Growing concerns suggest that global equity markets may be heading towards another bubble, driven by unyielding optimism regarding AI. Should this bubble burst in 2026, Bitcoin (BTC) and the wider crypto market could be among the first to face significant repercussions.
Key insights:
The risks of an AI bubble could impact crypto markets first as stretched, debt-laden equity markets begin to unravel.
Bitcoin might drop to the range of $60,000–$75,000, although institutional backing may mitigate losses compared to previous downturns.
The AI Bubble May Trigger a “Severe” Stock Market Meltdown
In November, 45% of fund managers surveyed by Bank of America indicated that the “AI bubble” poses the biggest tail risk for the market, a significant rise from 11% in September.
Over half of those surveyed believe that AI stocks are already trading within bubble territory, driven by excessive spending and poor returns on investment.
Firms like Meta Platforms, Amazon, Microsoft, Alphabet, and Oracle have significantly increased their AI infrastructure investments in 2025.
This spending surge is anticipated to continue, with total capital expenditures projected to rise by 64% year-over-year to over $500 billion by 2026, as noted by Alexander Joshi, Head of Behavioral Finance at Barclays UK.
“Forecasts place AI data centers among the largest infrastructure developments in modern history,” he wrote in a November report, adding:
“AI data centers now contribute significantly to US GDP growth. While not inherently negative, this reliance is precarious if AI progress stalls. Should expectations falter, the rebound could be drastic.”
Financial analyst HedgieMarkets warned that the AI boom could lead to a crash more severe than the dot-com bubble burst of the 2000s, pointing out that the sector expended around $400 billion to generate merely $60 billion in revenue in 2025, with most companies seeing no returns.
🦔I think the AI bubble is going to pop, and when it does, it’s going to be uglier than people expect. Forrester predicts a market correction in 2026, and honestly, I think they’re being optimistic. The sector is spending $400 billion while only bringing in $60 billion in…
— Hedgie (@HedgieMarkets) December 15, 2025
In contrast to the equity-driven dot-com period, today’s AI growth is fueled by debt, increasing the risk of widespread failures across private equity, banks, insurers, and already overburdened consumers, should growth expectations collapse.
Economic historian Carlota Perez warned that a combined AI and crypto collapse could result in a global economic crisis of “unimaginable scale.”
If the AI bubble bursts in 2026, what’s the potential downside for Bitcoin?
Tether CEO Paolo Ardoino cautioned that a correction in the AI sector could affect crypto markets in 2026, which he termed the year’s “biggest risk for Bitcoin,” noting its positive correlation with US equities as a basis for his pessimistic perspective.
Ardoino remarked that BTC’s correction will likely not be as drastic as during the bear markets of 2022 (-77%) and 2018 (-84%), due to its growing institutional support.
As of December, Bitcoin had decreased by approximately 30% from its peak of $106,200.
Related: Bitcoin’s declining demand signals a new bear market: Analysts
Analyst Nomad Bullstreet indicated that Bitcoin’s price is unlikely to fall below its average production cost per coin in the $71,000-75,000 range, a target area previously signaled by BTC’s existing bearish flag pattern.
A report from Fundstrat Global Advisors, along with Fidelity, forecasts that Bitcoin’s price could reach $60,000–$65,000 in 2026.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision. While we strive to provide accurate and timely information, Cointelegraph does not guarantee the accuracy, completeness, or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
