The latest commentary from economist Warsh suggests that the U.S. government’s $700 billion AI buildout will ultimately bring down the price of AI services. Lower costs could accelerate the adoption of AI across industries, potentially increasing the use of digital assets for micro‑transactions, data storage, and smart‑contract execution. For retail crypto holders, this could translate into a modest uptick in demand for tokens that facilitate AI‑related payments or data sharing.
However, Warsh’s colleagues caution that the same spending may fuel persistent inflation. If AI deployment expands productivity but also pushes up the overall price level, the Federal Reserve could respond by tightening monetary policy—raising rates or tightening liquidity. Higher rates tend to dampen appetite for risk assets, and the current “Extreme Fear” reading on the crypto market reflects a cautious stance among investors. This environment could weigh on the price of Bitcoin, currently hovering around $64 k, and Ethereum near $1.8 k.
In short, the AI buildout is a double‑edged sword: it may lower service costs and boost crypto usage, but it could also strengthen inflationary pressures that dampen risk sentiment. Retail investors should keep an eye on macro‑economic indicators—especially interest‑rate moves—and on how AI adoption trends affect the demand for crypto as a payment and data‑exchange medium.