AI’s $1T spending boom could hit Bitcoin traders first

The Bank for International Settlements, in its annual economic report from Basel, said five hyperscalers are on track to spend more than $1 trillion on AI-related capital expenditure across 2025 and 2026. The report warned that if returns fall short of expectations, a rapid pullback in financing could tighten credit and equity liquidity and affect liquid risk assets, with Bitcoin traders likely to feel the initial impact.

The BIS identified chips, cloud capacity, data centers, power equipment and networking hardware as the core areas driving the buildout. The bank wrote that the scale and speed of investment have raised questions about whether companies are committing large sums before the business case for all of that capacity is proven. The report included the observation: “Disappointment in returns could trigger a sudden pullback in financing and turn the capex boom into a protracted investment bust, with potential knock-on effects on financial conditions.”

The report noted physical supply bottlenecks in advanced semiconductors, grid equipment and electricity supply that are already putting upward pressure on prices. It said those constraints, combined with intense competition for market leadership, risk producing excess capacity and lower returns if demand does not materialize as expected.

Financing for the AI buildout has shifted beyond the large cash reserves of leading tech firms. The BIS described a broader funding network that increasingly relies on debt, private credit, lease finance and long-term supplier and energy contracts. That network links chipmakers, cloud providers, AI labs and data-center developers through equity stakes, capacity deals and purchase commitments. A BTC-focused financial firm described the structure as “a web of overlapping commitments now bind[ing] the AI buildout into a roughly $1 trillion loop,” where the same dollars appear as investment, funding, revenue and sales across different parties.

If revenue expectations weaken, the report said losses could propagate along several channels. Suppliers could lose orders, data centers might fail to fill capacity, and private credit funds with loans to tech borrowers could face losses. Banks’ exposure to the nonbank finance system may be more complex than headline figures show. The BIS noted those dynamics could prompt a sharp repricing of risk: credit spreads could widen, refinancing costs could rise for weaker borrowers, and firms dependent on outside funding might reduce investment and staffing.

The BIS singled out Bitcoin as vulnerable in an initial market shock because the token often behaves like a high-beta, liquid asset. The report explained that investors tend to sell easily tradable positions first when they need cash or seek to reduce risk, and many Bitcoin holders also own equities, exchange-traded products or derivatives that would be affected by a broader downturn. As an example of market sensitivity, Bitcoin fell below $63,000 after South Korea’s KOSPI index plunged nearly 10 percent.

The report added that later outcomes will depend on policy responses. It said a reversal confined to a few firms would likely lead to sector repricing and supplier adjustments, while a larger downturn that weakens corporate investment, employment and household wealth at the same time could put pressure on central banks to adjust monetary policy. The BIS noted that rapid, large-scale investment without clear payoffs can produce a sharp and sustained pullback that affects technology equities, credit markets and other liquid risk assets.