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Bitwise: AI stocks are siphoning momentum from crypto
Bitwise chief investment officer Matt Hougan warned that fast-moving AI equities and other high-growth sectors are diverting investor capital and attention away from digital assets. In a June 2 market note, Hougan pointed to AI-linked chipmakers, robotics names and high-profile private companies as attractive alternatives that have dented crypto’s momentum trade.
From momentum trade to contrarian bet
Hougan argues the crypto market has shifted. Where price action and market hype once drew the majority of flows, investors today are increasingly treating crypto as a contrarian allocation that demands patience and rigorous fundamentals. “The crypto market is brutal right now,” he wrote, noting that the new investor base favors projects with clear revenue models, measurable adoption and tangible utility on-chain.
Why AI stocks have become a magnet for capital
The AI trade that accelerated after the public launch of ChatGPT in late 2022 has persisted into 2026. Nvidia and other AI infrastructure names delivered outsized returns, pulling discretionary money from other risk assets. That rotation has manifested in equity outperformance across AI, defense and select energy segments this quarter, according to market observers and research firms tracking capital flows.
Bitcoin and major altcoins feel the strain
Bitcoin has been particularly affected by the rotation and by outflows from U.S. spot Bitcoin ETFs. BTC slipped below $70,000 amid a reported $483 million in daily net ETF outflows, extending an 11-session streak of withdrawals that exceeded $3.4 billion. Those ETF redemptions, combined with equity market rotation into AI and related sectors, have pressured sentiment across the crypto market.
Supply and on-chain events add pressure
Compounding the bearish tone, wallets linked to the Mt. Gox saga moved 10,306 BTC — roughly $739 million — in transactions that raised concern about potential new supply entering exchanges. While there was no confirmed large-scale sale at the time, the transfer amplified short-term volatility for Bitcoin and major altcoins.
Smaller tokens showing pockets of resilience
Despite the headwinds facing Bitcoin, some mid- and small-cap tokens outperformed in May. Hougan pointed to assets such as Hyperliquid, BNB, Zcash and Stellar as examples where clearer narratives, on-chain usage and business-model signals attracted renewed interest. That performance suggests the market is rewarding select fundamentals over blanket crypto exposure.
Fundamentals, regulation and cycle timing
Looking ahead, Bitwise’s view implies the next phase of crypto’s cycle will hinge on three factors: demonstrable project fundamentals (revenue, user growth, and real-world use cases), regulatory clarity that reduces investor uncertainty, and whether capital rotates back after the AI trade cools. For investors, the emphasis is shifting from speculative momentum plays to long-term, data-driven allocations in blockchain projects and digital assets.
What this means for crypto investors
For traders and portfolio managers, the message is clear: crypto is no longer a guaranteed momentum engine. Those who remain bullish are focusing more on fundamentals, business model validation and regulatory developments. As capital reallocates across public markets, projects that can demonstrate durable value capture and on-chain utility are likeliest to attract the next wave of institutional and retail flows.
Overall, Bitwise’s cautionary stance does not pronounce the death of crypto; rather, it reframes the market as a place where patient, fundamental investors may find opportunities while momentum-driven strategies lose their edge.
Source: crypto
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