Massive capital expenditure tied to AI infrastructure — estimated at $800 billion — is drawing Federal Reserve attention as a potential new source of inflationary pressure, complicating the rate outlook for risk assets including Bitcoin. While Wall Street has long treated AI investment as unambiguously bullish, fuelling equity valuations and earnings expectations, the Fed appears increasingly focused on the demand-side inflation risks that such concentrated, large-scale spending could generate. If policymakers respond by keeping interest rates higher for longer, or delaying anticipated cuts, Bitcoin and broader crypto markets face headwinds typically associated with tighter monetary conditions. The dynamic highlights a tension between tech-sector optimism and macroeconomic discipline, with crypto caught in the crossfire as the Fed reassesses how AI-driven capital flows fit into its inflation models.
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