AI panic hammers Nasdaq as Bitcoin slips below $76.000 and billions are wiped out

Financial markets took a heavy blow on Thursday as investors fled technology and AI stocks en masse. What began as a correction in chipmakers grew into a broad sell-off that hit both equities and cryptocurrencies hard. Bitcoin fell from around $80.000 to below $75.000, while other major cryptocurrencies also lost substantial ground. At the time of writing, Bitcoin is trading at $75.500.

Regulation

The trigger was growing concern about potentially tighter regulation of AI. Investors fear that the spectacular growth of the AI sector may have peaked. Companies that benefit from the huge investment in data centres and AI infrastructure were hit particularly hard.

According to Jay Hatfield, CEO of Infrastructure Capital Advisors, there is outright panic in the market. Investors are reassessing their expectations for the AI sector and factoring in a possible delay in the build-out of new data centres. As a result, chipmakers, server manufacturers and suppliers of AI infrastructure were sold off in particular.

The Nasdaq lost as much as 5 per cent yesterday, officially entering correction territory. Other US equity indices also took heavy hits.

Bitcoin

The fear was not confined to the stock market. Crypto investors also headed for the exits en masse. Bitcoin, which earlier this week was flirting with the start of a new bull market, shed thousands of dollars in value within hours. Analysts note that Bitcoin is increasingly treated as a risk asset akin to a technology stock, which makes it extra sensitive to shocks in the tech sector.

Meanwhile, investors are once again seeking safety in government bonds. US Treasuries rose sharply in value, pushing the yield on the ten-year note back to its lowest level since September.

The big question now is whether this is a temporary panic reaction or the start of a much deeper cooldown in the AI hype that has driven markets to record highs over the past year.