More than $1tn has been wiped from the global cryptocurrency market in the past six weeks as investors react to concerns about a possible technology bubble and declining expectations of a US interest rate cut next month.
According to CoinGecko, which tracks more than 18,500 digital assets, the total value of the crypto market has dropped by 25% since early October. Bitcoin has fallen 27% in the same period to $91,212, its lowest level since April.
The sharp decline in crypto prices comes alongside broad weakness in global stock markets. The UK’s FTSE 100 fell 1.3% on Tuesday, marking its fourth consecutive daily loss and the worst performance since April.
Europe’s Stoxx 600 fell 1.8%, while the Dow Jones, Nasdaq, and S&P 500 were each down about 1% in the US. Asian markets also suffered. Japan’s Nikkei 225 dropped 3.2%, and Hong Kong’s Hang Seng fell 1.7%.
Investors have become increasingly cautious over the rapid rise in artificial intelligence–related stocks and the growing risk of an overvalued tech sector. Concerns about high valuations in areas such as cloud computing, advanced chips and data infrastructure have added to the risk-off tone in markets.
Gold, which typically benefits during periods of uncertainty, also declined. The spot price slipped 0.3% to $4,033.29 an ounce on Tuesday after hitting a one-week low. The drop reflects cooling expectations that the US Federal Reserve will cut interest rates next month, as higher rates make non-yielding assets like gold less attractive.
Analysts expect gold prices to stabilise once interest rate expectations become clearer and note that central bank demand for gold remains strong.
