Chip Selloff Drags Bitcoin Lower as AI Trade Fractures and Apple Overtakes Nvidia

A deepening global selloff in chipmakers dragged risk assets lower, pulling bitcoin back from the $65,000 level it reached earlier this week and dropping below $63,000. As risk appetite diminished, the correlation between technology stocks and crypto assets intensified once again.

AI Trade Fractures Hit Former Crypto Miners Hard

News that China's Kimi K3 has beaten Claude and GPT in coding benchmarks has sparked concerns regarding AI leadership. Gavin Baker, CIO at Atreides Management, noted that this could be a negative inflection point for Anthropic and OpenAI, while being net positive for other companies. This uncertainty hit crypto stocks most tied to the AI trade:

■Former miners turned data-center providers led the declines.

■Hut 8 (HUT), Bitdeer (DTDR), and MARA Holdings (MARA) all dropped by more than 7%.

■Strategy (MSTR) shares fell 2.25%, while Coinbase (COIN), Bullish (BLSH), and Circle (CRCL) were all lower by about 1.5%.

Apple Overtakes Nvidia in Market Cap Tug-of-War

While all eyes were on the chipmaker selloff, Apple (AAPL) quietly rose, hitting a new record high earlier this week. As Nvidia (NVDA) slipped further, its market cap fell back to $4.86 trillion, below Apple's $4.88 trillion. HSBC, a rare sell-side firm without a buy rating on Apple, upgraded the stock, citing the company's ability to leverage its 2.5 billion installed device base with its revamped Apple Intelligence.

Oil Surge Reignites Inflation Fears for Crypto

Futures tied to WTI crude oil are on track for their best week since mid-April, surging nearly 12%. This rebound has fresh implications for bitcoin. The cryptocurrency had climbed to a three-week high above $62,000 after softer inflation data eased fears of near-term Fed rate hikes. However, with oil roaring higher again, inflation worries could quickly return, potentially dragging BTC lower.

From my perspective as Deniz Arel, the rapid transmission of volatility from the chip sector to crypto markets is evident. The sharp drop in stock performance of former mining companies pivoting to AI infrastructure (HUT, MARA) highlights the sector's fragility in the current cycle. Additionally, high-profile marketing expenditures like Galaxy Digital's stadium naming rights deal serve as a classic behavioral finance indicator of market cycle tops; regarding regulation and compliance, it is crucial for companies to be more cautious about cash flow management and market manipulation risks during such periods.