Capital Rotation From AI to Crypto Gains Momentum as Bitcoin ETFs Attract Institutional Demand

Bitcoin ETFs Attract Fresh Institutional Capital

US spot Bitcoin exchange-traded funds extended their winning streak to six consecutive trading days, pulling in $203.1 million in fresh institutional capital, according to latest trading data. The six-day total reached approximately $930 million, marking the longest such streak since April and propelling Bitcoin briefly above $67,000. Since their January 2024 launch, these funds have accumulated $51.8 billion in net inflows and now manage $80.9 billion in assets, though they remain down $4.84 billion on a year-to-date basis.

Sentiment metrics reflected the renewed interest, with the Crypto Fear & Greed Index recovering from “extreme fear” to “fear”—a meaningful shift toward optimism. Analysts noted that Bitcoin must hold above the $65,000-$65,500 support level to sustain what could become a more durable rally.

AI’s Cooling Momentum Opens Door for Crypto

After nearly two years of dominating speculative markets, artificial intelligence enthusiasm is beginning to fragment as investors distinguish between sustainable businesses and hype-driven plays. The Philadelphia Semiconductor Index, a bellwether for AI chip manufacturers, recently declined more than 20% from its recent peak—though it still trades well above year-ago levels. The shift reflects growing concerns about elevated valuations and aggressive AI infrastructure spending.

Observers believe this rebalancing could mark the start of a broader rotation back into digital assets. As noted by analysts including FRNT Financial CEO Stephane Ouellette, fading AI momentum combined with improved interest-rate expectations could support a breakout in Bitcoin prices and renewed institutional capital allocation to crypto.

Regulatory Progress and Institutional Adoption

Progress on US crypto legislation added fuel to the rally. According to US Treasury Secretary Scott Bessent, lawmakers are at the “1-yard line” on the CLARITY Act, which would establish the first comprehensive regulatory framework for digital assets. The prospect of regulatory clarity has brightened sentiment across crypto-linked equities, with major platforms like Coinbase posting significant gains.

Bitcoin mining firms are undergoing dramatic transformation as well. Hut 8 unveiled a 15-year, $9.8 billion lease for its AI data center campus, while IREN disclosed $2.8 billion in cloud services contracts with artificial intelligence developers, with the latter projecting more than $4 billion in annual recurring AI cloud revenue by year-end 2026. Blocksbridge Consulting estimates the sector will require approximately $50 billion in additional capital to achieve its AI ambitions. Beyond mining, investment firm Bernstein raised its price target on brokerage Robinhood to $160 from $130, citing long-term growth from prediction markets and tokenized assets. Bernstein forecasts prediction markets will generate $1.7 billion in revenue by 2028, while major Wall Street firms including Broadridge, Alpaca, Securitize and Cantor Fitzgerald expand blockchain-based securities infrastructure.

The convergence of improved regulatory sentiment, institutional ETF demand, fading AI speculation, and growing tokenization infrastructure suggests crypto markets are entering a new phase of institutional adoption and maturity. Renewed institutional demand and regulatory clarity could ignite a sustained crypto market recovery.

Source: US Treasury, via Cointelegraph. Not financial advice.