Nasdaq’s 5.5% Plunge Ripples Into Crypto as AI Investment Fears Mount
Cointime reports: US equities suffered a sharp selloff on Wednesday, with the Nasdaq Composite tumbling 5.5% and erasing all gains from the previous session’s midterm-election rally. The crypto market was quick to follow, with bitcoin falling from around $81,000 to below $76,000.
The trigger was a sudden reassessment of the AI investment boom that has powered US stocks for two years. Companies like Nvidia, Amazon, and Microsoft have poured billions into AI infrastructure, but investors are increasingly questioning when those outlays will translate into actual profits. Data center construction, chip procurement, and power supply are driving capital expenditures higher, and some firms are leaning more heavily on debt financing.
Semiconductors Lead the Rout
The Philadelphia Semiconductor Index dropped sharply, with Nvidia and AMD among the biggest decliners. The scale of investment keeps growing, but AI profitability remains unproven, prompting markets to reprice what had been lofty growth expectations.
Political uncertainty added to the mix. After Democrats made gains in the midterm elections, investors began scrutinizing how future congressional and local policies might affect AI infrastructure buildouts. Data centers are not just corporate investments—they also impact electricity supply, water usage, and residential costs. Texas’s incoming governor has proposed pausing new data center approvals until protective measures are in place. While these moves do not signal a blanket restriction on AI, they introduce fresh variables for expansion plans.
Crypto Feels the Heat
The equity selloff quickly transmitted to digital assets. Bitcoin, still a risk asset despite its own cycle, could not escape as investors reduced exposure. The prior rebound lacked strong capital support: US spot bitcoin ETFs saw net inflows of about $74 million on November 4, but had bled over $400 million in the two prior sessions. Leverage liquidations amplified the drop, with roughly $1.25 billion in total liquidations over 24 hours—$1.1 billion of which were longs.
In the near term, caution is warranted. The Nasdaq has entered correction territory, and valuation repair for AI tech stocks will take time. If US equities continue to weaken, crypto will likely face further pressure. The core issue is a repricing of risk, not a change in the long-term fundamentals of AI or crypto. After this adjustment, markets may need to find a new direction—but a turning point will eventually come. Patience is key.
