Bitcoin Stuck Near $65k as AI Boom Drives Inflation

Bitcoin has bounced back to the $65,000 range, trading near $65,975 after briefly crossing $66,000 for the first time since early June. United States spot Bitcoin ETFs brought in $203.2 million on Tuesday to notch six straight days of positive inflows. Even so, these inflows remain tiny when compared to the massive $6.9 billion pulled out by investors during May and June.

The main roadblock for Bitcoin is no longer just internal market trends. The surging artificial intelligence sector is driving up demand for data centers, electricity, and high tech equipment. Major companies are spending billions on these projects, which is keeping inflation sticky and stopping the Federal Reserve from cutting interest rates quickly.

Because inflation remains high, bond yields have climbed. The two year Treasury yield recently hit 4.301 percent, making safe government bonds much more attractive than risky digital assets. At the same time, massive investor capital that might usually flow into crypto is heading straight into semiconductor stocks and AI infrastructure companies instead.

Traders are now watching the upcoming Federal Reserve decision on July 29 for signs of a shift in monetary policy. Bitcoin likely needs falling bond yields, lower inflation, and much larger institutional inflows to finally break out of its current trading range.