Bitcoin News Today: Fed's Balancing Act Backfires: Markets Plunge as AI Bubble and Policy Uncertainty Collide

Global financial markets reeled from a sharp selloff this week as concerns over a potential AI-driven bubble, Federal Reserve policy uncertainty, and crypto volatility collided, sending stocks, cryptocurrencies, and commodities into a tailspin. The S&P 500 and Nasdaq plunged amid warnings from top bank executives about a "tech-driven market bubble," while Bitcoin dropped 3.8% to $110,063 as investors recalibrated portfolios in the face of shifting central bank signals and geopolitical tensions, according to Robert Kiyosaki.

The Federal Reserve's recent 25-basis-point rate cut, initially seen as a relief for risk assets, now appears to be the last adjustment of 2025, according to Chair Jerome Powell. His comments doused hopes for aggressive monetary easing, triggering a 0.7% drop in the S&P 500 following his remarks, according to Investopedia. Powell emphasized the Fed's dilemma: balancing inflation risks against a weakening labor market. "A further reduction in the policy rate at the December meeting is not a foregone conclusion—far from it," he stated, signaling a potential pivot to a more hawkish stance, according to Yahoo Finance. Analysts warn that even the possibility of delayed rate cuts could destabilize markets, as seen in the 1.2% plunge in the S&P 500 and 2% drop in the Nasdaq after U.S. bank CEOs flagged a "10-15% drawdown" risk, according to Investing.com.

Cryptocurrencies mirrored this unease. Bitcoin's decline was exacerbated by a Zcash breakout that siphoned liquidity from the broader market, pushing BTC to a four-day low of $105,000 before a modest rebound to $109,928, according to TradingView. Despite the sell-off, institutional demand for crypto ETFs remained robust, with Bitcoin ETFs attracting $202.48 million in inflows on October 28, led by BlackRock and Fidelity, CoinPedia reported. Ethereum ETFs also saw $246 million in net inflows, though retail sentiment turned bearish, reflected in Kalshi traders slashing odds of ETH hitting $5,000 to 34%, according to Live Bitcoin News.

The AI sector, a key driver of this year's market rally, now faces scrutiny. Renaissance Macro Research's Jeff deGraaf noted that the Fed's rate-cutting cycle could either inflate or burst a bubble, depending on economic conditions. "Bubbles typically pop in tightening cycles, not easing ones," he said, cautioning that a sudden shift in monetary policy could destabilize AI-driven valuations, according to Investopedia. This tension is already manifesting: Meta and Microsoft's shares fell sharply after the firms announced higher 2026 spending, as investors began demanding clearer ROI from AI investments, Business Insider reported.

Meanwhile, geopolitical risks compounded the volatility. A Trump-Xi meeting yielded no concrete breakthroughs, leaving trade tensions unresolved and markets bracing for renewed tariff battles, CoinPedia reported. In Asia, the KOSPI and Nikkei 225 both plummeted over 4%, with South Korea's chip giants Samsung and SK Hynix shedding 6-7% as tech valuations came under fire, according to Investing.com.

Amid the turmoil, Robert Kiyosaki urged investors to "protect themselves" by buying Bitcoin, gold, and silver, warning of a "massive crash" that could wipe out millions, CoinPedia reported. His call reflects a broader shift toward tangible assets, as Bitcoin spot trading volumes surged to $300 billion in October, signaling a move away from leveraged bets after $19 billion in liquidations, according to Live Bitcoin News.

The Fed's next move will be pivotal. With inflation ticking upward and labor market weakness persisting, policymakers face a high-stakes balancing act. As UBS analysts noted, the 2000 dotcom crash was preceded by a 1.75% rate hike—a contrast to today's easing cycle, Investopedia observed. Yet, if inflation accelerates or economic data surprises to the downside, the Fed's dovish stance could quickly evaporate, triggering a new wave of market turbulence.