Bitcoin Slips Below $80,000 as Fed Meeting and AI Trade Worries Fuel Risk Aversion

Stock News
10/26

On Monday, rising overall risk aversion ahead of the Federal Reserve's policy meeting, combined with mounting investor concerns over artificial intelligence (AI) trades, weighed on the cryptocurrency market and pushed Bitcoin back below the $80,000 mark.

The world's largest digital asset by market value fell as much as 1.4%, dropping below $79,300, before paring some of those losses and hovering around $80,000 during Asian afternoon trading hours. Smaller tokens, including Ethereum, XRP, and Solana, also declined.

U.S.-listed spot Bitcoin exchange-traded funds (ETFs) saw $772.4 million in net outflows last Thursday and Friday, a sharp reversal from the more than $1 billion in net inflows earlier last week.

The drop came alongside a broader market slump that has extended from last week into this one. Investors are beginning to question massive AI spending while keeping an eye on upcoming earnings reports from tech giants this week, hoping to find clues about the market outlook.

South Korea's Kospi index — viewed as a bellwether for the AI trade — fell 0.2%, while chip-related stocks led declines in Japan's Nikkei index.

Caroline Mauron, co-founder of Orbit Markets, said: "So far, Bitcoin is still showing relative resilience compared with the AI debt concerns that are dragging down all risk assets." "The market's focus now shifts to the Fed meeting, and after that, the U.S. midterm elections."

Pratik Kala, portfolio manager at Apollo Crypto, said that for many systematic funds and algorithmic traders, Bitcoin still falls into the risk-averse asset category, making it vulnerable to deteriorating market sentiment. He pointed out that online discussions surrounding the AI trade, including comments by SpaceX and Tesla CEO Elon Musk about a possible consolidation next year, further intensified market pressure. He added that advances in the AI field have also heightened potential security risks facing cryptocurrencies, making some investors more cautious.

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