Bernstein sees AI trade, not quantum fears, behind bitcoin’s (BTC) weakness

Bitcoin’s BTC$63,271.85 recent weakness is being driven by softer capital flows rather than concerns over quantum computing or other risks, according to Wall Street broker Bernstein.

Growing concerns that future quantum computers could eventually break the cryptography underpinning Bitcoin have become a recurring topic in crypto markets, especially after recent research from Google suggested the computational resources needed to crack key blockchain security systems may be far lower than previously thought.

Bitcoin treasury companies and exchange-traded funds (ETFs) have attracted about $12 billion of inflows this year, down sharply from $60 billion in 2025, the broker said. ETFs have seen roughly $2.6 billion of net outflows from a $75 billion asset base, with most new demand coming from corporate buyers led by Strategy (MSTR).

Bernstein analysts attributed the slowdown largely to retail investors chasing AI-related opportunities, noting that the strongest-performing areas of crypto this year have been tied to tokenized equities and commodities.

“Bitcoin still may offer some diversification from the unusual singular AI driven momentum markets we have experienced this year,” analysts led by Gautam Chhugani wrote in the Monday report.

Still, the analysts views the modest scale of ETF outflows as encouraging, arguing that bitcoin ownership is becoming less dependent on momentum-driven retail flows.

Bitcoin has endured a difficult stretch in recent months, falling from roughly $82,000 in early May to around $63,000 today, a decline of more than 20%. The cryptocurrency briefly dropped below $60,000 last week, its lowest level since October 2024, and remains about 50% below its October 2025 record high near $126,000.

Persistent ETF outflows, weakening investor risk appetite and a shift in capital toward AI-related stocks and high-profile equity offerings have been cited as key drivers of the downturn.

Unlike previous cycles dominated by retail traders, today’s market includes ETFs, corporate treasuries, wealth-management platforms, pension funds and sovereign investors, creating a more diversified and resilient ownership base, the analysts argued.

While bitcoin has lacked the excitement of AI trades this year, Bernstein argued that “being boring” does not weaken its long-term store-of-value thesis and may ultimately reflect a healthier market structure.

Spot bitcoin ETF flows explain roughly 45% of weekly BTC price moves and remain the best gauge of investor adoption, Citi said in a report last week.

The world’s largest cryptocurrency was trading around $62,600 at publication time.

Read more: Bitcoin’s dearth of fresh investors matters more than Strategy’s sale, Citi says