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Financial strains at AI companies could also weigh on the crypto market, including BTC, CoinDesk said in an analysis.
The outlet said the AI industry has been one of the key drivers of risk-asset sentiment, including for BTC, since late 2022, and rising financial risks among AI-related companies could ripple into crypto as well. According to CoinDesk, concern over AI companies’ ability to repay debt has recently intensified, with credit default swap trading surging as investors hedge against default risk.
Justin Bimonte of JPMorgan Private Bank said rising CDS prices do not necessarily mean a crisis is imminent, but they are a warning sign for risk. Unlike large AI companies with solid cash flow, some debt-reliant firms are now facing a significantly higher risk of default, Bimonte said.