Bitcoin drops 4% as oil surges and chip stocks slide 6.7%

• A 4% decline took Bitcoin to $81,360 as higher oil prices, US-Iran tensions and unease over AI expenditure weighed on the wider cryptocurrency market.
• The developments also hit altcoins: Ethereum, XRP and Solana each lost over 4%, while Zcash shed 10.6%.
• Continued investor caution over AI infrastructure expenditure accompanied falls of 4.4% in Nvidia and 7% in Meta.

Higher oil prices, concerns about artificial intelligence (AI) expenditure and mounting geopolitical tensions between the US and Iran drove a broad market sell-off on Thursday. Cryptocurrencies followed the wider market lower, taking Bitcoin (BTC) below $82,000.

Bitcoin slides below $82,000 as renewed macroeconomic concerns weigh

Macroeconomic concerns pushed the leading cryptocurrency down 4% to $81,130 and depressed prices across digital assets. According to Coinglass data, the fall prompted roughly $474 million in crypto futures liquidations over the past 24 hours.

Further selling pressure hit altcoins, taking Ethereum (ETH) down 4.4% to $2,376. Losses reached 5% for XRP, 2.8% for BNB and 4.1% for Solana (SOL), while Zcash (ZEC) and Hyperliquid (HYPE) shed 10.6% and 4.8%, respectively.

Cryptocurrencies linked to AI also suffered losses over 24 hours: NEAR Protocol (NEAR) fell 9%, Bittensor (TAO) lost 8% and Render (RENDER) declined 7%.

Technology shares retreat amid unease over AI expenditure

US equities weakened alongside the renewed pressure on cryptocurrencies. The Nasdaq lost 2.6%, while the S&P 500 declined 1.2%. Despite revenue exceeding expectations, Meta Platforms (META) shares dropped 7% amid investor concerns about increasing AI expenditure and the company’s plans to fund its expansion by issuing new shares.

A 4.4% decline in Nvidia (NVDA) accompanied losses of 9% in SpaceX (SPCX) and 3% in (TSLA), despite positive Q3 earnings. Underscoring the extent of the selling, the Philadelphia Semiconductor Index, a benchmark for US chip companies, fell 6.7%.

The scale of the selling suggests that robust demand for AI technology may no longer, on its own, reassure investors. Infrastructure expenditure and funding needs are instead attracting closer market scrutiny.

In an appearance covered in an interview with CNBC, Nvidia CEO Jensen Huang characterised demand for AI cloud infrastructure as “off the charts”. His comments underlined both the industry’s robust demand and the financial difficulties confronting infrastructure providers.

Adding to the uncertainty were geopolitical tensions between the United States and Iran. Fears that a potential escalation of the Middle East crisis could disrupt supply chains lifted Brent crude by 3.7% to $112 per barrel.

As investors moved towards safer assets during the market turbulence, the US 10-year Treasury yield dropped below 5%. Lower yields typically indicate stronger demand for existing government bonds, rather than necessarily pointing to better economic conditions.