FameEX Hot Topics | AI and Big Tech Bubble Jitters Spread Volatility to Bitcoin and Crypto

Bitcoin this week endured intense selling pressure, plunging below $86,000 for the first time since April as U.S. equities suffered a broad risk-off rout. The move closely tracked a sharp drop in technology stocks, with the Nasdaq Composite tumbling as much as 4% intraday on Thursday—even after Nvidia reported earnings and guidance that soundly beat Wall Street estimates. Investor anxiety centered on two fronts: the torrent of capital flowing into AI infrastructure and a sudden recalibration of Federal Reserve rate-cut expectations.

Wednesday’s release of the Fed’s October meeting minutes showed policymakers increasingly wary that further easing could entrench higher inflation. Despite a rebound in September nonfarm payrolls to 119,000, traders slashed bets on aggressive cuts. Markets now see just a 20% chance of the federal funds rate falling to 3.50% by the January 28, 2026 FOMC meeting, down from 55% a month ago. The shift toward caution rippled through both stocks and crypto.

Strong corporate results offered little relief. Walmart delivered an upbeat surprise, but fears of economic softening overshadowed the news. Analysts flagged massive debt-financed data-center buildouts by AI leaders as a looming risk. D.A. Davidson’s head of technology research, Gil Luria, described these projects as “inherently speculative investments” that could face a severe reckoning in two to three years, stressing that Nvidia’s stellar numbers do not yet confirm AI economics are maturing. From its October 29 peak, the Nasdaq has now shed 7.8%, wiping out ten weeks of gains in mere sessions.

Bitcoin’s correlation with tech stocks meanwhile surged to an 80% six-month rolling coefficient—the highest since spring. This tight linkage signals that many market participants are currently viewing Bitcoin less as a decentralized hedge with predictable supply dynamics and more as a classic high-beta growth asset, highly sensitive to liquidity conditions and macro growth sentiment.

With uncertainty swirling around both the sustainability of AI capital spending and the trajectory of interest rates, Bitcoin remains firmly tethered to the same forces battering the broader technology sector, underscoring its evolving role as a macro-driven risk asset rather than an independent store of value.

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