Key takeaways:

• Volatility in Big Tech and fears around an AI-driven spending bubble pushed risk assets lower and raised Bitcoin’s correlation with the Nasdaq to multi-month highs.
• Traders expect liquidity to improve later as U.S. fiscal pressures grow and a tariff-focused stimulus agenda is discussed.
• Strong jobs data and Fed minutes trimmed the odds of near-term rate cuts, increasing caution among equity and Bitcoin investors.

Bitcoin plunges with tech-led market selloff

Bitcoin slumped as volatility and uncertainty in Big Tech, combined with worries about Federal Reserve policy, pressured risk assets. The tech-heavy Nasdaq fell as much as 4% intraday on Thursday despite solid earnings from Nvidia, and Bitcoin followed suit, dropping below $86,000 for the first time since April.

Nasdaq, AI spending and correlations

Investors grew uneasy about surging AI-related spending even in the face of strong corporate reports. That anxiety helped push the Nasdaq down, wiping out recent gains, and pushed the correlation between Bitcoin and the tech index up to about 80% — a six-month high. The move suggests traders are treating Bitcoin more like a risk-on tech asset than a separate store of value.

Ray Dalio’s bubble warning, mixed market signals

Billionaire investor Ray Dalio said markets look like they are in “that territory of a bubble” and advised diversifying into scarce assets such as gold. He cited higher wealth taxes as a bigger fear than tighter monetary policy. Yet market dynamics remain mixed: a stronger-than-expected U.S. jobs report for September rekindled doubts that the Fed will ease soon.

Jobs data and Fed minutes tighten expectations

U.S. nonfarm payrolls rose by 119,000 in September, reversing the prior month’s decline. Minutes from the Federal Open Market Committee’s October meeting showed many participants thought further rate cuts could risk higher inflation. Traders reacted by cutting the odds of two interest-rate cuts by January 2026. Based on government bond pricing, investors now assign a roughly 20% chance the FOMC will set rates at 3.50% on Jan. 28, down from 55% one month earlier.

AI build-out costs overshadow earnings

Even with strong corporate results — including a surprise from Walmart and robust guidance from Nvidia — analysts warned that heavy AI infrastructure spending could pressure the economy. Gil Luria, head of technology research at D.A. Davidson, said companies are taking on debt to build data centers, which are speculative investments that could face a reckoning in a few years. That fear helped push investors out of risk markets despite earnings strength.

How Bitcoin traders are positioned

Bitcoin traders are not necessarily bearish under $90,000. Many are waiting for clearer entry points as macro conditions remain unstable. The recent sell-off reflects a pivot away from viewing Bitcoin’s strengths in decentralization and predictable monetary policy, toward treating it as correlated with big tech and AI optimism/fears.

Liquidity outlook and political stimulus talk

Some traders expect liquidity to improve later as U.S. fiscal pressures grow. The article suggests liquidity could get a lift if U.S. fiscal problems persist and political proposals — like a tariff-focused “tariff dividend” stimulus — gain traction. In that scenario, panic sellers might regret early exits if liquidity returns.

What to watch next

• Whether the tech-led risk-off continues or recovery in liquidity stabilizes Bitcoin.
• Fed communications and economic data that could reshape rate-cut expectations.
• The trajectory of AI build-out spending and any signs of a longer-term reckoning for speculative data-center investments.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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