(Bloomberg) -- Two years ago, Rahul Patel couldn't sleep. Most Read from Bloomberg
The crypto founder who trades his own money spent his nights rotating through internet jokes with billion-dollar market caps — Moo Deng, Labubu Coin, Skibidi Toilet — trying to sell before the crowd did. Hold a trade overnight and you could wake to find the party had moved on.
Now the memecoin boom is well and truly over, and he sleeps just fine. From his home in Tampa Bay, Patel, 36, oversees a portfolio that looks nothing like it did at the height of the frenzy. The tokens named after viral animals and social-media gags have given way to bets on the chipmakers at the center of the AI boom.
"It's a lot better of an experience," he said, using the digital-asset shorthand "bags" for his holdings. "You can sleep on your bags. Memecoins, for the longest time, you haven't been able to sleep on your bags."
Patel is one of a growing number of crypto-native traders who have moved from memecoins into AI and semiconductor stocks. The instincts are familiar — move early, ride the momentum, position for the catalyst before everyone else. What changed, Patel says, is that the AI companies give him something memecoins rarely did: revenue, production targets and clear market catalysts to test the trade against.
The migration is showing up on exchanges, where traders can now use familiar products to bet on stocks. Contracts tracking SK Hynix Inc., Micron Technology Inc. and SanDisk Corp. drew more than $8 billion of volume on Hyperliquid last week alone, according to tracker hl.eco. At Binance, the largest crypto exchange, average daily volume in stock-linked contracts has climbed from $85 million in February to $5.5 billion in July — a market that barely existed six months ago.
It has grown big enough, and lopsided enough, to draw professionals. Hedge funds from Hong Kong to New York are now taking the other side of the crowd, collecting the fees retail traders pay to keep their bets alive.
The timing is unkind. Chip stocks have just come through their worst stretch in more than a year as the momentum trade frayed. Memory names led the drop; SK Hynix fell double digits in a single session, the kind of swing any crypto trader would recognize. Sivers Semiconductors AB, one of Patel's own picks, is down nearly 70% from its high. But he says he bought it to hold for years, not hours — reason enough to ride the drops.
He started buying Sivers, a Swedish company listed on Nasdaq Stockholm, after reading an anonymous X account called Serenity, which has more than 970,000 followers and, in his view, a habit of surfacing under-the-radar AI names before the mainstream catches on. The Serenity account didn't return a request for comment on X.
"The reason why I bought some of his picks, in addition to the fundamentals, was this sort of aura and cult that he's created in some of the names, like Sivers Semiconductors," Patel said.
He compares Serenity to Murad, a leading voice of the memecoin boom who popularized the "memecoin supercycle" — the argument that the strongest tokens were internet-native cults, not financial assets.
Crypto traders came for the AI boom and brought their playbook with them: anonymous X accounts, online communities that trade together, round-the-clock leverage — all in one place that never closes.
New assets. Same playbook. It shows up most in the market's speculative names: a viral account highlights a company, followers pile in and the buying itself becomes part of the case for owning it, the same feedback loop that once propelled obscure tokens. Not everyone thinks that will end well.
"I think it's a very unhealthy kind of trading," said Jukan Choe, an analyst at Citrini Research who has built a large following on X but often avoids naming individual stocks in his posts. "That kind of share price rally isn't based on fundamentals — it's a tower of liquidity built up by retail investors, so after a while, it's almost bound to collapse quickly."
The exchanges are meeting in the middle. Crypto venues are increasingly offering stock, ETF and commodity contracts, while traditional operators including CME Group and Cboe Global Markets have expanded their crypto offerings as investors push for markets that trade longer, and eventually around the clock. The old line between crypto and Wall Street is continuing to blur.
On crypto exchange Hyperliquid, traders can go long or short with as much as 20 times leverage — and their shortlist runs past Nvidia Corp. into memory and optical names.
Shunyet Jan, Binance's head of exchange and trading, called the growth of perpetual futures linked to stocks and commodities on his exchange "unprecedented."
Perpetual futures, unlike calendar futures, never expire. They let a trader ride Nvidia's price without ever buying a share, using the same kind of instrument once aimed at Bitcoin and Ether.
Trading in the contracts has been largely heavily tilted toward bullish bets. Perpetuals use periodic funding payments to help keep their prices aligned with the assets they track. When demand to go long becomes especially one-sided, longs generally pay shorts — and the rate can climb sharply.
In principle, the trade is straightforward: buy the shares, short the perpetuals and collect funding payments while the imbalance persists.
One firm running the strategy is South Korea-based Hyperithm, whose ties to local prime brokers and securities firms let it source shares of names like SK Hynix while collecting the funding retail demand generates, according to Sangrok Oh, its chief executive officer and founder.
"Our view is that retail demand creates the gaps and institutionalization narrows some of them, but as long as the market remains fragmented and segmented, the inefficiencies that a firm with a superior model can capture remain structurally present," Oh said.
Leverage cuts both ways. When too many crowd the same side, a small move against them forces selling that drives the price lower, forcing more — the rally machinery running in reverse.
As for Patel, he hasn't been rattled by the AI selloff this month. He plans to hold many of his positions for a year or two, an eternity by memecoin standards, where a long hold was measured in days.
"You always want to exit earlier than the actual sell-the-news event," Patel said.
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