AI $1T capex pullback could hit Bitcoin first

The Bank for International Settlements in its annual economic report warned that more than $1 trillion in capital expenditure planned by the five largest hyperscalers across 2025 and 2026 could prompt a sudden pullback if expected returns fail to materialize.

The BIS wrote that companies have invested heavily in chips, cloud capacity, data centers, power supply and networking to gain market share, and that a 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 compares the current wave to past infrastructure-led booms that saw rapid spending followed by sharp reversals.

The BIS highlighted bottlenecks in advanced semiconductors, grid equipment and raw electricity. The organization said those supply constraints are already pushing up power prices and could feed into broader inflation measures at a time when geopolitical tensions are straining other supply chains.

Financing for the AI buildout now extends beyond corporate cash. The BIS said the trillion-dollar scale increasingly depends on debt, private-credit funds, lease financing and long-term supplier agreements. Those arrangements can obscure risk across linked firms and contracts.

A market observer at Onramp Bitcoin noted that investments and purchase commitments connect chipmakers, cloud providers, AI labs and data-center operators, creating overlapping claims on the same dollars. The BIS warned that if AI adoption slows, stress could travel back through that chain, leaving suppliers with lost orders, data centers with unused capacity and private-credit funds facing loan losses.

The BIS also flagged potential spillovers to the broader financial system. Banks’ exposures to nonbank finance and private-credit structures may be more complex than headline numbers suggest. The report said widening credit spreads and higher borrowing costs for weaker borrowers could follow a sharp repricing of equity risk.

The report and market participants said Bitcoin could be an early casualty in a broad de-risking episode because investors tend to sell liquid positions first. Bitcoin trades continuously and is held by many investors who also own equities and other high-beta assets, making it vulnerable when portfolios are rapidly trimmed. Bitcoin fell below $63,000 after a near 10% drop in South Korea’s KOSPI index, an episode the BIS cited as an example of how liquidity and leverage can overwhelm scarcity narratives.

The BIS noted that the long-term economic effects of AI remain uncertain. The organization said AI could lift productivity if systems improve themselves and generate new ideas, but that the immediate financial risk comes from large-scale spending before the revenue case is proven. Some market participants, including Arthur Hayes, co-founder of BitMEX, argued that if a capex reversal widened into a broader financial shock and prompted central bank easing, renewed liquidity could later support a rally in Bitcoin. The BIS report presents the risks and the possible policy channels without projecting a specific outcome.