FameEX Hot Topics | Big Tech & AI Bubble Fears Spark Volatility Spillover into Crypto Markets

Bitcoin faced sharp downward pressure this week as a broad sell-off in U.S. equities dragged risk assets lower. The cryptocurrency fell below $86,000 for the first time since April, mirroring a steep decline in technology stocks. The tech-heavy Nasdaq Composite dropped 4% intraday on Thursday despite Nvidia delivering better-than-expected earnings and guidance. Investors appeared unnerved by the scale of capital being poured into artificial intelligence infrastructure and by shifting expectations around Federal Reserve policy.

Minutes from the Fed’s October meeting, released Wednesday, revealed growing concern among policymakers that additional rate cuts could rekindle inflation. Although nonfarm payrolls rebounded to 119,000 in September after the prior month’s decline, traders markedly reduced bets on aggressive easing. Market-based pricing now assigns only a 20% probability of the federal funds rate reaching 3.50% by the January 28, 2026 FOMC meeting—down sharply from 55% a month earlier. This reassessment fueled caution across both equity and crypto markets.

Even robust corporate results failed to stem the tide. Walmart surprised to the upside, yet broader worries about economic softening persisted. Analysts highlighted massive debt-funded spending by AI developers on data centers as a key risk. Gil Luria, head of technology research at D.A. Davidson, warned that these investments remain “inherently speculative” and could face a painful reckoning in two to three years. He added that Nvidia’s strong numbers do not yet prove the underlying economics of AI are maturing. Since hitting an all-time high on October 29, the Nasdaq has surrendered 7.8%—erasing ten weeks of gains in just a few sessions.

The tightening correlation between Bitcoin and technology stocks reached an 80% six-month peak, the highest level since spring. This close tracking suggests many investors are treating Bitcoin less as a decentralized store of value with predictable monetary policy and more as another high-beta risk asset sensitive to macro liquidity conditions and growth expectations. As uncertainty mounts over both AI capital allocation and the path of interest rates, Bitcoin continues to move in lockstep with the same forces pressuring the broader technology sector.

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