Retail Investors Flee Bitcoin Amid Rising Volatility, Rush Into AI Stocks

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

Amid extreme volatility and a crisis of confidence in the virtual asset market, retail investors are moving in large numbers to the stock market centered on artificial intelligence (AI), which has shown steady growth.

On February 26 (local time), cryptocurrency-focused outlet Benzinga reported that in 2026, the trend of retail investors turning away from virtual assets such as Bitcoin (BTC) and shifting toward the stock market is accelerating. Unlike the fear that pervades the crypto market, the growing appeal of the traditional financial market—particularly AI technology stocks—is driving a major capital rotation.

Tom Lee, co-founder of Fundstrat, assessed that the sell-off in virtual assets and big tech has already entered bottom territory. He stated that the downturn in crypto and big tech has “entered its final stage.” He further analyzed that the decline of the “Magnificent 7” is about 95% complete, while the software sector sell-off has progressed to roughly 99%.

The market remains on edge as Bitcoin and Ethereum (ETH) options worth $8.9 billion are set to expire, heightening concerns over volatility. In contrast, earnings guidance from leading AI companies such as NVIDIA is acting as a strong buy signal for retail investors. Expectations that the Federal Reserve will implement four rate cuts this year are also cited as a key factor supporting investor sentiment in the stock market.

Analysts at Bernstein noted that the current slump in the virtual asset market is not due to technical flaws at exchanges or custodians but rather stems from a simple crisis of confidence. Despite solid Bitcoin spot ETF holdings and a declining circulating supply, retail investors are choosing the stock market—where performance is immediately visible—over crypto, even amid warning signals from the so-called Buffett Indicator suggesting bubble risks.

As retail investors’ preference for equities becomes more pronounced, capital inflows into the virtual asset market remain stagnant. With the AI boom in equities continuing, the trend of crypto being pushed down the priority list in asset allocation is clearly reflected in market indicators.

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