GSR Says Cooling AI Investment and Fed Rate Cuts Could Boost Bitcoin

GSR Head of Markets Spencer Hallarn said the slowdown in cryptocurrency markets is partly tied to capital shifting toward artificial intelligence investments, with equity issuance by large technology companies to finance AI infrastructure tightening liquidity across broader markets.

Hallarn said in a recent interview that the current environment has prompted clients to focus more on OTC hedging structures, long-term budget planning, and real-world assets, or RWAs.

On tokenization, Hallarn said platforms operating as walled gardens with extensive know-your-customer (KYC) requirements have struggled to generate meaningful transaction volumes. He said 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 and the Federal Reserve begins cutting interest rates, Hallarn said, potentially supporting higher Bitcoin prices.

Bitcoin was trading at $63,675 at the time of writing, 49.5% below its record high of $126,080 reached on Oct. 6, 2025.

Source: GSR