According to CNBC, Bitcoin’s November sell-off worsened significantly as investors grew worried about artificial intelligence stock valuations. The cryptocurrency dropped 2.5% on Tuesday to trade at $103,952, marking a 6% decline over just two days. Ether suffered even more dramatically, losing 2.5% in a single day and more than 10% over two days to reach $3,503. The sell-off coincided with Nasdaq futures falling 1.5% as investors dumped AI-linked stocks like Palantir despite solid earnings. Compass Point analyst Ed Engel noted that retail investors appear less engaged in buying dips compared to previous market cycles. The connection between crypto and AI stocks comes from shared investor bases that treat both as high-risk, high-reward bets.
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The Risky Relationship
Here’s the thing about Bitcoin’s supposed “safe haven” status – it completely falls apart when the same investors who piled into AI stocks start getting nervous. We’re seeing a classic risk-off move where everything speculative gets sold simultaneously. Bitcoin and AI stocks have become strange bedfellows because they both attract capital looking for explosive growth rather than steady returns.
And that creates a dangerous correlation. When Palantir’s valuation makes investors queasy, suddenly Bitcoin doesn’t look so appealing either. It’s basically the same crowd deciding both trades, which means when one goes, they all go. Remember when crypto was supposed to be uncorrelated with traditional markets? That narrative has completely unraveled.
Where Are The Dip Buyers?
Ed Engel’s observation about retail investors sitting this one out is particularly concerning. In previous cycles, every dip was met with frantic buying from retail traders convinced they were getting a discount. Now? Crickets.
Could this signal broader fatigue with crypto’s volatility? Or maybe retail investors simply don’t have the dry powder they used to after years of economic pressure. Either way, without that retail support, these sell-offs could get much uglier. The big question is whether institutions will step in where retail won’t – and so far, that doesn’t seem to be happening at scale.
The Domino Effect
Now we’re watching whether this becomes a self-fulfilling prophecy. If enough people believe the AI trade is overextended, they’ll pull money from everything risky – including crypto. And without the retail cushion we’ve seen in past cycles, there’s less to stop the bleeding.
The real test will be whether Bitcoin can decouple from tech stocks or if we’re in for more pain. Given how institutional the crypto market has become, I’m skeptical we’ll see that separation anytime soon. Basically, when Wall Street sneezes, crypto catches a cold these days. And right now, Wall Street is looking pretty congested.
