Situational Awareness fund’s $16B liquidation prompts Wall Street to bet AI trade has bottomed

A 24-year-old former OpenAI researcher just became Wall Street’s most expensive cautionary tale. Leopold Aschenbrenner’s Situational Awareness LP hedge fund sold its entire public equity portfolio, roughly $16 billion worth of AI stocks, to Citadel in a single block trade this month after its leveraged bets cratered. From moonshot to meltdown Situational Awareness launched in late 2024 with approximately $225 million in initial capital. By the end of June 2026, the fund had posted net returns of roughly 439% year-to-date, ballooning its assets under management north of $20 billion. The fund was running leverage of nearly four times its equity base. Key AI positions in the portfolio fell 40-50% during the recent period before the unwind. The portfolio included AI infrastructure plays: Bloom Energy, Nebius (formerly SanDisk), CoreWeave, IREN, and Core Scientific. The book also included Bitcoin miners who had pivoted to data center operations: Riot, CleanSpark, HIVE, and Bitdeer. Why Wall Street thinks this is the bottom Forced liquidations from leveraged funds create artificial selling pressure that pushes prices below their fundamental value. Citadel buying the whole portfolio in on...