Bitcoin Could Gain From an AI‑Stock Pull‑Back, Says Macro‑Economist
Lyn Alden warns that the recent surge in artificial‑intelligence equities may soon reach a point of diminishing returns, prompting a potential rotation of capital into Bitcoin.
Summary
- Macro‑economist Lyn Alden argues that AI‑related stocks are approaching an “excessively large” valuation, which could trigger a shift of speculative money toward alternative assets such as Bitcoin.
- Bitcoin is currently trading around $67,850, roughly 46 % below its October 2023 peak of $126,100 and down 24.5 % over the past month.
- The cryptocurrency’s price dynamics suggest that only a modest inflow of new demand is needed to halt the decline, as long‑term holders already provide a price floor.
- Analysts remain divided on whether AI leaders like Nvidia can sustain their rapid appreciation; a slowdown may open a window for crypto investors.
AI Hype Meets Crypto Market Realities
On the Coin Stories podcast, Lyn Alden explained that many AI‑focused stocks have risen to levels where further price appreciation becomes hard to justify on fundamentals. “When an asset reaches a point where it looks absurdly large, investors naturally begin to look elsewhere for upside,” Alden said.
The AI rally, led by semiconductor giants such as Nvidia, has been spectacular. Nvidia’s shares have climbed over 35 % in the last twelve months, making the company the largest by market capitalization on the Nasdaq. While the firm remains a pivotal player in the AI hardware supply chain, some market participants—including Albion Financial’s chief investment officer Jason Ware—question whether the growth trajectory can continue indefinitely.
Why Bitcoin May Benefit
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Capital Rotation – As speculative funds exit what they perceive as over‑priced AI equities, they often search for assets that can offer comparable or higher returns with uncorrelated risk. Bitcoin, with its limited supply and growing institutional presence, is a prime candidate for such reallocation.
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Marginal Demand Requirement – Alden points out that Bitcoin does not need a massive influx of capital to reverse its recent downtrend. The existing base of long‑term holders creates a substantial support level; even a modest amount of new buying pressure can push the price higher.
- Increased Competition for Funds – The AI boom has intensified competition for investment dollars across asset classes. Bitcoin developer Mark Carallo has noted that the cryptocurrency is now contending for capital in a way that it has never before, potentially accelerating any shift of funds once AI stocks stall.
Outlook for Bitcoin’s Price Path
Alden cautions against expecting a rapid “V‑shaped” bounce. Historically, Bitcoin’s price recoveries outside of major stimulus events tend to be gradual, often characterized by a sideways consolidation before a decisive move higher. She forecasts a “grinding” phase that could see the price dip another $10‑20 k before stabilizing, after which a modest upside driven by new demand becomes plausible.
Key Takeaways
- AI Stocks May Peak: Overvaluation concerns could curb the ascent of high‑flying AI companies, especially Nvidia, prompting investors to seek alternative growth opportunities.
- Bitcoin Needs Only Small New Inflows: The cryptocurrency’s existing long‑term holder base offers a strong floor; a limited influx of fresh capital may be sufficient to initiate an upward trend.
- Potential for a Capital Shift: If AI equities lose steam, capital could flow into Bitcoin, amplifying its price despite the broader market weakness.
- Expect a Prolonged Consolidation: A rapid rally is unlikely. Market participants should prepare for a period of sideways movement or modest decline before any meaningful upside materializes.
Analyst Perspective
While the AI sector’s momentum has been a headline‑grabbing story, its sustainability remains uncertain. Investors looking for a hedge against a possible AI‑stock pull‑back may find Bitcoin an attractive, albeit volatile, store of value. As always, thorough due diligence and risk management are essential when navigating the intersection of emerging technologies and digital assets.
Source: https://cointelegraph.com/news/bitcoin-price-catalyst-ai-stocks-peak-economist-lyn-alden?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
