- When it hovered at all-time highs, crypto failed to keep momentum going.
- Instead, most investors’ attention seems to be locked on AI.
- AI, however, didn’t necessarily syphon a great deal of money away from crypto.
When ETF hype pushed Bitcoin to a new all-time high in early March, it seemed like the top cryptocurrency would reach the six-figure mark in no time.
Instead, momentum died down and crypto markets began moving sideways, with Bitcoin ranging between $56,500 and $73,000 for four months now.
That may be due to Wall Street’s fascination with artificial intelligence, according to Ram Ahluwalia, CEO of Lumida Wealth, a crypto investment advising firm.
“Crypto is a momentum asset,” Ahluwalia posted on X. But right now, “Nvidia and the AI theme owns the dominant zeitgeist.”
”Fast money capital that would ordinarily flow into crypto is going into Nvidia,” he added, referring to the number one supplier of semiconductors used in AI.
Ahluwalia drew comparison to the 2021 GameStop mania — pointing out that almost every time GameStop spiked, Bitcoin would consolidate.
And he isn’t the only person who has drawn parallels between AI and crypto.
Crypto “is the biggest economic movement of my lifetime, and from a technology point of view, it is rivalling AI,” ARK Invest CEO Cathie Wood stated at the State of Crypto Summit on June 13.
“But the institutional world does not quite understand that this movement is as big as that one,” Wood said. “There will probably be convergence at some point in time.”
Brian Armstrong, CEO of crypto exchange Coinbase, also noted the seasonal nature of the two industries at that same event.
“Both crypto and AI go through these summers and winters, and I keep hoping that sometime we’ll have a coordinated summer of AI and crypto at the same time,” he said.
By the numbers
While AI investments have certainly skyrocketed, the attention seems to have been syphoned from fintech more than from crypto.
That’s according to Elliot Chun, a partner at Architect Partners, a firm that advises crypto companies on financing strategies.
Chun told DL News that the AI sector had inked $41 billion in venture deals in the second quarter of 2024 alone, whereas fintech netted $14 billion, and crypto $3 billion.
By comparison, in the first quarter of 2022, AI deals amounted to only $21 billion, while fintech saw $40 billion in deals, and crypto $12 billion.
“So are crypto and AI intertwined? Probably not as much as we think,” Chun said.
Robert Le, a senior analyst at PitchBook, a provider of private market data, concurred.
”AI has genuinely been stealing everyone’s thunder in the last 18 months,” Le told DL News.
The best of both worlds
Chun and Le also noted that specific areas of crypto had benefited from the AI hype. These include projects at the intersection of both sectors, and Bitcoin miners that have started spinning up AI fleets.
Brian Rudick, a senior analyst at crypto trading firm GSR, told DL News that crypto AI projects had done remarkably well in a year that has yielded plenty of mixed results.
“One could even argue that the AI boom has caused greater investment and activity in crypto than otherwise would have been the case,” Rudick said.
“Negative sentiment is due more to a lack of new killer applications [and airdrops that lose value] than due to an alternative technology being more attractive,” Rudick added.
Tom Carreras is a markets correspondent at DL News. Got a tip about AI and crypto? Reach out at tcarreras@dlnews.com
