Hawkish Fed and AI Spending Fears Weigh on Bitcoin
The Federal Reserve held its policy rate at 3.75%-4.00%, but two members dissented in favour of a 25-basis-point increase. The hawkish split, alongside Brent crude near $115 a barrel, may keep inflation and interest-rate concerns in focus. The 10-year Treasury yield rose to 5.05%, a potential headwind for risk assets, including Bitcoin.
Big Tech earnings highlighted a growing divide over AI spending. Alphabet reported revenue up 25% year on year, but capital expenditure of $51.4bn pushed free cash flow to negative $9.1bn; its shares fell nearly 10% after hours. Microsoft shares rose 2.9% as Azure grew 48%, suggesting investors are increasingly judging AI investment by returns rather than spending alone. ServiceNow and Fortinet also dropped sharply after forward growth signals disappointed.
In crypto-related equities, Strategy disclosed holdings of 848,517 BTC and is due to report quarterly results. Strive reported 43,000 BTC and is using preferred-stock financing to expand its holdings. Datavault AI said it could not withdraw bitcoin held in a custodial wallet and will restate several financial reports, raising concerns about asset verification and custodian risk across digital-asset treasury companies.
For crypto traders, the combination of hawkish rate expectations, elevated oil prices and scrutiny of corporate bitcoin holdings points to near-term volatility. Upcoming inflation data and Strategy’s results are key catalysts.
Bearish
The near-term balance of risks is bearish for crypto. Two Federal Reserve members argued for a rate increase, while the 10-year Treasury yield reached 5.05% and oil remained near $115 a barrel. Higher yields and persistent inflation concerns can tighten financial conditions, reduce demand for speculative assets and make leveraged crypto positions more vulnerable. The article also notes that Bitcoin has been trading in line with risk assets rather than acting as a reliable safe haven.
This resembles past periods when hawkish Fed repricing and rising Treasury yields put pressure on Bitcoin and other high-beta assets. The reaction is not automatic: crypto can rebound if inflation data cools, yields retreat or investors interpret strong economic activity as supportive of risk appetite. Traders should therefore watch upcoming inflation releases, Treasury yields and liquidity conditions, not just the Fed decision itself.
Corporate crypto holdings add a separate source of volatility. Strategy’s large BTC position and financing plans may influence sentiment around digital-asset treasury companies, while Datavault AI’s inability to withdraw bitcoin from a custodial wallet and planned restatements raise questions about asset control and verification. In the short term, those concerns could widen risk premiums and weigh on related equities. Over the longer term, clearer custody standards and more transparent financing could strengthen the sector, but dependence on debt or preferred-stock funding remains a vulnerability if Bitcoin prices fall or financing costs rise.