Bitcoin fell below the $80,000 mark on Monday as investors became more cautious ahead of a key Federal Reserve meeting. Concerns over heavy spending on artificial intelligence (AI), rising oil prices and uncertainty in global markets also put pressure on cryptocurrencies.
Investors are questioning the massive amounts of money technology companies are spending on AI. These concerns have affected technology stocks and other risky investments, including cryptocurrencies. Chip-related stocks were also among the biggest decliners in Japan’s Nikkei Index.
Bitcoin, the world’s largest cryptocurrency, fell as much as 1.4% to below $79,300 before recovering some of its losses. It later traded around $80,000 during afternoon trading in Asia , according to Bloomberg. South Korea’s Kospi Index, which is closely watched as an indicator of the AI trade, fell 0.2%.
Investors are also watching upcoming earnings reports from major technology companies for clues about whether heavy AI spending will pay off, according to Bloomberg. The weakness in technology stocks continued in Asia on Monday.
Kala also pointed to online discussions about AI, including comments by SpaceX and Tesla CEO Elon Musk about possible consolidation in the sector next year.
Pratik Kala, portfolio manager at Apollo Crypto, said Bitcoin remained part of the risk-off category for many systematic funds and algorithmic traders. This means that when market sentiment weakens, these investors may reduce their exposure to Bitcoin, putting further pressure on its price, according to Bloomberg. These discussions contributed to the uncertainty affecting markets, according to Kala.
Ether, the world’s second-largest cryptocurrency, fell 0.9% to $2,320.05 on Monday. XRP declined 0.5%, Solana dropped 0.2%, Cardano fell 0.8%, and BNB slipped 0.2%. Because inflation remains persistent and energy prices pose additional risks, all three central banks are expected to maintain a cautious approach.
Their outlooks could leave the possibility of further interest rate hikes later this year open.
However, prices remained close to their annual highs, keeping investors concerned about the possible impact on the global economy, according to Investing.com. Higher interest rates generally make risky investments, such as cryptocurrencies , less attractive and could put further pressure on prices, according to Investing.com. These declines reflected the broader weakness across the cryptocurrency market, according to Investing.com.
Oil prices fell on Monday after a report of further talks between Middle Eastern countries and Iran raised hopes of easing tensions.
