The cryptocurrency market has suffered a dramatic loss of over $1 trillion in just six weeks, as investors grapple with the fear of a tech bubble and the possibility of a US rate cut next month. This decline is evident in the value of over 18,500 coins, which has plummeted by a quarter since early October, according to CoinGecko data. Bitcoin, a major player in the market, has seen a 27% drop in the same period, reaching its lowest point since April at $91,212. The situation is not limited to crypto; the stock market is also experiencing turmoil, with the UK's FTSE 100 index down 1.2% on Tuesday, and the Stoxx Europe 600 following suit. This comes on the heels of significant losses in Asia, where the Nikkei 225 index in Japan lost 3.2%, and Hong Kong's Hang Seng index dropped 1.7%. The concerns extend to the tech sector, with Sundar Pichai, the CEO of Alphabet, warning of irrationality in the AI boom. He predicts that if the AI bubble bursts, no company, including Alphabet, will be immune. This sentiment is echoed by Sebastian Siemiatkowski, the CEO of Klarna, who expresses nervousness about the substantial investments in computing infrastructure and the rising valuation of AI companies, such as chipmaker Nvidia, which recently hit a market value of $4 trillion. The situation is further complicated by the fact that pension funds are also investing in these high-risk assets, as pointed out by Siemiatkowski. The market's volatility is not limited to tech and crypto; the price of gold, traditionally seen as a safe haven, is also falling, with the spot price dropping 0.3% to $4,033.29 an ounce on Tuesday morning. This decline is attributed to the fading expectations of a US Federal Reserve rate cut, which would make gold less appealing due to its non-yielding nature. Despite the current market turmoil, Giovanni Staunovo, an analyst at UBS, predicts a recovery in gold prices, citing the Fed's potential rate cuts and central banks' continued diversification into gold.
