Wedbush Securities analyst Dan Ives argues that Bitcoin (CRYPTO: BTC) is losing capital to artificial intelligence stocks as investors face a dollar-for-dollar allocation decision between the two asset classes.

Once In 100-Year Cycle Pulling Capital From Crypto

Ives explained the shift on Anthony Pompliano’s podcast. When investors have cash to deploy, they’re picking AI stocks over Bitcoin because the potential returns look bigger.

The AI trade represents a generational investment cycle that’s diverting attention and dollars from crypto.

“Risk assets—if you have a dollar, do you put it in this bucket, this bucket, or this bucket?” Ives stated. 

“When it comes to the AI trade and what’s happened in tech and the level of disruption, we’re talking like a once in 100-year type of cycle,” he added.

AI stocks give exposure to chip makers like Nvidia Corporation (NASDAQ:NVDA), cloud companies like Microsoft Corporation (NASDAQ:MSFT), and software companies building AI products. 

Bitcoin has struggled over the past year despite being up 15% over 90 days.

You Could Pick The Wrong AI Stock And Wish You Stayed In Crypto

Ives acknowledged the risk cuts both ways. Investors buying AI stocks face the challenge of picking the right companies, while Bitcoin offers a simpler bet.

“You could pick the wrong name here and then you’re like I should have stayed in crypto,” Ives explained.

Bitcoin has behaved differently than expected recently. Since the Iran war began, Bitcoin went up instead of down. Over three years, it beat both gold and the S&P 500 (NYSE:SPY).

Money Flows Back And Forth Like A Pendulum

Ives compared the capital shift to a pendulum swinging between different investment themes. 

He pointed to late 2024 when everyone said tech was dead and financials would lead the market.

“You cannot get caught up in narratives,” Ives stated. “You have to figure out what makes sense for you.”

Crypto isn’t going away and will stay part of portfolios. But right now, money is flowing into AI because investors see data centers getting built, chip shortages creating opportunities, and companies spending billions on AI infrastructure.

The battle comes down to where investors think they can make more money. AI offers 15% to 20% potential returns across multiple companies, while crypto offers a different risk-reward profile with higher volatility.

Image: Shutterstock