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Volatility and uncertainty in the big tech industry, along with concerns about Fed policy, stressed risk assets, sending bitcoin’s correlation with the Nasdaq to its highest level in months.
Crypto traders expect better liquidity as US fiscal pressure mounts and Trump pushes ahead with a tariff-based stimulus agenda.
The tech-heavy Nasdaq index suffered a 4% intraday drop on Thursday despite strong earnings and forecasts from chipmaker Nvidia. Investors expressed concerns about the costs of rising costs in the artificial intelligence sector, and Bitcoin (BTC) followed suit, falling below $86,000 for the first time since April.
Despite investor concerns about overvaluation in the market, billionaire investor Ray DeLeo said there was no clear trigger for the market’s near-crash. “The picture is pretty clear, because we’re in this bubble territory,” DeLeo told CNBC, and recommended that investors diversify into scarce assets like gold.
Delevingne added that his biggest fear is higher wealth taxes rather than tighter fiscal policy. However, contrary to Ray DeLeo’s view, market sentiment shifted after the United States reported a strong jobs report for September, prompting traders to doubt that the US Federal Reserve will further ease its monetary policy.
Nonfirm payrolls rose by 119,000 in September, reversing a decline from the prior month. Most FOMC participants Noted According to minutes of the October meeting released Wednesday, “Further cuts in the policy rate could increase the risk of higher inflation.” On Thursday, traders trimmed the odds of two interest rate cuts by January 2026, reflecting renewed caution among equity and bitcoin investors.
Based on implied prices in government bond markets, investors now assign a 20% chance that the FOMC will set interest rates at 350% on January 28, down from 55% a month ago. While the FOMC minutes show that many Fed policymakers are not in favor of an immediate rate cut, they offer little insight into how close the October rate cut actually is.
AI builds out strong earnings on costs and Walmart surprises in spotlight
Even with strong corporate earnings, including a positive surprise from Walmart, traders worry that the economy could weaken as AI developers like Openai. Gail Loria, head of technology research at DA Davidson, told “The concern is about companies taking on too much debt to build data centers,” CNBC said.
Data centers are “inherently speculative investments that may face payback two or three years from now,” Luria said, adding that NVIDIA’s earnings “are not a reliable gauge of whether the AI economics are really maturing.” The tech-heavy Nasdaq index is now down 7.8 percent since its all-time high on Oct. 29, having made gains over the past 10 weeks. Investors responded by pulling back from risk markets.
Related: BitCoin Slip to 86k Brings BTC Closer to ‘More Pain’ But Great ‘Discount’ Zone
Amid heightened uncertainty, Bitcoin’s price movements continued to mirror trends in the tech sector. The correlation between the two asset classes climbed to a six-month high of 80 percent, suggesting investors are paying less attention to bitcoin’s strengths in decentralization and predictable monetary policy.
Bitcoin traders, essentially, are not short of 90,000 and are likely waiting for clear entry points as the broader macro conditions remain volatile. If Dalio is right, panic sellers may regret their exits, as liquidity conditions may improve while the U.S. debt crisis lingers and U.S. President Donald Trump pushes ahead with his “tariff dividend” proposal aimed at stimulating the economy.
This article is for general information purposes and is not intended and should not be construed as legal or investment advice. The views, opinions and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of QuintalGraph.