Crypto Biz: Is the AI-to-crypto rotation underway?Bitcoin ETF inflows, cooling AI momentum and potential regulatory progress under the CLARITY Act are fueling speculation that capital is rotating back into crypto.

Crypto markets experienced renewed activity recently, driven largely by institutional investors who contributed to the longest streak of inflows into U.S. spot Bitcoin exchange-traded funds (ETFs) since April. Over six consecutive trading days, these ETFs attracted $203.1 million in fresh capital, totaling around $930 million for that period as Bitcoin briefly surpassed $67,000. Since their launch in January 2024, U.S. spot Bitcoin ETFs have amassed $51.8 billion in cumulative net inflows and hold $80.9 billion in net assets, although they are down $4.84 billion year-to-date in net flow. Analysts suggest Bitcoin needs to sustain prices above the $65,000 to $65,500 range to support a bullish breakout.

The broader crypto rally has coincided with positive developments in U.S. crypto legislation, notably with comments from Treasury Secretary Scott Bessent that lawmakers are close to passing the CLARITY Act. This proposed legislation would establish a clearer regulatory framework for digital assets, boosting market optimism. At the same time, investor enthusiasm for artificial intelligence (AI) stocks appears to be waning after nearly two years of dominance, with the Philadelphia Semiconductor Index (SOX)—a benchmark for AI chipmakers—falling more than 20% from its recent highs. These factors have led some analysts to speculate that capital is rotating from AI back into crypto.

Within the crypto sector, Bitcoin mining companies have notably benefited from deals involving AI infrastructure. Hut 8 and IREN announced substantial AI-related agreements: Hut 8 secured a 15-year, $9.8 billion lease for its AI data center campus, while IREN disclosed $2.8 billion in cloud services contracts with AI developers. These moves highlight how miners are diversifying their business models amid challenges in Bitcoin mining economics, with IREN projecting over $4 billion in annual AI cloud revenue by 2026. However, experts caution that realizing these AI ambitions will require roughly $50 billion more in capital, and there are concerns about execution and funding.

Separately, Bernstein raised its price target for Robinhood shares to $160, maintaining an Outperform rating based on the firm’s belief that tokenized assets and prediction markets will drive the company’s long-term growth more than traditional crypto trading. Bernstein forecasts that prediction markets could generate $1.7 billion in revenue by 2028 and sees tokenized equities as a major opportunity facilitated by Robinhood’s layer-2 Arbitrum network. This outlook aligns with a broader push on Wall Street toward blockchain-based securities infrastructure, involving firms like Broadridge and Cantor Fitzgerald.

Overall, the article suggests that improving regulatory clarity, cooling AI momentum, and renewed demand for Bitcoin ETFs are creating a more constructive atmosphere for the crypto market in recent weeks. However, while these signs indicate potential rotation of speculative capital back into crypto, analysts emphasize that it is still early to confirm this as a sustained trend.