The Wall Street Journal: How AI Trading Is Stealing Crypto's Thunder?

Original Title: How the AI Trade Is Stealing Crypto's Thunder Original Author: Vicky Ge Huang, WSJ Original Translation: Chopper, Foresight News

Daniel Koss once made significant investments in Bitcoin, firmly believing that cryptocurrencies would reshape the financial industry. However, with the rise of the AI boom, he changed his investment direction. The 30-year-old investor sees the rapidly evolving AI technology as having the potential to disrupt multiple industries, prompting him to jump in. Last August, he liquidated a six-figure Bitcoin position, and now all his funds are directed towards the AI sector.

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

Koss's portfolio adjustment reflects a massive capital migration that has swept through the 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 Bitcoin's pricing dilemma: since hitting a historic high of over $126,000 last October, Bitcoin has faced continuous pressure, lingering around $60,000. At that time, the Trump administration threatened to impose new tariffs on China, triggering investors to sell off high-risk assets.

Meanwhile, chip manufacturers and other AI concept stocks have experienced the kind of explosive growth previously seen only in the crypto market.

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

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

Koss has no plans to trade Bitcoin again in the short term. He believes that crypto assets have matured, and the era of exponential growth is gone for good. He thinks Bitcoin will no longer see tenfold increases within a year. "Bitcoin's market cap is now so large that even doubling it would be considered a high return."

Even staunch crypto believers are reducing their crypto positions, shifting towards the more volatile AI stocks.

Ryan Ho, founder of the social trading platform Legend, revealed that when Bitcoin was close to $120,000, he held a seven-figure Bitcoin position, convinced that Bitcoin "would never drop below $100,000."

But the market did not cooperate. Last December, he swapped a large amount of Bitcoin and altcoin positions for AI-related stocks, including chip companies like Intel. He still holds several hundred thousand dollars worth of Bitcoin.

Ryan Ho

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

The crypto market subsequently decoupled from the U.S. stock market, with U.S. stocks continuing to rise while the crypto market stagnated. Ryan Ho believes that ordinary investors are more optimistic about AI's growth prospects, as artificial intelligence has numerous real-world applications, such as ChatGPT and AI-assisted programming.

Another driver of funds shifting from crypto to AI is the launch of AI stock derivatives on mainstream crypto trading platforms like Hyperliquid.

"In the past few months, a large number of crypto traders have started trading AI stocks, primarily because 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 also allocating a significant amount of 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 using government relief checks.

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

After months of observation, Minh Le has 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 gains cannot be converted into real money to improve life and create good experiences, what’s the point of making money?"

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