AI is draining crypto liquidity? Wintermute warns: capital rotation is reshaping Bitcoin and the crypto market

February 11 News, crypto market maker Wintermute pointed out in its latest market commentary that the artificial intelligence investment boom has lasted for several months, drawing available global funds and weakening the growth momentum of Bitcoin and the entire cryptocurrency market. The firm believes that if AI-related trading continues to dominate capital, digital assets may struggle to outperform other risk assets in the medium term.

Wintermute stated that the current market is experiencing a clear sector rotation, with large-scale capital flowing into AI stocks, which has compressed liquidity in the crypto space. Over the past year, driven by demand for chips, cloud computing, and automation, many leading AI companies saw stock price increases of over 200%, attracting significant institutional allocations. In contrast, Bitcoin and mainstream crypto assets, while still above the lows of the previous cycle, have lagged significantly behind the AI sector in terms of gains.

As a liquidity provider handling tens of billions of dollars in digital asset transactions daily, Wintermute observed through capital flows and position changes that more investors are shifting capital from the crypto market to the AI sector. This trend not only affects short-term price performance but also alters the market’s risk appetite structure.

Historically, when a particular sector outperforms consistently and consensus forms, valuations tend to rise rapidly, followed by potential corrections. Wintermute believes that once signs of cooling appear in the AI sector, some funds may flow back into high-volatility assets like Bitcoin, bringing new momentum to the crypto market.

However, some analysts point out that if AI stocks experience a sharp pullback, it could trigger broader market volatility and exert short-term pressure on all risk assets. Therefore, the movement of cryptocurrencies is not isolated but heavily influenced by macroeconomic conditions, capital structure, and investor sentiment.

Until the AI-led capital allocation phase concludes, Wintermute advises investors to stay vigilant about liquidity changes and industry rotation signals, as these factors may determine the rhythm of the next crypto market cycle.