ByteTree Sounds Alarm on AI Rally, Compares It to 1999 Bubble

ByteTree, a financial research firm, has expressed concern that the current AI-driven rally is reminiscent of the 1999 tech bubble. The firm's Whisky portfolio sold its blockchain equities positions in the second quarter and invested in Berkshire Hathaway (BRK-A) and other value stocks.

Charlie Morris, founder of ByteTree, noted that it was 'a matter of time before the bubble bursts.' He compared the semiconductor index, which added $10 trillion in market cap over the past year to reach $16 trillion, to the entire EuroStoxx 600. This surge is similar to what happened in 1999.

ByteTree's Money Map concept positions Bitcoin (BTC) alongside gold and value stocks as hard assets that outperform during inflationary periods. The firm claims that rising real yields are driving Bitcoin's decline, which corresponds with the cryptocurrency's two biggest contemporary drawdowns - a 73.8% plunge in 2018 and a 64.3% drop in 2022.

While Bitcoin's price has fallen below its 200-week moving average, reducing the weekly score to 1, ByteTree notes that this was also the turning point of the 2022 bear market. The firm believes that 'the current Bitcoin bear is long in the tooth,' but predicts that real rates will eventually turn.