Bitcoin and crypto could surge following potential AI sector crash

Financial analysts and crypto investors are projecting that a potential crash in the artificial intelligence sector could ultimately drive a massive surge in Bitcoin and Ethereum prices.

Arthur Hayes, co-founder of BitMEX and investment chief at Maelstrom, argues that the current multi-billion dollar investment in AI data centers is an overbuild that will lead to a crash. He anticipates that by late 2027 or 2028, the surplus of computing power will cause a market correction. Hayes believes that, much like the aftermath of the 2008 financial crisis, governments and central banks will likely initiate massive liquidity injections and rescue packages to stabilize the economy, which would provide significant upward pressure on crypto assets.

Similarly, Bitwise investment director Matt Hougan suggests that while an AI bubble burst might cause initial sharp selling in the crypto market, the subsequent monetary response to prevent a recession would act as a powerful catalyst for long-term growth. Hougan notes that if AI investments drive significant economic growth or if a soft landing occurs, Bitcoin could also benefit from increased institutional adoption and ETF inflows.