Copper’s AI-Driven Rally Sparks Crypto Liquidity Concerns as Fed Remains in Limbo

Copper’s $6.06 per pound peak on Jan. 14, 2026, has created a financial crossroads where AI infrastructure demand and Federal Reserve policy uncertainty intersect, challenging assumptions about crypto liquidity.

The COMEX copper futures market revealed a paradox: volume dropped to 74,332 contracts on Jan. 15, 2026, while open interest climbed to 269,825, signaling position consolidation among institutional players.

This divergence suggests market participants are hedging against prolonged rate uncertainty rather than speculating on short-term price swings.

Minneapolis Fed President Neel Kashkari said:

"The question is, is it going to be two and a half percent by the end of the year...? I don't know."

J.P. Morgan Chief Economist Michael Feroli said:

"I do not expect the Fed to make any cuts this year."

The stark contrast between Kashkari’s uncertainty and Feroli’s hawkish stance reflects a policymaking vacuum. Amazon’s two-year copper agreement with Rio Tinto, disclosed by Wall Street Journal, further underscores industrial demand’s gravitational pull.

The tech giant’s contract—specifically for AI infrastructure—has shifted copper from a speculative metal to a foundational input for digital transformation.

Look, the physical commodity’s surge into AI supply chains creates a structural tension with crypto’s liquidity models. As central banks delay normalization, copper’s real-world utility gains a pricing premium that digital assets struggle to replicate. This dynamic could force institutional investors to rebalance portfolios toward tangible assets with clear industrial demand trajectories.

⚠️ LEGAL DISCLAIMER: This article is for informational purposes only and does not constitute financial or investment advice.