In the ever-evolving landscape of tech and finance, Bitcoin’s next significant price surge may be catalyzed by the overvaluation of artificial intelligence (AI) stocks, according to macroeconomist Lyn Alden.
“It could be that the AI stocks eventually just peak, they get so silly big that they can’t get realistically much higher,” Alden told Natalie Brunell on the Coin Stories podcast. When an asset’s price reaches a level where further gains are difficult to justify, investors often reallocate their capital to other opportunities with more potential upside. With Bitcoin (BTC) currently trading at $67,849, down 24.49% over the past 30 days, Alden suggests it could be a prime beneficiary of such a rotation.
The AI Stock Bubble and Bitcoin’s Opportunity
Some financial analysts are already questioning whether the largest AI stocks will maintain their momentum. Jason Ware, chief investment officer at Albion Financial Group, recently expressed doubts about the sustainability of Nvidia’s (NVDA) growth. “We all know they are the most concentrated, obvious winner in the AI build-out. Can that growth continue in a way that supports the stock moving higher?” Nvidia’s stock price is up 35.48% over the past 12 months, and while it remains a dominant player, the market is beginning to scrutinize its future prospects more closely.
As investor interest in AI has surged, Bitcoin has found itself competing for capital in a way it never has before. Mark Carallo, a Bitcoin developer, noted this shift in capital allocation. However, Alden believes that Bitcoin doesn’t need a significant influx of new capital to move higher. “It only takes a marginal amount of new demand to come in,” she said, adding that long-term holders effectively “put the floor in” as short-term traders rotate out.
The Role of Long-Term Holders
Alden emphasized the importance of long-term holders in stabilizing Bitcoin’s price. “The coins rotate from fast money hands to strongly held hands; they are really not going to want to part with it unless it goes up like 5X or more, that kind of buyer,” she explained. This dynamic suggests that even a modest increase in demand could have a significant impact on Bitcoin’s price.
A Gradual Recovery
Despite the potential for a bullish catalyst, Alden does not expect a quick, near-term surge in Bitcoin’s price. “Bitcoin rarely makes V-shape bottoms outside COVID stimulus-type events. It normally hits a low level then goes sideways for quite a while,” she said. She predicts a more gradual recovery, with the possibility of Bitcoin moving $10,000 or $20,000 lower before it starts to climb again.
Alden’s insights highlight the complex interplay between traditional tech stocks and cryptocurrencies. As the market continues to evolve, the relationship between AI stocks and Bitcoin could play a crucial role in shaping the future of both sectors. For now, investors should keep a close eye on the performance of AI stocks, as their trajectory could provide a valuable indicator of Bitcoin’s next move.
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