Bitcoin dips below US$80,000 as AI-related market selloff deepens

Bitcoin's value slipped below US$80,000 on Monday (Oct 26) as investors became increasingly risk-averse ahead of a Federal Reserve meeting and were concerned about the artificial intelligence sector. The digital asset plummeted by up to 1.4% to under US$79,300 before recovering slightly to around US$80,000 in Asia's afternoon trading.

Other cryptocurrencies, such as Ether, XRP, and Solana, also experienced declines. This downturn followed a massive withdrawal of US$772.4 million from US-listed spot Bitcoin exchange-traded funds on Thursday and Friday, after a week of net inflows exceeding US$1 billion. The decline echoed a broader market slump, with investors questioning the significant investment in AI and awaiting earnings reports from tech giants for insight into the market's future.

South Korea's Kospi Index, a key indicator for the AI sector, dropped 0.2%, while Japanese chip-related stocks suffered significant losses. Caroline Mauron, co-founder of Orbit Markets, noted that Bitcoin had managed to remain relatively stable despite the AI-linked financial concerns affecting other assets. However, market attention is now shifting towards the Federal Reserve meeting and the upcoming US midterm elections.

Pratik Kala, a portfolio manager at Apollo Crypto, attributed the market strain to recent online discussions about AI, including comments from Tesla CEO Elon Musk, who suggested potential consolidation in the sector next year. The potential security risks associated with AI also contributed to investor apprehension. Experts suggest that the current AI-related market downturn has left Bitcoin vulnerable to further sentiment deterioration.