The market is undergoing a silent shift. From tech stocks to gold, and then to $BTC, various assets that have been fervently pursued by capital in recent months have almost simultaneously faced sell-offs. This is different from the panic triggered by a single event last year; it feels more like a series of slowly accumulating doubts that have ultimately overwhelmed investors' nerves.
Thursday's market clearly showcased this. The S&P 500 index fell by 1.2%, while the Nasdaq 100 index saw a deeper decline, marking the largest correction since April of last year. Software stocks remain weak, and the news that AI company Anthropic launched a financial research model has intensified market concerns over technological disruption. Silver prices plummeted by 17%, falling from historical highs alongside gold.
The turbulence in the cryptocurrency market is particularly intense. $BTC fell more than 10% in a single day, wiping out all gains since Trump won the election. Investors are starting to close positions that were built using leveraged financing but are now showing losses. The sell-off intensified on Thursday afternoon, with $BTC briefly dropping below $63,000, nearly halving from its four-month high and dragging down other cryptocurrencies and related ETFs.
Meanwhile, U.S. Treasury prices rebounded, once again playing the role of a traditional safe-haven asset. This shift in capital flows stands in stark contrast to the optimism at the beginning of the year. At that time, the market widely expected that the AI boom, a robust economy, and the upcoming interest rate cuts would drive U.S. stocks to continue their upward trend.
Although corporate earnings remain robust overall, investors' focus has quietly shifted. They are beginning to reassess a series of risks: which companies will be eliminated in the AI race; where monetary policy will head if Kevin Walsh, nominated by Trump, takes over the Federal Reserve from Powell; and whether the valuations of $BTC, gold, and tech giants like Alphabet have become too high to sustain.
In the stock market, the sell-off was relatively mild but widespread, with 9 out of the 11 sectors of the S&P 500 closing lower. In addition to concerns about AI losers, the market is also questioning whether the massive investments by tech companies in AI will yield returns. Alphabet's stock remained under pressure even after reporting better-than-expected revenue, while Amazon's stock plummeted 10% in after-hours trading following the announcement of a $200 billion investment plan for this year, reflecting this sentiment.
Market observers point out that people are clearly shifting towards defense. This feels more like an environment of 'shoot first, ask questions later.' The fear and uncertainty throughout the market are evident. The recent pullback reflects a widespread concern: the hottest stocks and assets have risen too quickly, and the market needs a 'cleansing' or 'reset.' Momentum may have been overly exhausted.
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