Over the past two years, global markets have entered a striking asymmetric divergence. On one side, artificial intelligence-related equities have surged, driven by massive capital inflows and strong narrative momentum. On the other hand, Bitcoin that used to be innovators’ favourite has moved in a comparatively slower, more muted trajectory. This imbalance has led analysts to wonder when the current phase that might be described as a “Bitcoin summer turned winter” will be over and what can help the pioneer crypto reap heavy gains once again. Perhaps, BTC can not reach past its prime once more?
However, many analysts believe this Bitcoin underperformance is not necessarily a sign of weakness. Instead, it reflects a broader reallocation of capital, shifting narratives, and macroeconomic conditions that currently favor AI equities over alternative assets like Bitcoin. Yet, some factors suggest the situation might as well improve by the end of the year.
Today, Bitcoin has lost roughly half its value since hitting an all-time high of $126,198.07 in October 2025. It is trading at about 65,600 USD at the moment of writing, and this fall has less to do with Bitcoin itself than (surprisingly) AI stock unstoppably growing popularity.
Why AI stocks are dominating market attention
The core driver of AI stock outperformance is simple: narrative concentration. Investors across venture capital, public markets, and institutional portfolios are converging on a single theme — artificial intelligence as the defining technological shift of the decade.
In a recent conversation with Natalie Brunell, Strategy Executive Chairman Michael Saylor explained that the wave of artificial intelligence megadeals (e.g. SpaceX merged with xAI, Anthropic, OpenAI, etc) was pulling capital out of Bitcoin. However, he also predicted the money would rotate back by the end of the year.
“I think that right now we’ve got this AI summer and you’ve got SpaceX as an AI company raising a bunch of money and Anthropic and OpenAI and Google and Meta and every one of them, you know, we’re talking about 500 billion dollars of capital they’re working to raise in order to power up their AI data centers. That’s creating a hot set of deals that Wall Street is marketing. Everybody wants to get into the deal. […] While those deals are coming, they’re creating a suction and they are sucking capital out of every other asset class and 1-2% of that capital is coming from Bitcoin. Once the deals have gone through then the early hedge funds and traders flip it and rotate back the other way so the hot money will come back and then eventually the lockups will expire and then everybody that got rich out of those things, they will go and diversify and they’ll come back into Bitcoin.”
Unlike previous tech cycles, AI is not being treated as a niche sector with vague promise. It is already seen as an infrastructure-level transformation, affecting software, hardware, finance, payments, labor markets, and productivity itself. Companies providing semiconductors, cloud computing, and foundational models have become the primary beneficiaries of this belief.
This has created a powerful feedback loop. Rising valuations attract more capital, which fuels further optimism, pushing prices even higher. In this environment, AI equities behave like a magnet for global liquidity, often overshadowing other asset classes, including crypto.
Why Bitcoin is lagging behind
Despite its status as the most established digital asset, Bitcoin is currently facing structural headwinds relative to AI stocks.
1. Capital rotation into “clearer growth stories”
Institutional investors tend to prefer assets with predictable earnings growth. AI companies, despite high valuations, are still tied to identifiable revenue models. Bitcoin, by contrast, is primarily a monetary and macro asset, which makes its valuation less intuitive for traditional portfolio managers. Therefore, it has been steadily falling, causing a wider crypto market crash in its wake.
2. ETF maturity and reduced volatility
The introduction of Bitcoin exchange-traded funds has been a long-term positive for adoption, but it has also changed market dynamics. As more institutional capital enters through regulated vehicles, price action becomes more stable but also less explosive in the short term.
Block Scholes, an institutional-grade crypto derivatives research, analytics, data and oracle provider, noted that “There is some evidence of a potential capital rotation, or at the very least, speculative froth, in perpetual futures contracts tracking real-world assets, as well as pre-IPO perps,” coinciding with the weakening in BTC and ETH sentiment. By the firm’s observations, the pre-IPO segment of the market has particular interest for investors. These perp contracts provide economic exposure to privately listed companies, and the ratio of pre-IPO perp volume to ETH notional perp volume increased from a negligible ~0.1% to a 3.0% peak in early June. Volume has jumped from a sub-$5M/day baseline to upwards of $50M/day as well, led by perp contracts tracking SpaceX. That trading trajectory supports Michael Saylor’s theory.
Chart by Block Scholes: HL daily notional (7d rolling): BTC and ETH on the left axis ($B scale); summed pre-IPO complex on the right axis ($M scale) so the late-May spike is visible at its own scale. BTC and ETH have drifted to the soft end of their range through 2026 while pre-IPO inflects sharply higher into late May / early June.
3. Competing macro narratives
For much of the past decade, Bitcoin’s dominant narrative was “digital gold” and financial sovereignty. Today, that narrative competes with AI’s much more immediate promise: productivity acceleration and economic transformation. In attention-driven markets, AI has simply been more compelling.
4. Interest rate environment
Higher interest rates have also played a role. When risk-free returns are elevated, investors tend to reduce exposure to speculative or non-yielding assets. Bitcoin, despite its maturity, still behaves partly like a risk-on asset in global portfolios.
Does this mean Bitcoin is losing relevance?
Not necessarily. Historically, Bitcoin has gone through cycles of extended underperformance followed by rapid catch-up phases. Its price behavior is strongly tied to liquidity conditions and investor sentiment rather than steady fundamentals.
Periods like the current one often resemble accumulation phases. Long-term holders and institutional investors build positions gradually, while attention is focused elsewhere. In this case, AI equities.
At the same time, analysts note that Bitcoin always comes back to the top of the trading charts. In his book, Bitcoin Supercycle, Michael Terpin, the founder of Transform Ventures, BitAngels, and Market Wire (now Globe Newswire), studies the so-called “Four Seasons of Bitcoin and how they have accurately predicted the direction of bitcoin price in every year since the first halving in 2012”. According to his theory, the four-year cycle and Bitcoin Summer that always lasts between nine and eleven months patterns are accurate “like clockwork”.
This way, the expert predicts that “the bottom will hit in early October 2026” between a worst-case scenario of $37,850 and the more likely bottom of $60,000. Following Terpin’s theory, the rest of the year and 2027 that comes next will be a low-volatility recovery year where Bitcoin “base-builds” before the next narrative phase begins. If that prediction comes true again, true “supercycle” will begin in late 2027 and continue into 2028.
What could change by the end of 2026
Several potential catalysts could shift Bitcoin back into a leading market narrative.
1. A global liquidity expansion cycle
If central banks begin sustained rate cuts or reintroduce accommodative monetary policy, liquidity conditions would likely improve. In such environments, historically, Bitcoin has tended to outperform as investors re-enter risk assets.
2. AI sector overheating and rotation risk
If AI valuations become excessively stretched, markets may begin rotating capital into alternative stores of value. Bitcoin could benefit as a secondary “risk-on hedge,” alongside gold and other macro assets.
3. Increased institutional integration
Growing adoption of Bitcoin in corporate treasuries, payment systems, and financial infrastructure could strengthen its long-term demand base. This would reduce reliance on speculative cycles and increase structural buying pressure.
4. Regulatory clarity
Clearer global frameworks around digital assets, particularly in the US and EU, could reduce perceived risk and unlock new institutional capital flows.
5. Evolution of Bitcoin’s utility layer
While Bitcoin is primarily seen as a store of value, improvements in scaling technologies and financial integration could expand its practical use cases, reinforcing its relevance in a broader financial ecosystem.
Conclusion
The current stage, where Bitcoin is losing ground while capital concentrates in AI deals, is less about decline and more about relative attention. AI has captured the imagination of investors, absorbing liquidity and dominating narratives. Bitcoin, meanwhile, is operating in a quieter phase of its cycle defined by consolidation rather than excitement.
However, financial history suggests that narrative dominance rarely lasts forever. As markets evolve and liquidity conditions shift, capital tends to rotate. If or rather when that happens, Bitcoin may once again move from the background to the center of global investment attention, potentially redefining its role in the next phase of the digital economy.
