❓WHAT HAPPENED: The cryptocurrency market has lost over $1 trillion in value in six weeks amid concerns over a tech bubble and diminishing hopes for a U.S. interest rate cut.
👤WHO WAS INVOLVED: Investors, cryptocurrency holders, and financial leaders such as Sundar Pichai of Alphabet and Sebastian Siemiatkowski of Klarna.
📍WHEN & WHERE: The market decline began in early October, with global effects seen in the US, UK, Europe, and Asia.
💬KEY QUOTE: “No company is going to be immune, including us.” – Sundar Pichai
🎯IMPACT: The downturn has affected global markets, raised concerns about AI-related investments, and caused unease among financial analysts.
Over $1 trillion has been wiped from the cryptocurrency market in just six weeks, with the total value of over 18,500 coins dropping by a quarter since early October, according to CoinGecko. Bitcoin alone has seen a 27 percent decline, hitting $91,212, the lowest level since April.
This sharp decline is part of wider market concerns about a potential artificial intelligence (AI) bubble. Sundar Pichai, CEO of Alphabet, warned in an interview that “no company is going to be immune” if the bubble bursts. Similarly, Klarna CEO Sebastian Siemiatkowski expressed apprehension over the massive investments being funneled into computing infrastructure, stating, “That makes me nervous, because of the amount of wealth that is currently automatically allocated into this trend.”
Global markets have also reflected these anxieties. The FTSE 100 index in the United Kingdom fell 1.2 percent on Tuesday, marking its fourth consecutive day of losses. European markets followed suit, with the Stoxx Europe 600 also down 1.2 percent. In Asia, Japan’s Nikkei 225 dropped 3.2 percent, while Hong Kong’s Hang Seng index fell 1.7 percent.
Concerns are further compounded by falling expectations of a U.S. Federal Reserve interest rate cut next month. Gold, often viewed as a safe haven, has also experienced a price drop, with the spot price falling 0.3 percent to $4,033.29 per ounce. UBS analyst Giovanni Staunovo predicted a short-term decline in gold prices but remained optimistic about recovery, citing central banks’ continued diversification into gold.
A Bank of America survey found that 45 percent of fund managers view an AI bubble as the most significant risk to the stock market. Siemiatkowski added that the rising valuations of AI companies, such as Nvidia, which reached a $4 trillion market value this year, are concerning, particularly for pension funds tied to index investments.
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