U.S. tech stocks recorded their biggest drop since the COVID-19 pandemic, pushing Bitcoin (BTC) back below the $80,000 mark to around $75,000. On-chain analyst Axel Adler Jr. pointed to the U.S. tech selloff as the backdrop for the pullback in a newsletter on the 6th, assessing that the risk of deleveraging in the crypto market remains until stock market jitters subside.
The Nasdaq 100 index fell as much as 6.36% intraday to 26,630, the S&P 500 tech sector dropped 7.3%, and the Philadelphia Semiconductor Index slid 12%. Companies whose earnings are heavily tied to the expansion of artificial intelligence (AI) infrastructure saw particularly steep declines. Over the same period, the VIX index, a gauge of market volatility, soared roughly 70% in a single day, from 16.6 to 28.2.
Adler explained that concerns that data center construction regulations could be tightened after the U.S. midterm elections weighed on sentiment toward AI-related stocks. He added, however, that the election results alone have not halted actual data center projects.
He analyzed that when volatility spikes, some funds may reduce holdings to comply with risk limits, and in that process risk assets such as Bitcoin also come under selling pressure. In other words, price corrections can occur even without a clear deterioration in Bitcoin's on-chain metrics.
The Nasdaq and the VIX are cited as the variables that will determine the direction ahead. "The Nasdaq stabilizing and the VIX declining could be a signal that external pressure on Bitcoin is easing," Adler said. On the other hand, he noted, "as long as the stock market selloff continues, the risk of further position reductions in the crypto market remains."
The pullback shows that, with expectations for the AI infrastructure investment cycle having underpinned valuations across risk assets including crypto, concrete movement on data center regulation could amplify volatility in both tech stocks and digital assets together. Conversely, if volatility indicators calm down, there is room for a relief rally across risk assets.
