Undoubtedly, artificial intelligence is one of the biggest competitors for speculative investment capital in financial markets.
However, according to Jeff Park, a former Bitwise portfolio manager and current advisor to the crypto asset manager, the AI boom could end up becoming a catalyst for BTC, which is a rather unpopular opinion within the cryptocurrency sector.
Crypto Event Calendar
He argued that the enormous wealth being created by AI is bullish for BTC because the financial structures supporting that boom will not last indefinitely. “Its hard to believe this right now but all this AI wealth creation is very bullish for BTC,” Park wrote.
His unorthodox take is based on an asset-liability mismatch. Park believes the resulting financial positions could eventually become unstable. Capital could end up fleeing riskier or more heavily leveraged assets and seek alternatives such as Bitcoin.
Park believes that BTC is an “infinite duration asset” that could be waiting for that eventual rotation of capital.
Chipping away at crypto's potential
AI has become one of the dominant investment narratives in global markets.
Reuters reported in June that Bitcoin was suffering as investors moved their attention toward booming AI-related stocks.
That means a booming AI-driven stock market can potentially make Bitcoin look less attractive, and capital is not unlimited.
If the S&P 500 is rising because AI-related companies are generating extraordinary earnings expectations, an investor may have less incentive to take the additional volatility associated with Bitcoin.
This explains why crypto continues to underperform despite the fact that risk appetite remains strong.
Crypto Event Calendar
However, Park sees the AI boom as a potential source of future demand.