• The crypto rally is cooling as coin buyers are embracing AI instead, Nicholas Taleb says.
• Bitcoin and other cryptos have rebounded strongly this year, but have lost ground in the past week.
• Nvidia, Microsoft, Tesla, and other AI-related stocks have notched huge gains in 2023.

Cryptocurrencies are losing steam as some of their biggest fans get excited about artificial intelligence instead, Nassim Taleb says.

“The crypto fad is starting to peter out as many of those fanciful young adults who like to play w/computers in their mothers’ basements are now getting enamored with AI,” the author of “The Black Swan” tweeted on Friday.

“You need another infatuation to displace an infatuation,” he added.

Bitcoin has rallied 79% this year to about $29,800, but has slid by 5% over the past seven days, per CoinMarketCap. Ether, Cardano’s ADA, and Solana’s SOL tokens have also rebounded strongly in 2023, but declined between 5% and 11% in the past week.

Meanwhile, investors have piled into AI stocks this year, as they expect the tech to boost productivity and bolster providers’ profits. For example, Nvidia shares have more than tripled, boosting the graphics-chip maker’s market capitalization to about $1.2 trillion.

Tesla has more than doubled in value too, as CEO Elon Musk continues to promise self-driving cars and humanoid robots to his investors. Microsoft’s stock price has also surged by 45% to a record high, in part because it invested $10 billion in ChatGPT-parent OpenAI earlier this year.

Taleb, a former hedge fund manager, has repeatedly dismissed crypto as an investment. He’s described bitcoin as a “cult,” argued it fails as a haven asset or useful medium of exchange, and joked it’s not even good for money laundering because bitcoin transactions are traceable.

However, Taleb also warned in February that stocks were hugely overvalued relative to interest rates, which have jumped from nearly zero to north of 5% since early last year.

“I think that we may have a collapse in many, many prices,” he told Bloomberg at the time. “Disneyland is over.”

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