What Will Happen to the Crypto Market if the AI Bubble Bursts?

Source: CoinEdition Original Title: What Will Happen to the Crypto Market if the AI Bubble Bursts? Original Link: As 2025 draws to a close, worries about an AI bubble are growing, with stock prices looking high and spending on AI technology hitting record levels. Financial analysts and market watchers are increasingly warning that the huge rush of money into AI might be creating a bubble.

In November, the World Economic Forum (WEF) warned that huge investments in new technologies such as AI and crypto might be creating market bubbles that could burst dramatically.

Some analysts highlighted that if the AI boom turns into a bust, Bitcoin and crypto would likely be hit hard and fast, as they often move in line with risky tech stocks. Experts suggest Bitcoin’s price could fall to between $60,000 and $75,000 in a worst-case scenario, though the presence of large investors today might make the crash less severe than those in the past.

A major stablecoin platform’s CEO has publicly said that in case the AI bubble bursts in 2026, it could cause a huge stock market drop, which could then pull Bitcoin and other large cryptos down with it.

Also, market observers and historians have warned that if AI companies don’t live up to the hype, it could shatter investor trust and dry up funding. These conditions have typically made downturns much worse for speculative markets like crypto.

How a Burst Could Impact Crypto Specifically

Bitcoin and other major cryptos have become more closely tied to the stock market, especially tech stocks. As such, if a downturn in the AI market causes stocks to fall, it could drag crypto prices down notably, even if the technology behind them is still solid.

During past large market declines, Bitcoin’s price usually dropped steeply before leveling out. If the AI bubble bursts, it could make investors flee risk, seeking safety instead. This might translate to more money flowing into gold and stablecoins, and less interest in volatile altcoins and AI-related crypto projects.

Some suggest that if the AI stock bubble pops as the dot-com crash did, it could wipe out trillions in wealth and slow down the economy, which would put big stress on risky investments, including crypto.

Additionally, in the event AI funding drops or its expected returns are downgraded, we could see slower hiring and less spending in tech areas linked to both AI and crypto. This might mean less venture capital money flowing into new crypto startups.

Still, not everybody sees the potential AI bubble burst as catastrophic. Ongoing interest from big investors in products like Bitcoin ETFs and tokenized assets might help soften the blow of any future crypto downturn.