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- Crypto is shifting from hype-driven momentum to a fundamentals-focused investment.
- AI stocks are absorbing most institutional capital and market attention.
- Analysts see current conditions as a potential late-stage bear market phase.
Crypto markets are undergoing a noticeable shift as institutional investors increasingly favor artificial intelligence and tech-heavy equities over digital assets. According to Bitwise Chief Investment Officer Matt Hougan, this change is reshaping crypto’s identity from a momentum-driven trade into a more patience-based, fundamentals-focused investment. While AI stocks continue to surge, crypto is now being viewed through a colder, more selective lens.
AI Boom Redirects Institutional Attention
The explosive rise of AI-related equities has significantly altered capital flows. Since the public release of ChatGPT, companies tied to artificial intelligence have seen extraordinary gains, with major semiconductor and infrastructure firms posting multi-year rallies. This has left fewer short-term catalysts for crypto to compete for attention.
Hougan noted that when high-growth sectors like AI, robotics, and space technology dominate market narratives, digital assets lose their momentum appeal. Instead of chasing hype, investors are now allocating capital to sectors showing visible earnings acceleration and strong equity performance.
Crypto’s Shift From Momentum to Fundamentals
This environment is forcing crypto into a structural transformation. Rather than relying on speculative enthusiasm, the market is increasingly being judged on real-world utility, adoption trends, and on-chain activity.
Market observers suggest this evolution is already influencing capital rotation within crypto itself. Smaller assets with clearer use cases and stronger ecosystems are attracting attention, signaling a more selective investment approach. Analysts also argue that regulatory progress and improving infrastructure are helping reinforce this fundamentals-first mindset.
A Painful but Potentially Maturing Phase
Hougan emphasized that contrarian investments often move slowly and unevenly, lacking the rapid upside seen in momentum-driven cycles. However, he also suggested that this phase may indicate crypto is closer to a long-term bottoming process than a fresh downturn.
Some analysts share this view, noting that while AI continues to dominate institutional portfolios, crypto is quietly positioning itself as a differentiated, high-upside alternative for investors willing to tolerate volatility.
Also Read: Bitwise Calls Hyperliquid “Most Mispriced” Crypto as HYPE Jumps 77% in 2026
As capital concentrates in artificial intelligence and broader tech markets, crypto is being reclassified into a more patient, conviction-driven trade. The shift may feel uncomfortable for traders used to fast-moving cycles, but it could also mark an important step in the sector’s long-term maturation.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
