Bitcoin steadies as AI-stock bubble talk fuels rotation

Why AI stock froth could drive rotation into Bitcoin now

A growing macro thesis holds that pockets of artificial intelligence equities have become “silly big,” creating conditions for capital to rotate toward scarcer alternatives such as Bitcoin. The logic is straightforward: when enthusiasm concentrates in a narrow slice of growth leaders and valuations expand faster than underlying cash flows, investors often reassess risk and seek assets with supply constraints.

In this framework, Bitcoin’s fixed issuance schedule and 21 million cap can look comparatively defensive if AI-linked equity multiples cool. The same thesis allows for both trends to be structurally real, AI demand and Bitcoin adoption, while acknowledging that positioning extremes in one area can catalyze rebalancing into the other.

What Alden means by AI stocks getting silly big

One strand of the argument is that investors are extrapolating AI’s promise into hardware names in ways that stretch traditional valuation anchors. As reported by MacroVoices, markets at times have treated NVIDIA as if it “built AI from scratch,” despite it being fundamentally a hardware producer, a perception that can inflate expectations relative to the company’s core role.

The other strand is cycle awareness. Before the current AI buildout, semiconductor industries repeatedly traced deep boom-bust patterns, a dynamic that can reassert itself even during secular uptrends. “Semiconductors are infamously cyclical and have had repeated 75%+ drawdowns,” said Lyn Alden, macro analyst, in a January 2025 newsletter.

Immediate market impact: rotation signals and near-term watchlist

Rotation, if it emerges, tends to appear first in market internals. Breadth deterioration among mega-cap AI leaders, softening earnings revisions across semiconductor supply chains, and a turn in financial conditions or system liquidity can all be early tells; a rise in inflation-adjusted (real) yields would usually work the other way.

At the policy level, AI-driven productivity could introduce disinflationary impulses that give central banks more room to ease without stoking price pressures; according to CryptoBriefing, that pathway would typically favor scarce or monetary alternatives over richly valued growth stories. In parallel, coverage by BTCC.com of the Bitcoin 2025 Conference highlighted that persistent fiscal deficits and monetary debasement narratives continue to underpin the appeal of a capped-supply asset.

At the time of this writing, Bitcoin traded near $68,088, a level that provides context rather than a signal and may change rapidly in high-volatility conditions. None of these indicators guarantee rotation, but together they outline the conditions under which capital might shift from stretched AI exposures toward Bitcoin.

Valuation and concentration check: NVIDIA, semis cyclicality, and AI capex narratives

Concentration risk is central to this debate. When a handful of AI leaders account for an outsized share of index performance, even modest multiple compression in those names can pull broader benchmarks lower, which in turn can nudge multi-asset allocators to rebalance into uncorrelated or supply-limited assets.

A second consideration is the plumbing of AI demand. As reported by Coinlive, recent commentary described parts of the AI trade as a “frenzied, localized bubble phase,” with “crowded” positioning and even “incestuous” capital flows, companies buying capacity from each other, that may not be linear or durable. If that narrative collides with the semiconductor industry’s historical cyclicality, spending intentions and capex plans could normalize faster than top-down growth stories imply.

Finally, macro transmission matters for both sides of the ledger. If AI’s efficiency gains ease inflation at the margin and enable gentler rate policy, as outlined by CryptoBriefing, duration-sensitive growth stocks could get relief, yet the same environment often lifts alternative monetary assets. In that scenario, the debate becomes less either-or and more about how quickly exuberance in AI equities cools relative to a steady bid for Bitcoin’s scarcity.