AI Gets the Fed’s Ear: Why Bitcoin May Be Listening to the Machine

Fed Chair Kevin Warsh is sensitive to the economic impact of artificial intelligence, according to Jeffrey Rosenberg, a managing director at BlackRock. Speaking after the Federal Reserve held interest rates at 3.75% to 4% on Wednesday, Rosenberg said Warsh connected tighter financial conditions with AI, while minutes from the Fed’s June meeting flagged AI-driven demand as an inflation risk. Rosenberg said a blow to AI would instead be “primarily disinflationary,” a development that could affect rate-sensitive assets such as Bitcoin ($BTC).

Rosenberg said market rates have begun following the AI trade more closely, saying: “…the market sort of sniffing out that AI is a macro event as much as it is a micro event.” He added that spending now leans on the wealth effect, in which rising asset values lift consumption, making financial conditions the main channel for Fed policy. DataTrek co-founder Nick Colas said oil and bond yields moved together for about a decade before splitting in mid-September, while Fidelity’s Jurrien Timmer said the Goldman Sachs AI basket, which tracks AI-linked stocks, has fallen 22% since early June.

As that selloff deepened, the 10-year Treasury yield closed at 4.96% on October 22, its first close below 5% since September 22, according to Treasury data cited by 24/7 Wall St. Timmer said AI stocks and long-term Treasuries have recently moved in opposite directions, which could make bonds a hedge. The durability of that relationship depends on the Fed’s next move.

Rosenberg interpreted the slight steepening of the yield curve as a dovish hint, while stopping short of saying the Fed put—policymakers cushioning falling markets—remains alive and well. Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in the 10-2 vote in favor of a hike. Headline consumer prices rose 3.7% in the year to September, according to Bureau of Labor Statistics (BLS) data, while core prices, which exclude food and energy, rose 2.6%.

For $BTC, the transmission channel runs through both AI-related stocks and interest rates. The largest cryptocurrency has often traded alongside tech stocks, although a Big Tech and chip selloff dragged Bitcoin toward $62,000 in June. Ahead of Wednesday’s decision, $BTC rose 1.54% in 24 hours to $80,837 as tech stocks rallied; in August, it traded more like gold than the Nasdaq. Personal Consumption Expenditures (PCE) inflation data is due Thursday, followed by the December 8-9 Fed meeting.