This article is reprinted with permission from Bitpush, author: Bootly, copyright belongs to the original author.
Before the market awaited Nvidia's earnings report, global risk assets had already reacted in advance: sentiment shifted from panic to "stampede" panic.
On Tuesday, the Dow Jones Industrial Average fell by 499 points, a decline of 1.07%; the S&P 500 fell for four consecutive days, marking its longest losing streak since August; the Nasdaq has dropped over 6% since reaching a historic high in October, evaporating approximately $2.6 trillion in market value.
The cryptocurrency market, seen as a barometer for high-risk assets, experienced a "bloodbath": Bitcoin briefly fell below $90,000 for the first time in seven months; Ethereum dropped below the $3,000 mark.
Behind the synchronized plunge of U.S. stocks and the cryptocurrency market, investor panic over the "AI bubble" and uncertainty regarding the Federal Reserve's monetary policy are forming a dual "blow."
This decline is closely related to the AI topic.
Earlier today, Nvidia and Microsoft announced plans to invest up to $10 billion in Anthropic for the next round of computing power competition. This was supposed to be a positive news symbolizing future growth momentum in the industry, but it hardly boosted the market.
In the past six months, large tech companies have seen exponential growth in investments in AI infrastructure—data center construction, energy expansion, and GPU procurement, all amounting to hundreds of billions of dollars. Nvidia's market value once surged to $500 billion, and the weight of AI companies in the S&P 500 is rapidly approaching one-third.
This has led to increasingly loud voices in the market fearing that the "bubble is accelerating."
Sundar Pichai, CEO of Google's parent company Alphabet, pointed out in an interview with the BBC that the current AI craze has "irrational components." He warned, "If the AI bubble bursts, no company will be able to stand alone, including us."
Wharton School professor Jeremy Siegel stated in an interview with Bloomberg TV this week: "AI is revolutionary, but that doesn't mean valuations can detach from fundamentals."
This statement somewhat captures the contradictory emotions of investors: they are deeply confident in the future of AI but also worry that the gains of the past year have overdrawn future growth.
Therefore, before Nvidia's earnings report is released, some funds have chosen to retreat first and reassess the risk-reward ratio of the AI sector.
Sonu Varghese, a global macro strategist at Carson Group, noted in his analysis report: "The tech sector has been on a roll this year, so volatility is not surprising. The increased volatility in tech stocks is also due to highly concentrated risks—both in terms of index composition and investor holdings. Despite significant gains, investors heavily invested in AI-related stocks are always walking on thin ice; any pullback could trigger a chain reaction. More severely, when stock prices begin to fall, the simultaneous risk-diversifying behavior of many investors can exacerbate market turmoil."
Key economic data that was previously missing due to the government shutdown is being rapidly restored. The U.S. Department of Labor confirmed that it will complete all missing weekly initial unemployment claims data by this Thursday and will reissue the September PPI and import-export price index on November 25 and December 3, respectively.
However, the core anxiety in the market is not about "whether data is missing," but rather: after the data is restored, what kind of interest rate path will it indicate?
According to the CME FedWatch tool (as of November 19, Beijing time): the probability of the Federal Reserve cutting rates by 25 basis points in December is 48.9%, while the probability of maintaining the current rate is 51.1%.
In other words, the market's expectations for a rate cut in the near term are almost "fifty-fifty," making interest rate expectations particularly sensitive and fragile.
Tech stocks and crypto assets belong to the same category of assets that rely on high valuations and strong growth expectations, making them extremely sensitive to interest rate changes. If the upcoming data reinforces the narrative that "inflation remains sticky" or "the labor market is more resilient than expected," leading to a further delay in rate cut expectations, then the pressure of tightening liquidity will continue to loom over risk assets.
In recent years, the correlation between Bitcoin and U.S. tech stocks, especially the Nasdaq 100 index, has continued to strengthen. Recent data shows that the 30-day correlation between Bitcoin and the Nasdaq has reached approximately 0.80, a new high since 2022.
Industry insiders generally believe that Bitcoin's performance increasingly resembles a "leveraged tech stock," surging in bull markets and being sold off simultaneously during heightened risk aversion, with declines being amplified.
In the face of Bitcoin's pullback, opinions among crypto industry professionals have diverged:
Long-term profit-taking: Analysts like Gerry O’Shea from Hashdex Asset Management believe that Bitcoin's struggles are partly due to long-term holders taking profits and locking in substantial gains from recent years.
Technical alarms: Alex Kuptsikevich, chief market analyst at FxPro, pointed out that Bitcoin has fallen below the 50-week moving average, confirming the break of a two-year bull market trend. His predicted scenario is that Bitcoin may further test the 200-week moving average (around the $60,000 to $70,000 range).
"Extreme panic" signals: CoinMarketCap's sentiment index shows that current crypto investors are in a state of "extreme fear." However, Haider Rafique, global managing partner at OKX, believes that the market's performance in the coming days will determine whether this is merely a "sharp, temporary pullback" or will evolve into a "deeper reset."
Optimists call for entry: Ryan Rasmussen from Bitwise Asset Management remains optimistic, believing that when the market is at an extreme of "fear," it is the "perfect opportunity" for investors to establish existing positions or enter the market. Geoffrey Kendrick, head of digital asset research at Standard Chartered, noted in a recent report that the current Bitcoin pullback is a healthy adjustment within the cycle, and if it can hold the $100,000 area, Bitcoin will form new structural support.
In summary, the current market is in a typical "wait-and-see" period, with investors awaiting new directional anchors, including fundamental data, policy signals, and validation of the AI narrative. Until then, risk assets will enter a more restrained consolidation phase.
Related: Senator Tim Scott pushes for a vote on cryptocurrency market legislation in December
Original article: “Bitcoin Surrenders Early, Market Awaits Nvidia's 'Show'”
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