Concerns about an imminent bubble burst have spread beyond individual sectors, dampening what could have been a strong rally as the year closes.
The Ripple Effect of the AI Bubble: Equities and Bitcoin Both Slide
In today’s market environment, fluctuations in stocks often lead to corresponding movements in bitcoin. This saying helps explain bitcoin’s unusual price behavior over the past two months. Despite substantial institutional investments, favorable regulatory developments for cryptocurrencies, and endorsements from major asset managers worth trillions, bitcoin has failed to ignite a typical year-end surge. Meanwhile, equities appear to be facing similar headwinds, with many attributing the downturn to excessive enthusiasm around artificial intelligence.
Explore further: Has Investor Sentiment Around Bitcoin Become Irrational?
Two main explanations link the AI hype cycle with bitcoin’s recent decline. One suggests that investors are reallocating funds from digital currencies into highly touted tech firms like Nvidia (Nasdaq: NVDA).
“Bitcoin began this year as the leading investment theme,” noted Alex Thorn, Galaxy’s head of research firmwide in a November client briefing. “However, attention and capital have shifted towards AI technologies, hyperscale cloud providers, gold assets, and dominant tech giants known as ‘The Magnificent 7,’ diverting resources away from BTC.”
The alternative perspective argues that fears surrounding an impending collapse of the AI bubble are pushing investors away from riskier assets such as bitcoin toward safer havens like gold and silver—both currently trading near historic highs.
Despite chipmaker Broadcom (Nasdaq: AVGO) reporting outstanding fourth-quarter earnings on Thursday—with revenues surpassing $18 billion (a 28% increase year-over-year)—its shares plunged nearly 12% on Friday. The company counts industry leaders such as Google, Meta Platforms Inc., Bytedance Ltd., and Anthropic among its key clients. CEO Hock Tan anticipates that sales of their AI-focused chips will double by Q1 2026.
“Honestly speaking,” Bernstein analyst Stacy Rasgon commented in his report reflecting sentiments shared by many cryptocurrency analysts since October,“it is hard to imagine what more investors could want given Broadcom’s accelerating outperformance within its AI segment.” He added that ongoing anxiety about investing in AI-related stocks continues despite these robust fundamentals.
Market Snapshot
At press time according to Coinmarketcap data points,
bitcoin was priced at $90,308.12,
down approximately 2.33% over twenty-four hours but showing a slight weekly gain near 0.93%.
Since Thursday afternoon, brackets between roughly $89,532.60 & $93,554.27 mark its recent volatility range.
The daily trading volume increased significantly by over one-third, +34.61%, reaching approximately $82 billion, b ut overall market capitalization dropped down below $1&period8 trillion.
<img src=" https://cnews24.ru/uploads/925/92590eff648689e06e1e42ca9adbc30051f6f320.png & quot alt = & quot BTC dominance chart & quot style = & quot width :100 % ; margin – bottom :16 px ; & quot /& gt ;
Total open interest for bitcoin futures declined slightly by around -1 .61 % , settling at just above $59 .12 billion , per Coinglass data . Liquidations on Friday totaled roughly $101 .88 million , primarily driven by long position losses accounting for nearly $77 .85 million , while short sellers contributed about $24 .03 million through liquidations .
Frequently Asked Questions ⚡
Why are both bitcoins prices along with stock markets experiencing difficulties recently ?
Investors worry that excitement regarding artificial intelligence might be overstretched causing withdrawal from high-risk assets including cryptos plus technology shares.
How does this so-called “AI bubble” relate directly towards bitcoins’ weakening ?
Initially some capital moved out of cryptocurrencies into promising A.I.-related equities however now broader concerns about bubbles prompt cautiousness across multiple financial markets.
Why do companies excelling within A.I still witness share price drops ?
Even when earnings reports exceed expectations—as seen with Broadcom—the prevailing negative sentiment surrounding crowded A.I trades can suppress valuations regardless of fundamentals.
Does this imply there won’t be any late-year market rebound?
Heightened prudence tied both macroeconomic uncertainties plus skepticism around artificial intelligence investments has cooled prospects for any significant rally before year’s end.