Cryptocurrency markets showed renewed signs of life this week as institutional investors sparked the longest streak of inflows into U.S. Bitcoin spot funds (ETFs) since April and cryptocurrency-related stocks rose on optimism about U.S. regulation. But a more intriguing story may be playing out beyond cryptocurrencies: AI’s grip on speculative capital is beginning to loosen.

After nearly two years of dominating the markets, AI trading is becoming increasingly selective as investors distinguish between companies making stable profits and those in the hype cycle. The Philadelphia Semiconductor Index, or SOX, recently entered a technical bear market after falling 20% ​​from its recent high, although it remains well above year-ago levels.

Some analysts believe the shift could mark the beginning of a broader return to digital assets. While it’s too early to call it a lasting trend, improved regulatory clarity, a revival in ETF demand, and waning enthusiasm for artificial intelligence are creating a more constructive backdrop for cryptocurrencies than investors have seen in months.

Bitcoin ETFs are seeing a six-day streak of inflows as market sentiment improves

US Bitcoin spot ETFs extended their inflow streak to six consecutive trading days, attracting $203.1 million in fresh capital as institutional demand showed initial signs of recovery.

The latest inflows brought the six-day total to around $930 million, marking the longest streak for funds since April, when Bitcoin briefly rose above $67,000. The renewed demand coincided with improved market sentiment, and the Crypto Fear & Greed Index returned from “extreme fear” to “fear”.

Since launching in January 2024, U.S. Bitcoin spot ETFs have attracted cumulative net inflows of $51.8 billion and currently have net assets of $80.9 billion, although year-to-date they are down $4.84 billion. Analysts say Bitcoin needs to hold above the $65,000-$65,500 range to strengthen the case for a sustained bullish breakout.

Crypto rally is gaining momentum as artificial intelligence trading shows signs of cooling down

The rally in Bitcoin and broader digital asset markets has coincided with progress in U.S. cryptocurrency legislation and a cooling in artificial intelligence trading, fueling expectations that capital may return to cryptocurrencies.

The broader cryptocurrency market surged along with cryptocurrency-related stocks, with Coinbase, American Bitcoin and Cipher Digital posting double-digit percentage gains. Sentiment improved after US Treasury Secretary Scott Bessent said lawmakers were on the 1-yard line on the CLARITY Act – legislation that would establish a regulatory framework for digital assets.

Analysts also pointed to weakening momentum in AI stocks as another potential catalyst. FRNT Financial CEO Stephane Ouellette said slowing enthusiasm for AI stocks and growing confidence in the interest rate outlook could support Bitcoin’s breakout. The SOX index, the benchmark for AI chipmakers, has recently fallen more than 20% from its recent peak following concerns about elevated valuations and spending on AI infrastructure.

AI infrastructure deals are driving Bitcoin mining stocks higher

Bitcoin mining stocks rose after Hut 8 and IREN unveiled multibillion-dollar deals for artificial intelligence infrastructure, boosting the sector’s lucrative shift toward data centers and cloud computing as digital asset markets continued to struggle.

Hut 8, IREN, Cipher Digital, CleanSpark and MARA Holdings gained after Hut 8 announced a 15-year lease for its AI data center campus for $9.8 billion and IREN disclosed $2.8 billion in cloud services contracts with AI developers. The deals highlight how miners are diversifying beyond Bitcoin production as the economics of mining become increasingly challenging, with IREN now forecasting more than $4 billion in annual recurring revenue from the AI ​​cloud by the end of 2026.

While investors have appreciated the shift toward artificial intelligence, analysts say it also raises up-to-date questions about execution and financing. Blocksbridge Consulting estimates that the sector will need about $50 billion in additional capital to achieve its AI ambitions, even as insider stock sales come under increasing scrutiny.

TEM AI infrastructure growth rate. Source: Energy Storage

Bernstein sees tokenization and prediction markets driving Robinhood’s next phase of growth

Bernstein raised his price target on Robinhood, arguing that the brokerage’s long-term growth will be driven by tokenized assets and prediction markets rather than conventional cryptocurrency trading.

The investment firm raised its price target on Robinhood shares to $160 from $130, while maintaining its Outperform rating. Analysts forecast that prediction markets will become the company’s fastest-growing business, generating $1.7 billion in revenue by 2028. Bernstein also identified tokenized stocks as a major growth opportunity, citing Robinhood’s Arbitrum-based Layer 2 network as a key infrastructure for moving real-world assets onto the network.

The bullish outlook comes as Wall Street accelerates the development of tokenization and companies such as Broadridge, Alpaca, Securitize and Cantor Fitzgerald develop blockchain-based securities infrastructure.

Bernstein identified prediction markets, perpetual futures and tokenized stocks as key competitive battlegrounds for Robinhood. Source: Bernstein

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