Bitcoin tumbled sharply on Tuesday, dropping more than 6% to fall below $100,000 for the first time since June, as a broader risk-off sentiment rippled through financial markets.
Major US stock indexes also retreated, with tech and semiconductor stocks particularly weak. Shares of Nvidia fell 4%, while Palantir Technologies dropped over 8% despite strong quarterly results. Analysts cited warnings from Goldman Sachs and Morgan Stanley CEOs, who suggested equities could face a pullback of over 10% in the next two years.
“The market’s been moving higher based on earnings, but a risk-off pullback seemed likely even on minor disappointments,” said Keith Buchanan, senior portfolio manager at Globalt Investments.
Investor Caution Amid AI Optimism
Despite the sell-off, optimism around AI investments remains. Stocks climbed on Monday following Amazon’s $38 billion cloud deal with OpenAI, showing that artificial intelligence adoption continues to fuel investor interest.
However, investors are increasingly cautious amid tightening monetary policy and global market volatility. Treasury yields declined, with the US 10-year note falling 2 basis points to 4.087%, while the US dollar strengthened to a four-month high against the euro.
The S&P 500 fell 1.17% to 6,771.55, the Nasdaq dropped 2.04% to 23,348.64, and the Dow Jones Industrial Averageslipped 0.53% to 47,085.24. Globally, MSCI’s gauge of world stocks dropped 1.14%, and Europe’s STOXX 600 index fell 0.3%.
Cryptocurrencies and Risk Assets Feel Pressure
Bitcoin’s decline underscores growing investor caution in high-risk assets, including cryptocurrencies. Traders are reacting to mixed signals from the Federal Reserve, which recently cut rates but left future reductions uncertain, and global economic uncertainties.
“The tightening monetary conditions and risk-off sentiment are prompting investors to reduce exposure to volatile markets,” noted analysts.
Meanwhile, oil prices also eased, with US crude falling to $60.56 per barrel and Brent crude closing at $64.44, pressured by the stronger dollar.
As global markets adjust to rising caution, investors remain alert for further swings in both traditional equities and cryptocurrency markets.
