ByteTree Warns AI Rally Reminiscent of 1999 Bubble Burst

ByteTree's founder Charlie Morris has warned that the current AI-driven rally is reminiscent of the 1999 bubble burst. In its second-quarter investor letter, the firm noted that the semiconductor index gained $10 trillion in market value last year and is now worth $16 trillion.

The firm's Whisky portfolio sold its blockchain equities positions and bought Berkshire Hathaway and other value stocks during this period. Morris stated it was only a matter of time before the bubble bursts, citing rising real rates as a major contributor to Bitcoin's decline.

ByteTree believes that Bitcoin is strong despite its current price slump, with weekly on-chain transaction value at $13.5 billion, five times 2022 levels. However, the firm notes that this may not be enough to sustain the current market conditions.