Bitcoin has seen its gains for the year wiped out as concerns that the artificial intelligence (AI) bubble is about to burst, writes John-Paul Ford Rojas.
The value of the world’s most popular cryptocurrency tumbled below $93,000, down from its all-time high of more than $126,000 just six weeks ago.
Its fall was described as an “ominous signal” for wider markets, after a chaotic period over the past week, when a Wall Street sell-off was followed by a sharp plunge in the FTSE100 on Friday.
Investors are anxious over warning signs that a surge in AI stocks that has propelled US markets to a series of highs could prove overdone.
Chip maker Nvidia, which reports financial results tomorrow, has been the biggest beneficiary of the bull run, making it the world’s most valuable company.
Yesterday, however, it emerged that tech billionaire Peter Thiel had sold his entire stake in Nvidia, worth an estimated $100m (£76m).
It follows the decision by Japanese investing giant Softbank to dump its £4.4bn holding in the chipmaker, with Softbank finance chief Yoshimitsu Goto admitting: “I can’t say if we’re in an AI bubble or not.”
The Bank of England and the International Monetary Fund have both warned in recent weeks about the risk of a bubble.
Markets are also worried about the path of US interest rates.
Jobs data due out this week – delayed after the 43-day US government shutdown – could change the picture for rate setters ahead of their next meeting in December.
That has left investors anxious that a further hoped-for cut may not materialise.
The volatility has weighed heavily on Bitcoin, which began the year just above $93,000 after a Trump-inspired rally took it to record highs.
But the price has now sunk back below where it was at the end of December.
Kyle Rodda, senior market analyst at trading platform Capital.com, said: “Bitcoin is sending an ominous signal.
“So often the canary in the coal mine for broader risk assets, the wiping out of year-to-date gains suggests risk appetite is diminishing significantly in the markets.”
Investors are anxious over warning signs that a surge in AI stocks that has propelled US markets to a series of highs could prove overdone. (Pic: Getty Images)
Stocks were again on the back foot yesterday.
The FTSE100 ended in the red for a third session in a row, down by 0.2pc, or 22.94 points, at 9675.43.
That left it more than 200 points below an all-time high achieved less than a week ago, diminishing hopes it could soar to 10,000 by the end of the year.
New York stock indices were also once again in the red.
