Bitcoin's November sell-off worsens as investors take risk off on worries about the AI trade

On Tuesday, Bitcoin experienced a significant decline as a risk-averse sentiment swept through the market. Investors turned their backs on the cryptocurrency, driven by worries regarding the viability of AI stock valuations. The price of Bitcoin fell to $103,952, marking a 2.5% drop for the day and a total decrease of around 6% over the last two days. In tandem with Bitcoin's struggles, Ether, the second-largest cryptocurrency by market cap, also faced a downturn, losing 2.5% on Tuesday and over 10% in the past two days, currently trading at $3,503. Despite Bitcoin's recent reputation as a safe haven, it shares a significant investor base with AI stocks, creating a correlation where troubles in one market can negatively impact the other. The Nasdaq futures dropped by 1.5% on Tuesday, as investors chose to sell shares of AI-focused companies like Palantir, despite the firm reporting strong earnings. Analyst Ed Engel from Compass Point pointed out that retail investors appear less inclined to buy during this dip. He remarked, "While selling from long-term holders is typical in bull markets, retail spot buyers have not been as active compared to previous cycles," indicating a shift in market behavior.