Bloomberg commented that many of Wall Street’s most popular stocks suffered falls this week. This is particularly noticeable with Bitcoin, which has benefited from strong support for the crypto industry in recent months from the US government of President Donald Trump. This was reflected in the price, with Bitcoin reaching its all-time high of $125,000 in July.
At the end of January, the cryptocurrency was still trading at around $88,000, but things have now gone downhill, especially this week. On Friday, the price reached its preliminary low at around $60,000 before moving up again and reaching $71,000 on Friday afternoon. The price is now slightly above the level of 2024, i.e. the time before Trump’s election.
Bitcoin price under pressure
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The Bitcoin price has been falling for months, and the downward trend has recently accelerated.
A billion-dollar wave of liquidations in bets on the price development of Bitcoin is considered an important factor for the current sell-off. Many investors bet borrowed money – falling below critical price levels during the first downward movements led to automatic sales on the crypto exchanges, which in turn set off a chain reaction of sales.
Less desire for risk
However, experts also see the generally unsettled environment as the background for the sell-off. Analyst Jonathan Osswald from DZ Bank told the AFP news agency that Bitcoin’s decline had several key reasons. He referred, for example, to a “unsettled environment” due to geopolitical uncertainties such as the situation in Iran and Trump’s claims to Greenland, which is currently making risky investments generally less interesting.
The crypto markets in particular would also be burdened by the prospect of possible higher interest rates in the USA, which appear increasingly likely due to the nomination of Kevin Warsh as the new head of the US central bank Fed. This would make classic interest investments such as government bonds more attractive than investments such as stocks and cryptocurrencies. The latter benefit from high market liquidity. The declining interest of institutional investors in cryptocurrencies is also reflected in the market.
What happens next with Bitcoin remains to be seen. The overall price development shows that the cryptocurrency has suffered several sharp drops in its more than ten-year record hunt, but has always recovered again – accordingly, many investors are relaxed.
Uncertainty also in traditional markets
But Bitcoin also corresponds to the traditional markets – and things have been going well on these too recently. What was particularly notable was the abrupt price crash for precious metals, which temporarily put the brakes on a months-long record hunt. Here too, Warsh’s nomination is considered a central factor. At least the price of gold has now recovered significantly, and experts assume that interest in precious metals will continue given the uncertain global situation.
However, many tech stocks were under pressure this week. The specific trigger for the decline was panic over the development of AI tools – specifically the introduction of an additional module for the chatbot Claude from the AI company Anthropic, which makes it easier to complete legal tasks and financial analyzes.
The presentation immediately caused many financial services and Software as a Service (“SaaS”) stocks to plummet due to fears that these companies’ customer numbers could be affected by AI tools. An S&P industry index on “SaaS” companies fell from 15,896 points on Monday to around 13,000 points by Friday afternoon. Microsoft, Adobe, Salesforce and Oracle were among those affected, and the sales spread to the entire tech sector.
Concern about AI investments
In addition, investors are increasingly concerned about the ever-increasing investments by large corporations in their AI divisions. Those affected include Google parent Alphabet, Meta and Amazon. The latter wants to invest around 200 billion US dollars (around 170 billion euros) in AI, chips, robotics and satellites this year, as the group announced on Thursday after the US stock market closed.
According to Amazon boss Andy Jassy, the majority of the money will go to expanding AI infrastructure. Amazon was punished for this before the market, and the shares lost eight percent.
US stock exchanges on record course
On Friday the mood on the US stock exchanges changed. The US leading index Dow Jones exceeded the 50,000 point mark for the first time in its history. The index temporarily reached a daily high of almost 50,015 points. The S&P 500 and NASDAQ Composite also rose.
