Will money flow into crypto if AI trade fizzles? Analysts weigh in

The artificial intelligence (AI)-driven rally in global equities has pushed valuations higher, prompting investors to question how long the momentum can continue.

 

As the debate intensifies, another question is emerging: if the AI trade loses steam, could cryptocurrencies such as Bitcoin become the next destination for risk capital?

 

For much of 2025 and into 2026, AI has remained the dominant investment theme, with companies linked to semiconductors, cloud computing, automation and data-centre infrastructure attracting strong investor inflows. Nvidia, Microsoft, Alphabet, Amazon and Meta have led the rally, while chipmakers Samsung Electronics and SK Hynix have also benefited from rising demand for AI infrastructure.

 

At the same time, Bitcoin has taken a different trajectory. After touching an all-time high of over $126,000 in October 2025, the world's largest cryptocurrency has corrected sharply, prompting investors to assess what could reignite interest in the asset class.

Analysts see AI and crypto as separate themes

SB Seker, head of APAC at Binance, believes AI and crypto should not be viewed as competing investment themes.

 

"AI and digital assets and blockchain are distinct technology shifts, and risk flows are typically influenced by macro conditions, liquidity, and regulatory clarity, rather than one theme replacing another," said Seker.

 

He added that crypto continues to mature as an asset class through expanding real-world use cases and improving market infrastructure, and could benefit alongside other growth assets if overall risk appetite remains constructive.

 

Harish G. Vatnani, head of trade at ZebPay, echoed a similar view, saying investors generally diversify across asset classes rather than concentrate capital in a single investment theme.

 

"The crypto market has already undergone a significant correction, and valuations appear more balanced than during previous peaks," he said. Vatnani added that while AI and blockchain technologies are increasingly converging to create new opportunities, crypto should ultimately be assessed on its own adoption, utility and long-term fundamentals rather than as a direct alternative to AI investments.

Tokenisation brings equities and crypto closer

Ryan Lee, chief analyst at Bitget Research, meanwhile, argues that tokenisation is increasingly bringing the two markets together.

 

"Digital assets were never meant to compete with traditional equities," Lee said. "With the advent of tokenised equities, the line between stock markets and crypto is almost negligible."

 

According to Lee, investors are increasingly accessing both traditional and digital assets through converged investment platforms, allowing capital to flow across asset classes rather than forcing an "AI versus crypto" decision.

Could capital still rotate into Bitcoin?

While analysts broadly agree that AI and crypto are not mutually exclusive themes, views diverge on whether an AI correction could eventually benefit Bitcoin.

 

Rajagopal Menon, Vice President at WazirX, said Bitcoin does not require an AI unwind to continue attracting investors.

 

Institutional adoption, expanding ETF ownership, corporate treasury allocations, improving regulatory clarity and Bitcoin's fixed supply are the cryptocurrency's primary growth drivers, he said. An AI-led rotation, he added, would simply provide an additional tailwind.

 

However, Menon cautioned that an AI correction may not immediately benefit crypto.

 

"An AI correction could just as easily drag Bitcoin down," he said, noting that both AI stocks and cryptocurrencies respond to broader liquidity conditions and investor sentiment. At the same time, he argued that if investors begin taking profits from richly valued AI stocks, part of that capital could eventually rotate into Bitcoin through portfolio diversification.

 

Seker also struck a cautious note, saying market corrections typically lead investors to reassess risk across multiple asset classes rather than automatically shifting capital from one sector to another.

What could revive crypto?

Although opinions differ on whether an AI slowdown would trigger capital rotation into crypto, analysts broadly agree on the factors that could drive Bitcoin's next leg higher.

 

Seker cited clearer signals on US interest rates and liquidity conditions, stronger earnings visibility across risk assets, continued adoption of stablecoins and tokenised assets, and greater regulatory clarity as key catalysts.

 

Vatnani believes Bitcoin's correction since its October 2025 peak has helped establish a stronger price base, with improving investor confidence likely to support the next phase of the market cycle.

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Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.