Wall Street Sells What's Easy, Not What Lost Value
A $20 billion AI hedge fund called Situational Awareness had a remarkable run, gaining 439% from the start of 2026 through June. But in July, it lost about two-thirds of its value, leaving many wondering what happened.
The fund's collapse offers a warning for Bitcoin and other assets: when Wall Street needs cash quickly, they may sell assets that are still trading rather than those that caused the loss.
Situational Awareness' manager, Leopold Aschenbrenner, had built a persuasive investment pitch around artificial intelligence. He argued that AI was advancing fast enough to reshape energy, national security, computing, and nearly every large industry, then invested in companies supplying that future.
The fund's thesis initially worked almost too well, but the leverage it used to amplify its gains ultimately led to its downfall. The fund sold most of a $16 billion public-stock portfolio to Ken Griffin's Citadel, reducing exposure at an unusual speed.