Zerodha co-founder Nikhil Kamath has joined the growing chorus of warnings about AI valuations, revealing that shorting every private AI company today could pay off in five years. Speaking on the ''People by WTF'' podcast, Kamath drew direct parallels between the current AI boom and the dot-com crash, stating 'If I were to take every private company in AI and short their stock today, in five years, I might make money... It feels a bit like... the 'Internet bubble'.' His assessment centers on expensive proprietary models losing ground to cheaper alternatives, with the Zerodha co-founder expecting the industry to fragment into regional, self-reliant economies where nations build domestic AI copies. Coinbase CEO Brian Armstrong has echoed similar concerns, pointing to a stark cost gap where open-source models cost up to 99% less for inference than elite frontier labs, with models running six months behind reaching the market at a tiny fraction of the price.
Binance co-founder Changpeng Zhao has weighed into the growing Bitcoin versus artificial intelligence debate, offering a direct distinction between the two assets. According to reports from crypto.news, Zhao posted on X on July 16 stating, 'AI is great, but it does not protect you against inflation. Bitcoin does.' His latest comments expand on this position, arguing that 'AI is great, but it does not protect you against inflation. Bitcoin does.' His comparison places scarcity at the center of Bitcoin's appeal rather than treating it as another fast-growing technology investment. CZ wrote in a recent X post that artificial intelligence and Bitcoin serve separate financial and economic roles, rejecting the idea that rapid advances in AI can protect investors when fiat currencies lose purchasing power. 'AI is great, but it does not protect you against inflation. Bitcoin does,' he emphasized, drawing a clear line between the two assets' purposes.
The debate has gained attention as major AI companies attract large amounts of investor capital, with the expected public listings and fundraising plans involving OpenAI and Anthropic raising questions about whether investors could sell other liquid assets, including crypto, to fund new equity positions. As reported by crypto.news, a recent analysis examined whether major technology listings could drain liquidity from digital assets, finding that large IPOs can create short-term competition for capital because investors often need to sell existing holdings to fund new allocations. However, broader factors including monetary policy and geopolitical risk also played a major role in Bitcoin's 2026 decline. The overall crypto market was also fueled by new U.S. inflation data, with the producer price index (PPI) rising 5.5% year-over-year, much below the market expectations of 6.2%.
Zhao's statement frames Bitcoin as protection against inflation, but recent price action has shown that the cryptocurrency also responds strongly to interest-rate expectations and global liquidity. According to crypto.news reports, Bitcoin recovered above $65,000 after softer US producer inflation reduced expectations for another Federal Reserve rate increase. June producer inflation came in below market forecasts, helping Bitcoin and other risk assets move higher. Traders reduced expectations for tighter monetary policy following the data, while Ethereum also recovered above $1,900, demonstrating how Bitcoin trades within a wider market shaped by inflation, interest rates and liquidity conditions. The sentiment around the crypto market is improving, as evidenced by limited expectations for tighter monetary policy on Prediction market Polymarket.
Former Fidelity fund manager George Noble has raised significant concerns about the AI investment bubble, warning that an AI crash could cause 17 times more damage than the dot-com collapse, which erased about $5 trillion from the Nasdaq. 'The fallout from this could really be much more significant,' Noble said while discussing the rise in AI capital spending. Despite these warnings, Polymarket traders have assigned a meaningful chance to an AI downturn, with one contract placing the probability of an AI bubble bursting in 2026 above 17% after the odds previously dropped from 30% to 14%. Other contracts using different settlement rules showed probabilities ranging from 16% to 24%. Former White House economists Jared Bernstein and Ryan Cummings have added to the caution around AI valuations, describing the bubble as 'still inflating' and arguing that corporate AI spending is reducing cash reserves while technology investment consumes a larger share of U.S. gross domestic product than during the dot-com era.
