Daniel Koss piled into bitcoin thinking crypto would revolutionize finance. Then AI came along.
The 30-year-old investor thought the rapidly developing technology had the potential to upend entire industries, and he rushed to get in on the action. He dumped his six-figure position in bitcoin in August last year and is now entirely invested in artificial intelligence.
"I felt a bit like a cave man who found fire," said Koss, who is based in Zug, Switzerland.
Koss's pivot reflects a broader migration across markets over the past year: individual traders and hedge funds alike dumping bitcoin and other tokens to chase AI stocks. The rotation helps explain why bitcoin has remained stuck at around $60,000 after crashing from its record high of more than $126,000 in October, when President Trump's threat of new tariffs on China sent investors fleeing riskier assets.
Chip makers and other AI stocks, meanwhile, have posted the kind of surges once associated with crypto.
"What's happening in crypto is the purge is just getting started," said Mike McGlone, senior commodity strategist at Bloomberg Intelligence.
Koss has no plans to trade bitcoin again any time soon, saying he believes the asset has matured to a point where explosive, parabolic gains are a thing of the past. He said he doesn't think there will ever again be a year where bitcoin's value increases 10-fold. "I think even doubling is high because it's so big," he said.
Even some die-hard crypto believers have trimmed their positions in favor of fast-moving AI shares.
Ryan Ho, founder of social-trading app Legend, said he held a seven-figure bitcoin position when the digital currency traded near $120,000. At the time, he believed it would "never go below $100,000 again," he said.
Then it did just that. By this past December, Ho had rotated out of many of his positions in bitcoin and altcoins into chip makers and other AI stocks, including Intel. He still has a few hundred thousand dollars invested in bitcoin.
The 25-year-old said a key driver behind his exit was the structural weakness in the crypto market. In Ho's view, the crypto market stopped behaving like a healthy risk asset after the October crash. Buyer demand dried up and institutional capital rotated to AI.
The market subsequently decoupled from stocks, which continued to climb. Ho said the potential for AI's growth was more compelling to everyday investors because it was grounded in real-world uses, such as from ChatGPT to AI-assisted coding.
Another factor fueling the switch from crypto to AI: Popular trading platforms for crypto traders, such as Hyperliquid, embraced AI derivatives.
"That's why most crypto traders started trading AI equities over the past few months. It's just because it just became available to do," Ho said.
Other crypto traders simply wanted to cash out after a blistering run for bitcoin and major tokens.
Minh Le, a trader and digital artist, said he recently sold some to buy a Ferrari. He also rotated a meaningful portion of his gains into Japanese anime-based collectibles including One Piece and Pokémon trading cards.
Le said he built digital wealth through nonfungible tokens and memecoins. The Los Angeles-based trader got his start in 2017, purchasing litecoin, a once-popular cryptocurrency, on a credit card, before scaling up his bets using stimulus checks during the pandemic.
Le cashed out aggressively soon after buying up Trump's memecoin, which the president launched right before his inauguration. "That was some of the fastest money I've ever made in my life," he said. "I knew that was the time to step away from the table."
Now after several months away, Le is dipping his toes back into crypto. He is taking a more conservative approach this time, investing in assets he thinks could have real-world uses, such as a stablecoin that is used to make payments.
"If you cannot change these digital profits for real profit and real cash that you use to live and have amazing experiences, what's the point?" Le said.
Comments