Chamath Palihapitiya Sees 2 Problems Facing Bitcoin Bulls: Here's His Argument

Billionaire venture capitalist Chamath Palihapitiya argued on Sunday that bitcoin bulls face a two-front squeeze, with speculative money migrating to prediction and equity markets while the energy that powers mining is worth more redirected to artificial intelligence (AI).

Key Takeaways

• Chamath Palihapitiya said marginal liquidity now prefers prediction markets and equities over bitcoin.
• Bitcoin’s hashrate slid 7.9% to 908 EH/s this month, forcing a 5% difficulty cut as miners eye AI computing deals.
• Polymarket traders give bitcoin just 10% odds of reaching $100,000 by Dec. 31, 2026, as BTC currently trends near $64,000.

A Two-Front Squeeze

The Social Capital founder’s argument, highlighted in a post on X, states that the incremental dollar and the incremental megawatt (resources that once flowed to bitcoin by default) now have more attractive destinations, adding:

Marginal liquidity would rather speculate in prediction and equity markets, and marginal energy to mine BTC is worth far more if redirected to AI.

Palihapitiya is no stranger to provocative bitcoin calls, given that he was an early adopter who once urged everyone to put 1% of their net worth into the asset (even floating a $240,000 long-term price target). Yet in March, he questioned bitcoin’s suitability as a central bank reserve asset, arguing its traceability weakens fungibility.

On July 14, he warned separately that unchecked AI “tokenmaxxing” spending is quietly eroding corporate earnings.

The Data Behind Both Claims

On the liquidity side, prediction markets posted a record $10.8 billion week this summer, as the SpaceX initial public offering (IPO), the FIFA World Cup and geopolitics pulled speculative capital into event contracts. Polymarket traders currently price just 10% odds of bitcoin reaching $100,000 by Dec. 31, 2026, while giving 67% odds it reaches $70,000.

On the energy side, the migration is already measurable as Bitcoin’s hashrate fell 7.9% in ten days to 908 EH/s, and Bitcoin.com News reported that the network’s difficulty dropped 5% to 127.17 trillion on July 11 (its 14th reset of 2026) as miners diverted machines and megawatts elsewhere.

Industry analysts have described miners as abandoning the network for AI and high-performance computing contracts, with one setting a 2028 deadline for the trend to peak.

Pushback From Coinbase’s Chief

Not everyone seems to be onboard such a bearish read, with Coinbase CEO Brian Armstrong responding the same day that “hash power or energy going to Bitcoin mining doesn’t determine its price,” noting the network’s difficulty automatically adjusts when miners go offline to keep blocks flowing at the same pace.

The debate now turns on whether the squeeze is structural or cyclical. The next difficulty adjustments, the pace of miner AI deals, and whether prediction-market volumes keep compounding will show whether the marginal dollar and megawatt come back to bitcoin or whether the bulls must win without them.