On July 20, 2026, the main storyline of the cryptocurrency market was forcibly split into two conflicting narratives: on one side, the "Bitcoin as an inflation hedge" narrative was once again brought to the forefront, while on the other side, the technology frenzy was being questioned as an "AI bubble." In terms of market performance, Bitcoin briefly touched approximately $65010.30 in the OKX market, with a daily increase of about 0.67%, but it was accompanied by severe deleveraging of high-leverage funds—according to CoinGlass, approximately $214 million was liquidated across the network within the past 24 hours, including about $125 million in long positions and about $89.11 million in short positions, with liquidation related to Bitcoin reaching about $53.55 million. Near the critical price level, both long and short leverages were indiscriminately liquidated. In the realm of public opinion, Binance founder CZ chose this moment to publicly emphasize: AI cannot protect you from inflation, while Bitcoin can, reasserting the anti-inflation narrative of "digital gold" against the backdrop of macroeconomic uncertainty. In contrast, economist Peter Schiff warned that the real risk lies in the valuation of AI-related assets rather than the technology itself, pointing out that the rise of low-cost models in China, such as Kimi K3, is intensifying competition in the global AI industry, thus amplifying concerns about the bubbles in high-valuation sectors. On the same day, however, funds provided what seemed to be a contradictory answer on another front: Bitcoin mining company Hut 8 announced a 15-year AI infrastructure contract valued at approximately $9.8 billion with IREN for a 1GW site, causing both companies' stock prices to rise over 16%. Capital heavily rewarded the narrative of "the transition of power and computing infrastructure to AI services," transforming traditional Bitcoin hash rate enterprises into AI infrastructure providers. In an environment where inflation and monetary policy remain unclear, the simultaneous fluctuations in these prices, liquidations, and stock prices sketch a new trading routine: funds oscillate between the themes of the AI valuation bubble and Bitcoin as an inflation hedge, adjusting real positions and continuously rewriting the pricing framework of risk assets.

CZ Bets on the Bitcoin Anti-Inflation Narrative

At a time when Bitcoin was oscillating around $65,000 with a daily increase of only about 0.67%, filled with leveraged short-term speculation, CZ threw out the statement “AI is great, but it cannot protect you from inflation, Bitcoin can,” effectively helping the market to redefine the functional distribution of assets: AI was classified as a high-growth, high-valuation, and extremely macro-sensitive tech story, while Bitcoin was firmly anchored under the "digital gold" plaque, dedicated to hedging against inflation and monetary policy uncertainties. The key to this statement is not about reiterating Bitcoin's scarcity or halving but rather directly tying it to the current inflationary environment, allowing funds to make clearer weight choices between “earning AI growth beta” and “buying Bitcoin for hedging alpha.”

In an environment where inflation and policy paths are still uncertain, this narrative reinforcement will directly affect portfolio structures: some funds that had previously bet on both AI and Bitcoin began to shift Bitcoin from the "risk asset bucket" to the "macro hedge bucket," willing to pay a higher risk premium for it, accepting longer holding periods and lower tolerances for short-term volatility. As long as inflation expectations rise or policy signals remain ambiguous, funds are more likely to withdraw from the already high-valued AI theme, flowing toward Bitcoin, viewed as a store of value, rather than spreading the risk between the two. CZ's bet, in essence, is helping Bitcoin to compete for this portion of the "inflation hedge budget," enhancing its risk premium as a macro hedge asset, while locking in part of the chips from day trading leverage into longer-term inflation protection positions. What really needs to be observed is whether Bitcoin can continue to hold onto this anti-inflation risk premium that he has rebranded once the subsequent inflation and policy data gradually emerges.

Schiff Sounds the Alarm on AI Valuations

At the same time CZ redirected inflation anxiety toward Bitcoin, economist Peter Schiff chose to strike at the hottest topic of the moment—AI. He clearly distinguished between "technological progress" and "asset prices," pointing out that the real bubble does not lie in AI's abilities but in the valuations and related assets surrounding AI, warning the market not to simply and linearly map optimism about technology into unconditional premiums on stock prices and market capitalization. More damagingly, he directed his gaze toward the low-cost model camp rising in China, seeing products represented by Kimi K3 as reshaping the global AI industry's cost curve, making the profit margins and growth assumptions that current high-valuation players rely on appear more fragile under such competitive circumstances. Coupled with the existing public controversy within the market about whether the valuations of global AI giants are too high, Schiff’s statement effectively adds a layer of "bubble expectation" to the risk premium in the hot tech sector.

For crypto assets, this shadow is not necessarily a bad thing. In a context where the overall valuation of risk assets is high, and the macro environment is still filled with inflation and monetary policy uncertainties, if the tech sector is proactively required by the market to raise return rates due to expectations of an AI bubble, funds will start to re-evaluate the cost-effectiveness among different risk assets: on one side are high-valuation tech stocks that rely on future profit discounts and are highly sensitive to interest rates and competition, while on the other side are non-equity risk assets like Bitcoin, which are assigned anti-inflation and hedging attributes without relying on cash flow discounts for core pricing. When Schiff labels the tech theme with the tag "AI valuation bubble," he also indirectly raises the risk thresholds for such assets, providing part of the investors with a narrative rationale to pull out of the tech sector and shift toward inflation hedging and macro risk positions. What the market needs to verify is whether Bitcoin can steadily absorb this portion of the risk budget that has been withdrawn from the overvalued tech sector amid a heated debate on AI valuations.

$65000 and $214 Million in Liquidations

When the price was around $65010.30, with a daily increase of only about 0.67%, it appeared to be an ordinary volatility candlestick. However, on-chain and contract layers provided feedback on approximately $214 million in liquidations within 24 hours: among them, about $125 million in long positions, approximately $89.11 million in short positions, and around $53.55 million related to Bitcoin, with about $27.56 million in long positions and about $25.98 million in short positions. Liquidations concentrated as Bitcoin's volatility expanded and approached the critical range of $65,000, with high-leverage funds being passively liquidated during slight pullbacks and sweeping actions, completing a typical "deleveraging after a crowded long." Therefore, while prices superficially rose gently, the real story on the market was that under the macro narratives of inflation hedging and technology bubbles, leveraged longs were overly clustered and triggered a chain liquidation with the slightest disturbance, magnifying short-term volatility into a structural washout.

This round of approximately $214 million in liquidations directly reshaped short-term trading structures. On one hand, after a large number of long positions were liquidated, the funding rate for perpetual contracts typically falls back from high levels, narrowing arbitrage opportunities, forcing funds accustomed to "leveraging to earn funding fees" to reduce positions or shift toward lower-leverage allocations; on the other hand, off-market funds view such deleveraging as a testing point for narrative resiliency—if a batch of high-leverage longs is cleared near the $65,000 mark, and Bitcoin's price can still maintain its critical range, the macro story of inflation hedging receives a "stress test" reinforcement, leading off-market buyers to favor staggered, opportunistic buybacks rather than chasing after prices. In a high-leverage environment, the macro narratives of inflation hedging and AI bubbles not only determine which side funds stand on but also amplify price volatility through pushing one-sided positions that ultimately trigger concentrated liquidations, continuously rewriting the trading rhythm between contracts and spot.

Mining Companies Transition to AI Computing Power

At the same time that leveraged funds were tugging around $65,000, another funding path off-chain was rapidly opened: Hut 8 announced a contract worth approximately $9.8 billion with IREN for a period of 15 years for AI infrastructure, aimed at computing and power services for a 1GW site. This is not a simple custodial contract but directly locks in the power and facilities originally built for Bitcoin mining to the long-term demand for AI model training and inference. Following this announcement, the stock prices of Hut 8 and IREN surged over 16% in a single day, with the capital market completing a rewrite of the narrative of such companies in one day—from "high beta Bitcoin miners" to "infrastructure carriers riding on both inflation hedging and AI growth."

Bitcoin mining companies naturally possess low-cost electricity and computing facilities. When they shift some of their capacity from single mining to AI computing services, the company's revenue and risk structure change: on one hand, miners' cash flows no longer solely rely on Bitcoin prices and the overall hash rate cycle but also incorporate the demand and pricing for AI computing power; on the other hand, stock prices become more sensitive to the tech cycle, enjoying the valuation premium of AI themes while also bearing the risk of corrections when "AI bubble" expectations heat up. The over 16% surge in the stock prices of Hut 8 and IREN is a direct signal of capital preference—amid uncertainties in inflation and monetary policy, certain risk capitals choose to configure a mixed exposure through mining company stocks: betting on Bitcoin as a long-term story of an inflation hedge while also leveraging the same set of power and facilities to capture the high-growth narrative of AI. This "BTC + AI computing power" bundling model is transforming miners from mere derivatives following the crypto cycle into composite assets that are simultaneously exposed to fluctuations in Bitcoin prices and tech valuations.

Repricing Risk Between AI and Bitcoin

The group of resonating signals on July 20 clearly exposed funds' hesitations: on one side, CZ emphasized “AI cannot protect you from inflation, but Bitcoin can,” reinforcing the Bitcoin "digital gold" narrative; on the other side, Schiff pointed out the valuation bubble of AI-related assets, reminding investors that the tech theme may have already overdrawn its future. Caught between these two narratives are Bitcoin prices oscillating around $65010 and the approximately $214 million in liquidations across the network within 24 hours—long and short positions swiftly liquidated amidst the switching macro narratives, forcing crypto leveraged funds to rearrange their risk exposures; meanwhile, Hut 8 and IREN both raised their stock prices over 16% due to the AI infrastructure contract worth approximately $9.8 billion, rewarding the mixing model of “BTC + AI computing power” with real capital. In summary, the key macro variables currently affecting the pricing of Bitcoin and AI assets include three aspects: inflation expectations determine whether the anti-inflation narrative can continue to support Bitcoin's valuation, the overall valuation level of tech stocks determines when the bubble premium of the AI theme begins to be squeezed, and the level of leverage in the crypto market amplifies the impact of each narrative switch on prices. What needs close watching next is not just the trajectory of fund reallocations between Bitcoin and AI sectors in the thematic ETFs but also changes in the revenue share of Bitcoin mining and AI computing power within mining companies’ financial reports, as well as the correction rhythms of AI-related tech stocks under bubble warnings, since this data will collectively outline how funds reprice Bitcoin and AI assets' futures under the triple pressure of inflation risks, tech bubbles, and crypto leverage.

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