Ethereum on Track to Overtake Bitcoin as AI's Easy Money Disappears

Veteran investor Jordi Visser believes that AI's easy-money phase is coming to an end due to heavy spending by Big Tech companies. This could lead to a crypto rotation, with Ethereum (ETH) potentially outperforming Bitcoin (BTC), according to Visser.

Visser points to the fact that Alphabet reported negative free cash flow of $5.9 billion for the April-to-June quarter, compared to positive $5.3 billion a year earlier. Meta's free cash flow also declined from $8.5 billion to $784 million. Microsoft was an exception, but even its cash cushion fell 23%.

Visser expects AI investments to deliver respectable returns, around 30%, but not the sevenfold or eightfold gains that attracted investors during the sector's earlier phase. He believes autonomous AI systems will need blockchain-based payment rails and favors Ethereum due to its network producing fee revenue.

The macro backdrop remains restrictive, with the Federal Reserve holding rates at 3.5% to 3.75%, and Goldman Sachs noting limited sources of 'juice' for rallies in the immediate term.