AI Investment and Fed Rate Cuts May Boost Bitcoin Prices

Spencer Hallarn, Head of Markets at GSR, believes that the current slowdown in cryptocurrency markets may be partly due to increased investment in artificial intelligence (AI) infrastructure. He notes that large technology companies are issuing more equity to finance their AI endeavors, which is tightening liquidity across broader markets.

This shift has led clients to focus on over-the-counter hedging structures, long-term budget planning, and real-world assets, or RWAs. According to Hallarn, platforms operating as walled gardens with extensive know-your-customer (KYC) requirements have struggled to generate meaningful transaction volumes in tokenization.

However, Hallarn suggests that the larger opportunity lies in improving traditional banking and settlement infrastructure rather than simply converting existing assets into tokens.

Liquidity conditions for crypto could improve if investment in AI infrastructure cools down, and the Federal Reserve begins cutting interest rates. This, in turn, may support higher Bitcoin prices.