GSR: Crypto Bull Run Needs AI Cool-Down and Fed Rate Cuts

Capital rotation into artificial intelligence is draining liquidity from crypto markets, and the Federal Reserve holds the other key to a sustained recovery. That is the view from GSR’s head of markets, Spencer Hallarn, who laid out the twin conditions for the next crypto bull run in a recent interview, as reported by WuBlockchain.

AI Capital Demands Reshape the Liquidity Landscape

Hallarn pointed to big tech firms issuing equity to fund massive AI infrastructure as a direct headwind. That issuance soaks up capital that might otherwise flow into risk assets, including crypto. It’s not just about equity markets; the sheer scale of AI-related spending is tightening overall financial conditions. When corporate treasuries redirect billions into data centers and specialized chips, the pool of money available for speculative assets shrinks. The crossover between AI and crypto is far from one-directional, however. Web3 projects are building scalable AI-driven applications, as seen in the recent UXLINK and Origins Network partnership to power decentralized computing. Still, the primary liquidity effect is that AI is pulling capital away from crypto for now.

Even decentralized storage networks have felt the shift. Filecoin’s recent price trajectory, explored in our Filecoin price prediction analysis, is partly driven by expectations around AI storage demand. But that demand competes with the same constrained capital pool. If AI investment accelerates further without a corresponding easing in monetary policy, Hallarn’s scenario implies crypto will struggle to find fresh bids.

Tokenization’s Real Fight Is Back-End Plumbing

The interview also touched on real-world asset tokenization, where Hallarn drew a sharp line between hype and utility. He noted that many permissioned tokenization platforms with heavy KYC requirements see paltry volumes. The real opportunity, in his view, is not the act of wrapping assets into tokens but fixing the creaking settlement and banking infrastructure underneath. That assessment lines up with recent institutional moves. The first live tokenized Treasury settlement between Ondo Finance and JPMorgan, covered in our weekly tokenization roundup, shows that the real action is in backend plumbing, not in splashy user-facing platforms.

Meanwhile, GSR is seeing institutional clients shift their focus accordingly. Demand for over-the-counter hedging structures is rising, and long-term budget planning now dominates conversations. Clients are not rushing into tokenized assets for speculative gains; they want exposure to real-world assets that can settle efficiently. This quiet reorientation suggests the market is maturing past the phase where tokenization was treated as a branding exercise.

The Rate Cut That Could Change Everything

Hallarn’s outlook boils down to two catalysts: a cooling of AI-related capital expenditure and a Federal Reserve pivot to rate cuts. He emphasized that if those conditions occur, liquidity could return and support significantly higher Bitcoin prices. The timing, however, is entirely uncertain. The Fed’s inflation calculus remains data-dependent, and AI investment shows few signs of slowing. Big tech’s capex guidance suggests the spending spree could last years. That means crypto’s near-term path may continue to be constrained unless the macro picture shifts.

What Hallarn did not say is also telling. He did not promise a return to the aggressive bull cycles of 2021. Instead, he tied the recovery to measurable, external variables. That is a more sober framing than typical trading-desk optimism. It reflects a market that, for now, must coexist with a powerful competing narrative in AI and a central bank that still has not opened the liquidity spigots.