, Bitcoin has been weakening.

Koss has no plans to trade Bitcoin again in the short term. In his view, crypto assets have matured, and the era of exponential surges is gone forever. He believes that Bitcoin will no longer see tenfold increases within a year. "Bitcoin has grown so large that even doubling would be considered a very high return."

Even staunch crypto believers are reducing their crypto positions and turning to the highly volatile AI stocks.

Ryan Ho, founder of the social trading platform Legend, revealed that when the price of Bitcoin approached $120,000, he held a seven-figure Bitcoin position At that time, he was certain that Bitcoin would "never fall below $100,000" again.

However, the market did not go as he wished. In December last year, he swapped a large amount of Bitcoin and altcoin positions for stocks related to AI, including Intel. He still holds hundreds of thousands of dollars in Bitcoin.

Ryan Ho

The 25-year-old entrepreneur stated that the core reason for reducing his crypto asset holdings was the structural weakening of the crypto market. In his view, since the crash in October, the crypto market no longer exhibits the characteristics of healthy risk assets: buying demand has dried up, and institutional funds continue to flow into the AI sector.

Subsequently, the crypto market decoupled from the performance of U.S. stocks, which continued to rise while the crypto market stagnated. Ryan Ho believes that ordinary investors are more optimistic about the growth prospects of AI, as artificial intelligence has many real-world applications, such as ChatGPT and AI-assisted programming.

Another driving force behind the shift of funds from crypto to AI is the launch of AI stock derivatives on mainstream crypto trading platforms like Hyperliquid.

"In recent months, a large number of crypto traders have started trading AI stocks, and the core reason is that the relevant trading channels have been opened up," Ryan Ho said.

Some crypto traders have also chosen to cash out, ending a previous round of significant gains in Bitcoin and mainstream tokens.

Trader and digital artist Minh Le recently liquidated part of his crypto assets to purchase a Ferrari, while allocating a large portion of his profits to Japanese anime collectibles, including One Piece and Pokémon trading cards.

Minh Le

Minh Le accumulated wealth through NFTs and meme coins. This trader, who resides in Los Angeles, entered the market in 2017, using a credit card to buy the then-popular Litecoin; during the pandemic, he continued to increase his investments with government relief checks.

Shortly after buying the meme coin issued by Trump, he cashed out on a large scale. The meme coin was launched just before Trump's inauguration. "That was the fastest I ever made money, and I knew it was time to exit."

After months of observation, Minh Le has now re-entered the cryptocurrency space, but his strategy has become more conservative, focusing only on assets with real application scenarios, such as stablecoins used for payments.

Le stated, "If the digital account profits cannot be exchanged for real money and silver to improve life and create wonderful experiences, then what is the point of making money?" Original link

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Before investing in cryptocurrency, be sure to conduct thorough research, understand the associated risks, and carefully assess your own risk tolerance. Do not overlook the potential for significant losses due to the temptation of short-term high returns