Leopold Aschenbrenner previously established influence in the AI field with a lengthy article titled "Situational Awareness," and subsequently founded a hedge fund of the same name, concentrating capital heavily on AI-related chips and data center targets while using 3-4 times leverage; the fund's scale once reached about $45 billion, but recently faced significant drawdowns and was forced to deleverage as sentiment shifted in AI infrastructure.

In terms of capital pathways, its strategy relied on high leverage to amplify AI narrative returns, motivated by capturing exponential technological expectations with leverage; when volatility increased, it was forced to sell positions to repay financing, with funds flowing from high-leverage concentrated holdings to more robust deleveraged structures, specifically manifested in the fund's scale shrinking and publicly communicating adjustments to investors.

Similar cases can be seen with Long-Term Capital Management collapsing due to high leverage, or Archegos Capital facing a margin call due to concentrated leveraged positions; current AI thematic investments are transitioning from a narrative-driven high-leverage expansion phase to a deleveraging reconstruction phase under volatility and financing constraints.

This essentially represents a transfer of pricing power: when leverage amplifies volatility into survival risks, market mechanisms reprice risk through forced deleveraging, concentrating capital towards participants with ample collateral and no-leverage buffers.

ABAB News · Laws of Cognition

Leverage turns volatility into a survival crisis
Compound interest is romantic, forced liquidation is not
Over-collateralization is the true commitment