Bitcoin Rallies on Rotating Capital from AI Trade, Investors Warn of Government Intervention

The Bitcoin market has seen its strongest three-day rally since 2023, and prominent investors are now pointing to an exodus of capital from an overheated artificial intelligence trade. According to Steve Eisman, who sold his Google position in July, the entire market had become one crowded trade.

Bill Miller IV, chairman and chief investment officer at Miller Value Partners, echoed this sentiment, stating that Bitcoin is not just absorbing AI's spillover capital, but also serving as a structural hedge against government debt. He noted that this year's $1.8 trillion US budget deficit exceeds Bitcoin's entire market capitalization.

Miller attributed the reversal to growing doubt about AI capital expenditure returns and government interventions in the markets, including Japan's support of the yen and the US Treasury Department's decision to double its long-dated bond buybacks.