AI Bubble Risks in 2026 and Their Potential Impact on Bitcoin

Concerns are mounting that global equity markets may be drifting into another bubble, fueled by relentless optimism about AI. If that bubble cracks in 2026, Bitcoin (BTC) and the broader crypto market could be among the first to feel the fallout.

Key takeaways:

AI bubble risks could hit crypto first, as overstretched, debt-funded equity markets unwind.
Bitcoin may fall to $60,000–$75,000, but institutional support could help limit losses compared to past crashes.

AI bubble can trigger “severe” meltdown in stocks

In November, 45% of fund managers surveyed by Bank of America flagged an “AI bubble” as the market’s biggest tail risk, up from just 11% in September.

AI bubble vs. other risks in 2026. Source: BofA Global Fund Manager Survey

More than half of respondents said they believe AI stocks are already trading in bubble territory, thanks to huge spending and poor return on investment.

Companies such as Meta Platforms, Amazon, Microsoft, Alphabet and Oracle have ramped up AI infrastructure spending in 2025.

Hyperscalers’ capital spending. Source: Bloomberg

That spending is expected to surge, with combined capital expenditures, or capex, predicted to rise 64% year-over-year to more than $500 billion by 2026, according to Alexander Joshi, Head of Behavioral Finance at Barclays UK.

“Estimates place AI data centres among the largest infrastructure build-outs in modern history,” he wrote in a November report, adding:

Financial analyst HedgieMarkets warned that the AI boom risks a far harsher crash than the 2000s dot-com bubble burst, arguing the sector spent roughly $400 billion to generate just $60 billion in revenue in 2025, with most firms seeing no returns.

Unlike the equity-funded dot-com era, today’s AI expansion is debt-driven, raising the risk of cascading failures across private equity, banks, insurers and already-stressed consumers if growth expectations collapse.

Economic historian Carlota Perez cautioned that an AI and crypto bust could lead to a global economic collapse of “unimaginable proportions.”

How low can Bitcoin go if AI bubble pops in 2026?

Tether CEO Paolo Ardoino warned an AI sector correction could spill over into crypto markets in 2026, calling it the year’s “biggest risk for Bitcoin,” while citing its positive correlation with US equities as the basis for his bearish outlook.

BTC/USD and Nasdaq 100’s 52-week correlation coefficient chart. Source: TradingView

Ardoino added that BTC’s correction will not be as severe as it was during the 2022 (-77%) and 2018 (-84%) bear markets, due to its increasing institutional exposure.

As of December, Bitcoin was down by around 30% from its record high of $106,200.

Related: Bitcoin’s apparent demand shrinks, signals new bear market: Analysts

Analyst Nomad Bullstreet said the Bitcoin price may not decline below its average production cost per coin in the $71,000-$75,000 range, a target area previously suggested by BTC’s prevailing bearish flag pattern.

BTC/USD daily chart. Source: TradingView

A report attributed to Fundstrat Global Advisors, as well as Fidelity, projected Bitcoin’s price to hit $60,000–$65,000 in 2026.

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