Bitcoin tumbled through the psychologically significant $90,000 threshold on Thursday, surrendering recent gains as renewed anxiety over artificial intelligence profitability rippled through financial markets from the technology sector into cryptocurrencies.
The world’s largest digital currency declined 2.5% to trade at $90,056.24, while ethereum suffered a steeper drop, falling 4.3% to $3,196.62. The selloff wiped out two consecutive days of positive momentum for both assets, extending weakness that emerged during Wednesday’s U.S. trading session following the Federal Reserve’s monetary policy decision.
The cryptocurrency retreat came on the heels of the central bank’s third interest rate reduction of 2024. The Fed cut rates by a quarter point to a range between 4.25% and 4.5%, but signaled a more cautious approach ahead, projecting only two additional cuts in 2025 compared to the four previously anticipated.
However, the immediate catalyst for Thursday’s crypto selloff appeared to stem from growing unease in technology markets about the return on massive AI infrastructure investments. Oracle’s quarterly revenue came up short of expectations despite booming demand for AI infrastructure, sending shockwaves through AI-related stocks.
Cloud firm Oracle’s profit and revenue outlook missed forecasts, raising concerns that AI infrastructure spending isn’t converting to profits as quickly as investors hoped. The database giant’s disappointing guidance highlighted mounting concerns about whether unprecedented capital expenditures on data centers and AI capabilities will deliver anticipated returns.
Oracle has emerged as a bellwether for AI infrastructure spending, with the company committing to expand data center capacity to meet surging demand. Yet its latest results suggest the monetization timeline for these investments may be longer than markets expected, prompting executives across the sector to flag elevated spending levels without corresponding profit growth.
The contagion spread rapidly. AI-related stocks were hit following Oracle’s report, with chipmakers Nvidia and Advanced Micro Devices each dropping about 1%. The broader technology sector’s struggles weighed heavily on risk assets, with cryptocurrencies particularly vulnerable given their correlation with tech stocks and sensitivity to changes in monetary conditions.
Bitcoin’s decline below $90,000 carries symbolic weight for digital asset investors who had watched the cryptocurrency rally earlier this year on optimism surrounding spot Bitcoin exchange-traded funds and expectations of a crypto-friendly regulatory environment under the incoming administration. The retreat underscores persistent volatility in cryptocurrency markets and their susceptibility to shifts in broader market sentiment.
Adding to the bearish momentum, major financial institutions have begun tempering their bullish cryptocurrency forecasts. Standard Chartered slashed its expectations for Bitcoin to reach $200,000 by end of 2025, lowering its forecast to $100,000. The dramatic revision reflects growing recognition among analysts that the path to substantially higher prices faces significant headwinds.
The cryptocurrency selloff illuminates the complex web of factors influencing digital asset prices in late 2024. While the Fed’s monetary easing typically supports risk assets by reducing borrowing costs and increasing liquidity, concerns about inflation persistence and reduced expectations for future cuts have dampened enthusiasm. Federal Reserve Chair Jerome Powell emphasized Wednesday that progress on inflation “has been slower than expected,” signaling a more measured approach to policy normalization.
Meanwhile, the AI infrastructure spending concerns hitting technology stocks demonstrate how interconnected modern markets have become. Investors who poured capital into AI-related companies based on aggressive growth projections are now questioning whether the massive investments will pay off on expected timelines, creating a reassessment that’s reverberating across multiple asset classes.
For cryptocurrency markets specifically, the dual pressures of tighter-than-expected monetary policy and technology sector skepticism create a challenging environment. Bitcoin and other digital currencies have increasingly traded in tandem with growth-oriented technology stocks, making them vulnerable when sentiment in that sector sours.
The coming weeks will likely prove crucial for determining whether Bitcoin can stabilize above the $90,000 level or if further declines await. With the Federal Reserve signaling fewer rate cuts ahead and questions mounting about AI investment returns, cryptocurrency investors face a more uncertain landscape than many anticipated just weeks ago.
Market participants will be closely monitoring upcoming economic data releases, corporate earnings from other technology companies, and any policy signals from President-elect Trump’s transition team that could influence both monetary policy expectations and the regulatory environment for cryptocurrencies. For now, however, the message from markets is clear: enthusiasm for risk assets is being tested as investors grapple with persistent inflation, evolving central bank policy, and questions about whether transformative technologies can deliver promised returns.
WHAT YOU SHOULD KNOW
Bitcoin’s drop below $90,000 on Thursday reflects a critical shift in investor sentiment driven by two converging forces: the Federal Reserve’s more cautious stance on future rate cuts and mounting skepticism about AI profitability following Oracle’s disappointing earnings.
The cryptocurrency selloff demonstrates how digital assets remain tightly linked to technology stocks and sensitive to monetary policy changes. Most telling is Standard Chartered’s dramatic forecast revision—slashing its 2025 Bitcoin target from $200,000 to $100,000—signaling that the path to substantially higher crypto prices faces significant headwinds.
Cryptocurrencies are caught in a risk-off environment where concerns about whether massive AI infrastructure spending will deliver promised returns are spreading contagion across growth-oriented assets, while a less accommodative Fed dampens liquidity expectations that had fueled earlier rallies.
