Bitcoin dropping.
Big Tech stocks falling, “AI bubble”, what is going on?
Why investors are nervous about Bitcoin — and why AI-related stocks are also suffering
Bitcoin depreciation:
In recent months, many investors have shown caution — and even disinterest — in both Bitcoin and companies focused on artificial intelligence (AI). There are several reasons for this nervousness, and understanding the broader picture helps make sense of where the markets may be heading.
A) Shift in risk sentiment.
Financial markets are more “risk-off”, meaning investors are less willing to take risks. This means many are leaving more volatile assets, such as Bitcoin, and moving money into instruments considered safer.
One of the consequences is that Bitcoin ETFs, which previously attracted heavy inflows, are now seeing outflows — less money coming in means less support for upward price movement.
B) Macroeconomic pressures.
Interest rates are still a concern: if central banks maintain high rates, investors tend to prefer safe-haven assets.
Additionally, geopolitical uncertainties or reinforced trade policies can harm confidence in risk markets.
There have also been periods of weaker liquidity in the crypto market, which amplifies declines when selling occurs.
C) Technical issues in the crypto market.
Part of the recent declines has been amplified by the fact that many traders operate with leverage (i.e., borrowed money to increase their position). When the price drops, liquidations (forced sales) occur, which push the price down further.
There are also strong outflows from institutional players (large investors), leaving less support for Bitcoin’s price.
Finally, there is a general atmosphere of intense fear: according to CoinDesk, the “Fear & Greed Index” for crypto recently fell to a very low level.
“AI Bubble”
Stocks of major companies linked to Artificial Intelligence (such as Nvidia, among other Big Techs) are also falling or raising concerns.
A) Exaggerated valuations.
Many investors bought AI stocks believing in a promise: that AI will grow *massively* in the coming years. But these projections are not always realistic. Some analyses say that many of these companies are priced as if they had already achieved that huge growth, when in reality current profits are nowhere near such expectations.
A recent study proposes a model (the Capability Realization Rate) that measures the gap between AI potential (what is promised) and what is actually being delivered — and warns of a major risk of imbalance between market value and real returns.
B) Huge operational costs.
AI is not just “magical software”: to work effectively it requires powerful data centers, many GPUs, large energy consumption — and all of this is expensive.
For example, Nvidia’s data center revenue (strongly tied to AI) has grown impressively, but that requires massive infrastructure investment. If investments are too large, it may take a long time before returns justify the spending.
Profit margins may be pressured: many major AI players depend on costly infrastructure, which can delay the moment of “big profits”.
C) Uncertain monetization.
Even with impressive advances, it is not yet guaranteed that all AI applications will generate huge revenues in the short term. Many business models are still experimental or depend on very large scale to become profitable.
This is why some investors are starting to question whether this boom is healthy growth or a bubble that may burst when expectations prove to be exaggerated.
Connection with Cryptocurrencies
Part of the nervousness around Bitcoin is being fueled by the decline in tech / AI stocks. When technology investors suffer, there is a contagion effect on risk markets, which includes cryptocurrencies.
Additionally, many investors who hold capital in “future-oriented” assets (AI, crypto, etc.) are the first to pull out when macro uncertainties arise.
There is also a narrative of a “double bubble”: both in crypto (Bitcoin) and in AI companies, part of the valuation has been driven more by hype and optimistic projections than by concrete profits in the present.
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