“Bitcoin Takes a Dip as Risk Appetite Fades Among Investors”

Crucial insights:

• Disney and other consumer brands fell short on earnings, intensifying stress in markets following the extended US government closure.

• Experts observe no indication of insider-led Bitcoin offloading, with BTC instead mirroring broader skepticism regarding valuations and US economic security.

The tech-focused Nasdaq Index decreased by 2.3% on Thursday after Palantir CEO Alex Karp expressed reservations about the profitability of the artificial intelligence field. In a discussion at Yahoo Finance’s Invest event, Karp stated that not every AI deployment will “generate sufficient value to warrant the actual expense.” Investors are concerned the US economy may be entering a weaker stage.

Shares of Palantir (PLTR), Intel (INTC), and CoreWave (CRWV) experienced daily declines of 6% or more. Bitcoin (BTC) mirrored the broader risk-averse trend, dropping 6.5% after probing the $105,000 threshold on Wednesday. This retracement triggered $350 million in liquidations of leveraged optimistic BTC positions, likely influencing the failure to maintain the crucial $100,000 psychological support.

There is scant evidence suggesting that traders are particularly anxious about Bitcoin or that any significant event has provoked additional fear or uncertainty. Experts highlight that the recent selling pressure does not substantiate the narrative that Bitcoin insiders are liquidating assets. According to PlanB, the originator of the stock-to-flow model, the long-term supply pressure emerged from holders active between 2017 and 2022.

AI development expenses and US macroeconomic concerns trouble investors

Tesla (TSLA) shares extended their downturn after the company was compelled to recall over 10,500 units of its energy storage system. At least 22 reports of overheating linked to the $8,000 device, produced in the US, triggered the preventive measure. TSLA had already been facing difficulties after outlining plans to establish a 10 million-unit Optimium humanoid robot production line in Austin.

Aside from the AI domain, traders lowered their predictions regarding the US Federal Reserve’s monetary policy trajectory. According to the CME FedWatch Tool, the implied probabilities of the Fed reducing interest rates below 3.5% by January 2026 dwindled to 20%, a drop from 49% on Oct. 13. Analysts point out that the Fed’s primary worry remains persistent inflation, which continues to affect lower-income workers the hardest, according to Yahoo Finance.

US President Donald Trump enacted a temporary government funding bill to conclude the shutdown, but White House Press Secretary Karoline Leavitt stated on Wednesday that some October economic reports may not be released. Former Fed vice-chair Lael Brainard cautioned that AI investments are concealing cracks “under the hood,” as the remainder of the economy grapples with waning demand.

Shares of Disney (DIS) fell by 8% after the company announced quarterly results that were below expectations, influenced by its streaming and theatrical divisions. The entertainment behemoth joins several other consumer-centric corporations that have recently disappointed on earnings, including DoorDash (DASH), Dollar Tree (DLTR), and Starbucks (SBUX).

Related: US SEC, CFTC operations set to recommence after 43-day government shutdown

Investors now possess diminished clarity regarding the economic forecast following the unprecedented 43-day government funding closure. While some analysts contend that the US Gross Domestic Product could suffer a 2% decline, others believe the majority of detrimental impacts will be reversed once federal spending resumes. RBC analysts voiced concerns regarding interpreting US job market statistics, noting that “furloughed and essential employees would be counted as unemployed.”

It may take time for investors to assess whether stock market valuations are inflated and to evaluate the likelihood of the US government introducing liquidity via tax reductions or stimulus payments. Until that point, Bitcoin (BTC) is expected to reflect broader economic unpredictability, exacerbated by the absence of consistent and dependable data.

This article serves general informational purposes and is not designed to be, nor should it be interpreted as, legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.