Cryptocurrency is no longer attracting investors in the same way it did during previous market rallies, as more money and attention are now flowing into artificial intelligence (AI) stocks and other fast-growing technology sectors.
According to Bitwise Chief Investment Officer Matt Hougan, crypto is gradually shifting from being a popular momentum trade to becoming a contrarian investment. In other words, investors are no longer buying cryptocurrencies simply because prices are rising. Instead, they are becoming more selective and focusing on projects with strong fundamentals.
Hougan said many investors are currently attracted to opportunities in AI, robotics, and private technology companies such as SpaceX. Since the launch of ChatGPT in late 2022, AI-related stocks have become one of the strongest themes in financial markets, drawing significant investment away from digital assets.
Despite the recent weakness, Hougan does not believe interest in crypto is disappearing. Rather, he argues that the market is maturing and rewarding projects that can demonstrate real value, revenue, and practical use cases.
He noted that investors who remain interested in crypto are paying less attention to market hype and more attention to business fundamentals. Projects with strong products, active users, and sustainable growth are increasingly standing out from the crowd.
This trend has been reflected in market performance. While major cryptocurrencies such as Bitcoin, Ethereum, and Solana have struggled in recent months, some smaller digital assets have delivered stronger gains. According to Hougan, this suggests investors are becoming more selective instead of buying the entire crypto market.
Bitcoin has also faced additional pressure from several factors, including large outflows from spot Bitcoin exchange-traded funds (ETFs), weaker market sentiment, and investors shifting capital toward U.S. stocks, particularly in sectors linked to AI, defense, and energy.
Recent movements of large Bitcoin holdings have also added to market uncertainty, contributing to investor caution.
Even so, Hougan believes there are signs that parts of the crypto market remain healthy. He suggested that strong performance in selected projects could indicate the industry is closer to the end of the current downturn than the beginning.
Looking ahead, he expects the next phase of growth in the crypto market to depend less on excitement and speculation and more on regulation, adoption, revenue generation, and real-world utility.
In his view, the future winners in crypto will likely be the projects that can prove their long-term value rather than those driven primarily by short-term market enthusiasm.
