Bitcoin Declines Amid Profit-Taking, AI Investment Concerns, and Federal Reserve Uncertainty

Bitcoin (BTC) suffered a slight pullback after reaching an unprecedented high, driven by profit-taking trends, cooling market sentiment, concerns over the fervor surrounding artificial intelligence (AI) investments, and lingering uncertainties about the Federal Reserve's monetary policy.

As of 8:50 a.m. on November 10 (local time), Bitcoin traded at 117.74 million KRW on South Korea's Upbit exchange, marking a 0.34% dip from the previous day. Globally, on Binance, the cryptocurrency slipped 1.28% to $121,569.

The broader cryptocurrency market mirrored Bitcoin's decline. The CoinDesk 20, which tracks the price performance of the top 20 cryptocurrencies, fell by 2.03%. Ethereum (ETH) dropped 3.54% to $4,365, and XRP (XRP) saw a 2.59% decrease, trading at $2.8.

Surging Liquidations as Market Volatility Intensifies

Market turbulence led to significant liquidations in Bitcoin and other digital assets. Data from CoinGlass showed that, in the past 24 hours, $191.71 million (approximately 273.1 billion KRW) worth of Bitcoin positions were liquidated globally, with long positions accounting for 63.6% of the total. Across the entire digital asset market, liquidations amounted to $692.76 million (986.9 billion KRW).

Bitcoin's price fell sharply from pre-market levels of around $124,000 to the lower $120,000 range after U.S. markets opened. Analysts attributed this drop to cautious investor sentiment amid concerns about overheating in AI-driven technology stocks. The increased skepticism led to broad profit-taking across both equity and digital asset markets, further dampening Bitcoin prices.

Debate Over AI Investment Bubble Continues

The intense rally in AI-related stocks has revived discussions about the possibility of an investment bubble. Since late 2022, AI-focused equities have skyrocketed by over 260%, with much of the capital concentrated in a small number of companies, such as Nvidia and OpenAI. Critics fear that this level of investment may lead to an unsustainable cycle of speculative growth.

Tom Essaye of the Sevens Report weighed in, stating, "While the current investment environment doesn’t echo the dot-com bubble’s extreme conditions, there is a growing need for vigilance. Overinvestment in AI infrastructure could result in capital expenditure bubbles."

Similarly, Ulrike Hoffmann-Burchardi, a senior official at UBS Global Wealth Management, added, "AI investments are indeed shaping up to be a new driver of global economic growth, with funding expanding into the hundreds of billions of dollars. Still, market participants should brace themselves for heightened volatility in the short term."

Federal Reserve’s Silence Fuels Investor Uncertainty

Adding to market tension, Federal Reserve policies remained shrouded in uncertainty. During a brief appearance on November 9 at the Community Bank Conference in Washington, D.C., Fed Chairman Jerome Powell refrained from offering any remarks on the current economic landscape or future interest rate trajectories. His one-minute prerecorded address left investors disappointed and searching for clarity.

As a result, Bitcoin has lagged behind equities, gold, and other traditional safe-haven assets in recent months. CryptoQuant analyst Martun observed, "Bitcoin's underperformance over the past two months compared to other asset classes demonstrates the market’s vulnerability. Powell's comments lacked direction, providing no evidence of a reversal in this trend."

Fear and Greed Index Falls Into Neutral Zone

Investor sentiment has taken a hit, as seen in the Alternative Fear & Greed Index. The metric dropped slightly from 50 to 49, slipping into "fear" territory. Lower scores signal elevated selling pressure and bearish outlooks, while higher scores reflect growing optimism and buying drive.

Cautious traders remain wary of volatility in the digital asset space. Mixed signals from Federal Reserve policies and concerns over AI-driven investment dynamics continue to create uncertainty. The coming weeks may test the market's ability to weather these pressures and maintain investor confidence.

Bitcoin and its peer cryptocurrencies now stand at a crossroads, affected by macroeconomic factors, regulatory ambiguity, and emerging trends in global equity and technology investments. How these elements evolve will likely play a critical role in shaping the cryptocurrency market's trajectory in the near term.