Key Points:
Disney and other consumer companies reported disappointing earnings, adding extra pressure to the market as the U.S. government resumed operations after a prolonged shutdown.
Analysts found no signs of insider-led sell-offs in Bitcoin; instead, Bitcoin's movements reflect general concerns about valuation and the stability of the U.S. economy.
The tech-heavy Nasdaq index fell 2.3% on Thursday, following cautious remarks from Palantir CEO Alex Karp about the profitability of the AI industry during the Yahoo Finance Invest event. Karp stated that not every AI application can "create enough value to justify its actual cost." Investors are worried that the U.S. economy may enter a period of weakness.
Shares of Palantir, Intel, and CoreWave all dropped by 6% or more that day. Bitcoin followed the overall risk-off sentiment, falling 6.5% after testing the $105,000 mark on Wednesday. This pullback triggered the liquidation of $350 million in leveraged long positions, likely causing the critical psychological support level of $100,000 to be breached.
Currently, there is almost no evidence that traders are particularly worried about Bitcoin itself, nor has any significant event triggered additional panic or uncertainty. Analysts emphasize that the recent selling pressure does not support the notion of "Bitcoin insiders cashing out." According to PlanB, the founder of the stock-to-flow model, long-term supply pressure mainly comes from holders active between 2017 and 2022.
Tesla's stock fell further as the company was forced to recall over 10,500 of its own energy storage systems. The $8,000 device, produced in the U.S., has received at least 22 reports of overheating, prompting precautionary measures. TSLA has already been under significant pressure after announcing plans to build a production line for 10 million Optimium humanoid robots annually in Austin.
Aside from the AI sector, traders have also lowered their expectations for the Federal Reserve's monetary policy path. According to the CME FedWatch tool, the implied probability of the Fed lowering rates below 3.5% by January 2026 has dropped to 20%, down from 49% on October 13. Analysts point out that the Fed's current primary concern is stubborn inflation, which still impacts low-income groups the most, according to Yahoo Finance.
U.S. President Trump signed a temporary funding bill to end the government shutdown, but White House Press Secretary Karoline Leavitt stated on Wednesday that some economic data for October may not be released. Former Fed Vice Chair Lael Brainard warned that AI investments are masking "cracks beneath the surface," with other sectors of the economy struggling due to weak demand.
Disney's stock plummeted 8% after reporting quarterly results that fell short of expectations, with its streaming and theatrical businesses under pressure. This entertainment giant joins the ranks of consumer companies with disappointing earnings reports recently, including DoorDash, Dollar Tree, and Starbucks.
After a record 43-day government shutdown, investors are now less certain about the economic outlook. Some analysts believe that U.S. GDP could decrease by 2% as a result, while others think that most negative impacts will be reversed with the restoration of federal spending. RBC analysts caution that interpreting U.S. employment data requires care, "because those on forced leave and essential workers will also be counted in the unemployment figures."
Investors need time to assess whether stock market valuations are too high and to evaluate the likelihood of the U.S. government injecting liquidity through tax cuts or stimulus checks. Until then, Bitcoin is likely to continue reflecting broader economic uncertainty, with a lack of consistent and reliable data further amplifying this volatility.
This article is for general informational purposes only and does not constitute legal or investment advice. The views expressed in this article are solely those of the author and do not necessarily reflect the official opinion or position of Cointelegraph.
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Original: “Three Reasons Why Bitcoin (BTC) and Risk Markets Sold Off: Is a Recovery on the Horizon?”
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