Author: Vicky Ge Huang, Wall Street Journal

Translation: Chopper, Foresight News

Daniel Koss once heavily invested in Bitcoin, firmly believing that cryptocurrencies would reshape the financial industry. But after the rise of artificial intelligence, he changed his investment direction. This 30-year-old investor believes that the rapidly developing AI technology has the potential to disrupt multiple industries, so he decisively entered the market. Last August, he sold off his six-figure Bitcoin holdings, and now all of his funds are directed towards the AI sector.

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

Koss's shift in investment reflects the massive migration of funds that has swept through the market over the past year: individual investors and hedge funds have been selling Bitcoin and various tokens while pursuing AI stocks. This asset rotation also explains the predicament of Bitcoin's price: since it hit a historical high of over $126,000 in October last year, Bitcoin has been under 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 previously seen only in the crypto market.

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

This year, the U.S. stock market has continuously reached new highs, while Bitcoin has continued to weaken.

Koss has no plans to trade Bitcoin again in the short term. In his view, crypto assets have matured, and the era of soaring exponential growth is gone for good. He believes Bitcoin will never see a tenfold increase within a year again. "Bitcoin has grown so large that even doubling would be considered a very high return."

Even staunch cryptocurrency believers are reducing their crypto holdings and shifting toward the highly 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, at which point he was confident that Bitcoin "would never fall below $100,000."

However, the market turned against him. Last December, he exchanged a large number of Bitcoins and altcoins for stocks related to AI, including chip companies such as Intel. He still holds several hundred thousand dollars worth of Bitcoin.

Ryan Ho

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

The crypto market then decoupled from the performance of the U.S. stock market, 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 the past few months, a large number of crypto traders have started trading AI stocks, and the core reason is that related trading channels have been opened," Ryan Ho said.

Some crypto traders have also chosen to cash out, ending the previous surge in Bitcoin and mainstream altcoins.

Trader and digital artist Minh Le has recently liquidated part of his crypto assets to purchase a Ferrari, while allocating a significant amount 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, purchasing Litecoin with a credit card when it was popular; during the pandemic, he continued to increase investments using government relief checks.

Shortly after buying a meme coin issued by Trump, he cashed out significantly. The meme coin was launched just before Trump took office. "That was the fastest I've ever made money, and I knew it was time to exit."

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

Le said, "If digital paper profits can't be exchanged for real money to improve life and create wonderful experiences, then what’s the point of making money?"

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