AI Boom Draws Capital Away From Bitcoin, Bernstein Warns of 2026 Slowdown

Bernstein said Bitcoin’s increasingly diversified investor base continues to strengthen its long-term store-of-value case.

The Wall Street broker argues that Bitcoin’s recent weakness is being driven more by slowing capital inflows than by concerns such as quantum computing or other structural risks.

Fears around future quantum computing breakthroughs—which could theoretically undermine Bitcoin’s cryptographic security—have resurfaced in crypto discussions, especially after Google research suggested the computing power required to challenge blockchain systems may be lower than previously believed.

Bernstein noted that Bitcoin treasury companies and spot ETFs have together drawn about $12 billion in inflows so far in 2026, a sharp decline from roughly $60 billion in 2025. ETFs alone have seen around $2.6 billion in net outflows from a $75 billion asset base, with most new demand coming from corporate buyers led by Strategy.

Analysts said the slowdown is mainly due to retail investors shifting toward AI-related opportunities, with some of the strongest crypto performance this year concentrated in tokenized equities and commodities.

However, they added, “Bitcoin still may offer some diversification from the unusual singular AI driven momentum markets we have experienced this year.”

Bernstein also viewed the relatively small ETF outflows as a positive sign, suggesting Bitcoin ownership is becoming less dependent on short-term retail momentum.

Bitcoin has struggled in recent months, falling from about $82,000 in early May to around $63,000, a decline of more than 20%. It briefly slipped below $60,000 last week—its lowest level since October 2024—and remains roughly 50% below its October 2025 peak near $126,000.

The downturn has been linked to persistent ETF outflows, weaker risk appetite, and a broader rotation of capital into AI-driven equities and major stock offerings.

Unlike earlier cycles dominated by retail traders, today’s market includes ETFs, corporate treasuries, wealth managers, pension funds, and sovereign investors, creating a more diversified ownership structure that Bernstein views as more resilient.

While Bitcoin has lagged behind AI-driven market momentum this year, Bernstein argued that its subdued performance does not weaken the long-term thesis and may even indicate a healthier market structure.

Citing Citi research, spot Bitcoin ETF flows are estimated to account for roughly 45% of weekly price movements, underscoring their importance as a key demand indicator.

At the time of writing, Bitcoin was trading near $62,600.