AI may be keeping Bitcoin’s biggest macro headwind alive after the Fed stops hiking

Bitcoin faces a new macro headwind from the artificial-intelligence boom as massive infrastructure spending competes for long-term capital.

Minutes from the Federal Reserve’s Sept. 15-16 meeting showed market participants citing heavy private debt issuance for AI infrastructure as one factor pushing Treasury yields and term premiums higher. Nominal yields rose about 35 basis points across maturities from two to 10 years between Fed meetings.

That complicates things for crypto investors focused primarily on when the Fed stops tightening. Policymakers raised the federal funds target by 25 basis points to 3.75%-4% in September, and most officials judged another increase would probably be appropriate before year-end.

Even when that cycle ends, continued competition for long-term financing could keep borrowing costs elevated independently of the overnight policy rate.

The financing demands are already large enough to attract policymakers’ attention.

The Bank for International Settlements (BIS) estimates the five largest technology companies will spend more than $1 trillion on AI-related capital expenditure across 2025 and 2026. Industry projections cited by the BIS put global AI investment at roughly $500 billion today, potentially rising to between $3 trillion and $4 trillion by 2030.

Much of the earlier buildout could be funded from corporate cash flows. That balance is shifting as spending outpaces earnings and free cash flow at some companies, increasing reliance on bonds and private credit. The BIS said debt is becoming a larger part of the financing mix as firms build data centers, buy chips and secure energy infrastructure.

The Fed’s trading-desk manager said spreads on debt issued by major cloud providers remained wide because of the amount being borrowed and the long maturities involved. Market contacts also pointed directly to competition for capital from AI-related private issuance as one contributor to higher Treasury term premiums.

The minutes did not quantify how much of the roughly 35-basis-point rise in yields came from AI financing. Stronger economic data, expectations for additional Fed tightening, geopolitical developments and uncertainty around Treasury buybacks were also cited.

Still, the mechanism creates a potential problem for Bitcoin even after the policy-rate cycle turns.

Treasury data showed the 10-year Treasury par yield stood at 5.28% on Oct. 7, while the inflation-adjusted 10-year yield was 2.92%. Those levels give investors a substantial return from government securities before taking the volatility and drawdown risk associated with Bitcoin.

For crypto, that raises the required return on risk. A pause in Fed hikes could lower short-term rate expectations without providing the same relief at the long end of the curve if companies keep competing aggressively for financing.