More than $1 trillion has been lost from the cryptocurrency market recently, sparking concerns about a potential tech bubble. This drop follows a 25% decline since early October, as reported by CoinGecko, which tracks over 18,500 cryptocurrencies. Bitcoin, a key player, is down 27%, currently priced at $91,212.
Global investors are nervous about the impact of a potential bubble in artificial intelligence. Sundar Pichai, head of Google’s parent company Alphabet, expressed concern that no company is safe if the AI bubble bursts. He described the current enthusiasm as “irrational.”
Sebastian Siemiatkowski, CEO of Klarna, voiced similar worries about massive investments in AI and computing infrastructure. He pointed out that while companies like OpenAI may thrive, the significant sums poured into these ventures are unsettling. The rising value of AI companies, notably Nvidia, which recently became the first to achieve a market valuation of $4 trillion, adds to these concerns.
These rapid value increases raise alarm, particularly as they can affect personal investments indirectly. Siemiatkowski cautioned that many people’s pensions might be tied to these high-risk assets, which could lead to widespread losses.
A recent survey by Bank of America found that 45% of fund managers now view the AI bubble as the biggest market risk. Meanwhile, gold prices, traditionally seen as safe, have also dropped. Gold is now trading at around $4,033.29 per ounce, down 0.3%. This decline is linked to reduced expectations of a US interest rate cut.
Giovanni Staunovo, an analyst at UBS, predicts that while gold might drop further, it will eventually rebound as he expects rate cuts from the Federal Reserve in the coming quarters and strong demand from central banks diversifying into gold.
The current market landscape underscores a cautious approach. With uncertainties in both tech and traditional assets, experts recommend keeping a vigilant eye on developments.
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