$BTC The AI Bubble Drags Down Bitcoin.
The key lesson from this sharp drop in Bitcoin is about the correlation and the transfer of fear between markets.
When Wall Street's 'fashionable asset', currently AI (Artificial Intelligence) stocks, shows signs of exhaustion or overvaluation, fear spreads to the higher-risk asset class, and that asset is Bitcoin (BTC).
The Mechanics of Fear:
1. AI Jitters: AI chip and technology stocks, like Broadcom (AVGO), fell sharply (10%) because their forecasts did not meet investors' "high expectations". This adds to Oracle's drop (10% the previous day). The market wonders: Is the AI bubble deflating?
2. Crypto Correlation: Bitcoin is not immune. When the Nasdaq drops more than 1% due to tech fear, traders sell risk assets, dragging BTC from $92,500 to $89,800 in hours. Even BTC mining companies that were diversifying into AI, like Hut 8 and Riot, fell along with Broadcom.
3. The Fed Factor: Uncertainty about the Fed persists. Although an official (Goolsbee) projects more rate cuts in 2026 than expected, Powell's (Fed Chair) cautious rhetoric keeps traders on edge, amplifying sensitivity to bad stock news.
📌 As fear over the profitability of massive investments in AI shakes Wall Street, "fast money" exits the risk market, affecting BTC. Bitcoin's consolidation below $90,000 suggests that the market will need very strong macroeconomic or fundamental news (like more clarity from the Fed) to overcome selling pressure during U.S. trading hours.
🖇️ The fear over AI stocks knocked down BTC. Do you think Bitcoin is already too dependent on Wall Street's troubles and gains?
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