Economist Says AI Stocks Severely Overvalued, Bitcoin Poised to Benefit

▲ Bitcoin (BTC), Artificial Intelligence (AI) / AI-generated image

An analysis suggests that excessive overvaluation of artificial intelligence (AI)-related stocks could redirect sidelined investment capital into Bitcoin (BTC), potentially igniting a new bullish engine for the cryptocurrency market.

According to crypto media outlet Cointelegraph on February 21 (local time), macroeconomist Lyn Alden recently stated on a podcast that if AI-related stocks reach irrationally inflated peaks, Bitcoin could emerge as a major beneficiary. Alden explained that when the price of a particular asset becomes difficult to justify further gains, capital naturally shifts toward other opportunities with greater upside potential. She noted that with Bitcoin currently down about 46% from its all-time high of $126,100 recorded last October, the present moment could be an opportune time for capital rotation.

On Wall Street, doubts are also emerging about the sustainability of AI-related stocks. Jason Ware, Chief Investment Officer at Albion Financial Group, questioned whether Nvidia (NVDA), the largest company by market capitalization on the Nasdaq, can sustain growth sufficient to justify its soaring share price. Although Nvidia’s stock has surged 35.48% over the past 12 months, making it one of the most influential stocks in the U.S. market, the intense investor focus on AI has placed Bitcoin in an entirely new competition for capital inflows.

Alden emphasized that Bitcoin does not require a massive wave of capital to rebound. Even a relatively small amount of new demand could be enough to push prices higher. While short-term traders are exiting the market, long-term holders are building a strong support base. Alden observed that Bitcoin is currently transitioning from the hands of short-term investors to long-term holders, who are unlikely to sell until prices rise at least fivefold.

Bitcoin is currently down approximately 24.49% compared to 30 days ago. Alden noted that without extraordinary events such as pandemic-era stimulus, Bitcoin rarely forms a V-shaped bottom and typically moves sideways for an extended period after hitting a low. Rather than staging an explosive rally, the market appears to be consolidating its price foundation.

Ultimately, Bitcoin stands at a critical inflection point amid broader macro trends, including a potential AI stock bubble burst and capital rotation. Alden assessed that while Bitcoin may undergo a tedious consolidation phase and could decline another $10,000 to $20,000 from current levels, this process is a necessary step toward long-term growth. Investors, she advised, should closely monitor signs of a peak in the AI market and the pace of capital inflows into Bitcoin, rather than overreacting to short-term price fluctuations, in preparation for the next major rally.

*Disclaimer: This article is for investment reference only and the publisher is not responsible for any investment losses resulting from its use. The content should be interpreted for informational purposes only.*