Leopold Aschenbrenner built one of the most talked-about hedge funds in recent memory on a simple thesis: artificial intelligence is the most important technology of our lifetimes, and you should bet the house on it. In July 2026, the house caught fire.
Situational Awareness, Aschenbrenner’s fund named after his viral 2024 essay series on artificial general intelligence, suffered a 67% drawdown in a single month. The fund peaked at roughly $45 billion in assets under management before cratering to approximately $10 billion as a sector-wide selloff erased an estimated $3 trillion in AI market capitalization.
The anatomy of a blowup
The damage came from exactly the kind of positioning that makes risk managers lose sleep. Situational Awareness held heavily concentrated long positions in AI hardware and semiconductor stocks, specifically SK Hynix, Nebius, and Micron. On the other side of the trade, the fund was short software companies like Adobe.
When the AI sector turned south, the concentrated longs amplified losses while the shorts offered insufficient protection. To maintain liquidity, Aschenbrenner was forced to liquidate around $16 billion in public equity holdings to Citadel at a 10% discount to market prices. The liquidation process wrapped up by July 30.
From $254 million to $45 billion and back
Earlier 13F filings showed the fund’s portfolio grew from roughly $254 million in Q4 2024 to over $5.5 billion by Q4 2025. The climb to $45 billion happened in the first half of 2026, fueled by the AI bull market.
Aschenbrenner himself is no stranger to dramatic narratives. He previously worked at FTX’s Future Fund, the philanthropic arm of Sam Bankman-Fried’s now-infamous crypto empire. His 2024 essay series on AGI timelines attracted significant attention from tech industry figures, which translated into substantial investment capital.
Despite the July catastrophe, Situational Awareness still reported roughly 80% year-to-date gains. That seemingly impossible math is explained by the fund’s private holdings, most notably a stake in Anthropic, the AI safety company behind Claude. Those private positions weren’t marked down in the same way public equities were during the liquidation event.
Why crypto markets should pay attention
The fund’s 13F filings revealed billions in exposure to Bitcoin miners that had pivoted toward AI-oriented computing solutions. Companies like those that repurposed mining hardware for AI inference and training workloads were among Situational Awareness’s holdings.
Now that a fund with $45 billion in AUM has been forced to dump public positions at fire-sale prices, the knock-on effects for those dual-purpose mining companies could be significant. AI infrastructure and crypto mining infrastructure share data centers, GPU supply chains, and increasingly, the same investor base. A $3 trillion wipeout in AI market cap doesn’t stay neatly contained within one sector’s boundaries.