Bitcoin briefly slipped below $62,000 on Tuesday as a sell-off in AI-linked technology stocks spilled over into cryptocurrencies. Traders also held back ahead of the Federal Reserve's policy decision on Wednesday, with CME FedWatch showing roughly a 32% chance of a surprise quarter-point hike. Most altcoins fell alongside it.
Bitcoin retreated on Tuesday and briefly slipped below $62,000, as a sell-off in artificial-intelligence-linked technology stocks spilled over into cryptocurrencies. The world's largest cryptocurrency was last down 1.4% to $63,890.0 by 17:25 ET. Investors also braced for a pivotal Federal Reserve policy decision on Wednesday.
Asian chip stocks lead the AI rout
The cryptocurrency selloff coincided with a sharp decline in Asian technology stocks, led by South Korea's KOSPI, which slumped more than 10% as investors dumped AI-related chipmakers. Samsung Electronics and SK Hynix shares fell sharply amid concerns over the sustainability of massive AI infrastructure spending, while intensifying competition from Chinese memory-chip makers further weighed on sentiment.
That weakness then seeped into Wall Street on Tuesday, with the Nasdaq Composite the only major index closing lower.
Traders turn cautious before the Fed decision
Market participants also remained cautious before the conclusion of the Fed's two-day meeting on Wednesday. Traders are pricing in roughly a 32% chance of a surprise quarter-point rate hike this week, while expectations for a September increase have climbed above 80%, according to CME FedWatch. Higher interest rates tend to reduce the appeal of non-yielding assets such as cryptocurrencies.
Separately, Bitcoin has struggled to sustain its recovery after rebounding from earlier lows this month, with recent gains undermined by continued outflows from U.S.-listed spot Bitcoin exchange-traded funds.
The market also assessed improving geopolitical sentiment after the U.S. and Iran shifted toward diplomatic talks, with both sides holding off attacks since Sunday. Attention is also turning to a busy week for technology earnings, with results from major AI-focused companies expected to test whether heavy spending on AI infrastructure can keep supporting broader risk appetite.
Altcoins largely dip
Most altcoins fell on Tuesday amid the cautious mood. Ethereum shed 1.1% to $1,920.11. XRP slid 2% to $1.0650.
Solana eased 1.9%. Cardano, however, added 0.9%. Among memecoins, Dogecoin lost 1.5%.
Source: Investing.com
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