The tech sector is struggling, with the Nasdaq Composite dropping more than 4% in June, marking its worst day since April 2025. The S&P 500 fell 2.64%. Bitcoin trades between $62,000 and $67,000, lagging behind its earlier highs.
Microsoft, Nvidia, Oracle, Meta, Amazon, and Alphabet plan AI-related capital expenditures exceeding $650 billion for 2026. The fear lies not in AI's capabilities but in the uncertain returns on this vast investment.
The selloff follows a February market downturn that erased $1 trillion from software and data services. Investors are increasingly aware of challenges like power constraints limiting data center growth and rising talent costs in AI engineering.
Bitcoin's drop reflects a broader trend of tech and crypto moving together, suggesting heightened risk aversion among investors. As tech equities decline, capital often shifts to safer assets rather than crypto, putting additional pressure on valuations.
Rising interest rates could exacerbate this trend, increasing the costs associated with financing tech investments and further reducing demand for speculative assets like Bitcoin.