Key Takeaways
- Higher inflation and interest rates could put further pressure on bitcoin’s price by making safer bonds more attractive.
- An extended Iran war and an AI market correction could trigger a short-term BTC sell-off, while rising public debt could strengthen the debasement argument.
- Bitcoin’s changing relationship with traditional markets means the IMF’s scenarios may not translate directly into BTC price movements.
In its World Economic Outlook (WEO) the IMF doesn’t mention bitcoin or other crypto assets. However, its analysis could affect this market, too.
More Pressure on Central Banks
Compared with its April forecast, the WEO kept its global growth forecast unchanged at 3.1% for this year and raised next year’s forecast by 0.2%, to 3.4%. The IMF raised its global inflation estimates by 0.3% for this year, to 4.7%, and by 0.4% for 2027, to 4.1%.
For the U.S., the IMF expects inflation to reach 3.6% this year and fall to 2.8% in 2027, still above the Federal Reserve’s 2% target. This would keep pressure on central banks to maintain tight monetary policies or raise rates further.
“Monetary policy is expected to be less supportive than assumed in April, given visible inflationary pressures combined with a muted slowdown in activity,” the IMF said, projecting further rate increases in both the U.S. and the euro area.
According to the report’s authors, core inflation is expected to return to 2% by the end of 2027 in Japan and the United Kingdom, and by mid-2028 in the euro area and the U.S.
Higher rates make non-interest-bearing assets, such as gold and bitcoin, less attractive because investors can earn more from safer bonds instead.
Therefore, this inflation-driven shift toward “less supportive” monetary policy is likely to keep pressure on bitcoin, too. Whether it halts potential rallies, limits their size, or triggers a correction remains to be seen.
The Debasement Scenario Tested in Real Time
The IMF estimates that the three-month U.S. government bond yield will average 3.8% in 2026 and 4.3% in 2027, while the 10-year yield will average 4.5% in 2026 and 4.6% in 2027. These are the IMF’s “working hypotheses rather than forecasts.” Meanwhile, in October, the 10-year U.S. Treasury yield is already above 5%.
The IMF said government bond yields had risen because of growing inflation, expectations for central bank rates, and fears about public finances. Competition from corporate borrowers, “in particular, technology firms looking to finance AI investments,” was also mentioned. However, the fund emphasized that financing remains relatively easy because high stock valuations offset tighter conditions elsewhere. If those valuations fall, then borrowing costs could rise quickly.
In one of its risk scenarios, the IMF assumes that the Iran war lasts until mid-2027 and bond prices fall. During that period, oil reaches $130 a barrel, long-term borrowing costs rise, and central banks in advanced economies raise rates by an additional 0.5% in 2027. Global growth slows while inflation spikes. This could weigh on bitcoin’s price, at least in the short term. However, the same scenario could add more than 3% of GDP to public debt in advanced economies by 2031, potentially supporting the currency debasement argument made by bitcoiners, who point to rising global debt and inflation.
Also, if the IMF is right that governments might try to pressure central banks into keeping rates lower and allowing inflation to run hotter, then that would further strengthen bitcoiners’ argument.
AI Scenarios and Their Effects on the Bitcoin Price
Speaking of AI, the IMF’s main scenario assumes that the AI boom “gradually moderates,” with no major productivity boost expected because adoption remains limited. So far, AI investments have helped offset the energy shock caused by the Iran war while also fueling inflation.
The World Economic Outlook also outlines three alternative scenarios for AI sector expansion:
- AI spending rises further, mainly in the U.S., and productivity gains arrive early.
- AI spending follows the same path as in the first scenario, but chip production in Asia cannot keep up.
- Markets correct sharply if the productivity gains from AI investment fail to materialize.
The first scenario might be the least unfavorable to bitcoin because the U.S. Federal Reserve would face less pressure to raise interest rates. However, it could also mean that capital flows toward AI investments rather than bitcoin.
The other two scenarios could create a less favorable environment for bitcoin: higher rates and a stronger dollar in the second scenario, and a potentially sharper initial sell-off in the third. The latter could eventually be followed by support from lower rates and a weaker dollar.
Additionally, an AI market decline would also hurt major Bitcoin miners that are pivoting to AI computing, potentially increasing pressure on them to sell their BTC holdings.
Bitcoin Has Its Own Market Drivers
In any case, while interest rates, bond market problems, and the AI boom have been among the strongest factors affecting bitcoin price, the asset has its own drivers and does not always behave as the market expects. For example, BTC rallied in September even as the Fed raised rates, as this move was already priced in. Bitcoin’s constantly changing correlations with gold and tech stocks also show that its relationship with traditional markets can shift.
Bitcoin price dipped to around $81,000 about an hour before the IMF published its report on Monday at 10 p.m. ET, then recovered to above $83,000 on Tuesday morning.
