Crypto market sheds more than $1tn in six weeks amid fears of tech bubble

More than $1 trillion has been erased from the cryptocurrency market in the past six weeks — a 25% drop since early October across ~18,500 coins — with Bitcoin down about 27% to $91,212, as fading expectations of a US rate cut and mounting fears of an AI-driven tech bubble weigh on risk assets. Global equities also slid (FTSE 100 -1.2%, Stoxx Europe 600 -1.2%, Nikkei -3.2%, Hang Seng -1.7%) amid high-profile warnings from Alphabet CEO Sundar Pichai and Klarna chief Sebastian Siemiatkowski about “irrational” AI exuberance and oversized infrastructure investment, while Nvidia’s sky-high valuation (peaked at $4tn) and a Bank of America survey showing 45% of fund managers view an AI bubble as the top tail risk underscore systemic concerns. Safe-haven gold eased to $4,033.29/oz (-0.3%) as markets push back rate-cut expectations, though UBS expects a near-term trough followed by recovery if Fed easing resumes and central bank demand persists.

Analysis

Cryptocurrencies have lost more than $1 trillion of market value in the past six weeks, a roughly 25% decline since early October across ~18,500 coins, with Bitcoin down about 27% to $91,212 — its weakest level since April — driven in part by fading expectations of a US rate cut next month that reduce risk appetite. Global equities moved into risk-off mode concurrently: the FTSE 100 and Stoxx Europe 600 fell 1.2% each, Japan’s Nikkei plunged 3.2% and Hong Kong’s Hang Seng dropped 1.7%, reflecting broad market nervousness rather than a single-country shock. High-profile warnings from Alphabet CEO Sundar Pichai and Klarna’s founder about “irrationality” in the AI boom, alongside Nvidia’s earlier ascent to a $4tn market value and a Bank of America survey showing 45% of fund managers view an AI bubble as the top tail risk, underscore concentration risk in AI-heavy names and index-linked allocations. Gold, traditionally a safe haven, eased 0.3% to $4,033.29/oz (a one-week low) as traders push back on near-term Fed easing; UBS analyst Giovanni Staunovo expects gold to bottom soon and recover if the Fed resumes cuts and central banks continue diversifying into the metal, making monetary policy signals the key near-term catalyst for both risk and safe-haven assets.

Key Decisions for Investors

• Reduce or hedge directional crypto exposure given the 25%-plus market drawdown and heightened sensitivity to Fed rate-cut expectations,
• Trim concentration in AI-heavy and mega-cap index exposures (notably places where Nvidia-sized weightings dominate) to manage systemic and indexing risks,
• Monitor Fed communications and rate-cut probability closely and consider tactical gold exposure if central bank buying and resurgent easing materialize, while favoring high-quality, cash-generative equities for defensive rebalancing