AI bubble bursts? Chinese chip stocks crash as Bitcoin stumbles on Binance hack and investors fear the worst

Just a few months ago, nothing seemed able to stop the rise of AI stocks and cryptocurrencies. Bitcoin climbed from a low of around $60.000 to $85.000, and a new bull run appeared to be under way.

Today the picture looks far less rosy. Investors are increasingly asking whether the spectacular AI rally of recent years is giving way to a broader correction that will hit both technology stocks and digital assets.

Shanghai

In China, the damage is now considerable. Shanghai’s STAR 50 Index, which is made up mainly of companies active in AI, semiconductors and advanced technology, has fallen by about 40% since its July peak. An estimated $480 billion in market value has been wiped out in just four months. What was once seen as the most popular investment of 2026 has therefore become one of the year’s most painful losses.

Concerns are also mounting elsewhere in Asia. South Korea’s Kospi index is trading well below its summer highs too. Technology companies and growth stocks in particular are under pressure as investors take profits and take an increasingly critical view of the sky-high valuations paid during the AI hype.

Binance

The crypto market has not escaped either. For a long time, Bitcoin appeared to be heading for a new bull market, driven by institutional demand and optimism about digital assets. But that momentum suffered a severe blow after this week’s major hack at crypto exchange Binance. Although the market initially proved resilient, the incident has raised fresh questions about security, regulation and investor confidence.

Analysts point out that risk assets such as AI stocks and cryptocurrencies often move in the same direction when market sentiment turns. When investors want to reduce risk, these categories are often the first to be sold.

Correction

Does this mark the start of the long-awaited crash? Opinions are divided. Optimists describe it as a healthy correction after an unprecedented rise, while pessimists warn that the combination of falling technology stocks and weaker crypto markets could be the starting gun for a much larger downturn. One thing at least seems certain: the euphoria of the summer has given way to nervousness in the autumn. Bitcoin ended October down 7%.