Bitwise: AI stock surge makes crypto a contrarian bet

Bitwise Chief Investment Officer Matt Hougan wrote in a market note on Tuesday that a surge in stocks tied to artificial intelligence is drawing institutional money away from cryptocurrencies. “The crypto market is brutal right now,” he wrote, citing strong demand for AI, robotics and space-related equities.

The note highlighted that the Nasdaq-100 is roughly 43% higher year‑over‑year and that Nvidia shares have risen about 1,500% since the public debut of ChatGPT in late 2022. Hougan linked that rally to reduced investor attention on crypto.

He wrote that the flow into AI has forced crypto to shift from a momentum trade to a contrarian investment that must compete on fundamentals rather than hype. Hougan added that contrarian bets tend to produce uneven returns and require patience, a long time horizon and a close look at project fundamentals.

Market data on Tuesday showed global crypto market capitalization fell about 5.3% to roughly $2.38 trillion, roughly 46% below its October peak and the lowest level in two months.

Hougan noted this cycle differs from earlier downturns because capital is not simply retreating to Bitcoin. He said money is moving into smaller tokens viewed as having stronger fundamentals, naming HYPE, which rallied about 70% in May, and Stellar as examples.

When crypto stops being a momentum trade, fundamentals start to matter — and this rotation is proof it’s already underway.

Hougan cautioned that contrarian performance can be uneven and that investors should expect a slow, selective recovery. He said selective gains tied to real usage could signal the market is moving into a later phase of the bear cycle.

With significant institutional inflows into AI-related equities, market participants will monitor adoption figures, regulatory developments and on‑chain activity to assess whether assets grounded in fundamentals can sustain gains.