Crypto Crash: Bitcoin Plunges as Tech Sector Falters

The recent tumble in the tech sector has taken a toll on the cryptocurrency market, with Bitcoin being one of the most affected. The bursting of a massive speculative bubble in memecoins in January seemed to be the initial trigger for the general crypto market selloff that has been ongoing for several weeks. However, the declines have accelerated this week, partly due to growing risk-off sentiment in the previously buoyant stock market.

The Nasdaq, which is down about 2% an hour before the close of trade on Thursday, has lost roughly 7% over the past few sessions. The selloff in stocks is being led by chipmakers, with Nvidia (NVDA) down by 5% following its fourth quarter earnings report. The correction in stocks comes after many leading names were selling at lofty valuations, and President Trump's continual tariff threats have added to the uncertainty.

Quinn Thompson, founder of hedge fund Lekker Capital, warns of maximum caution in risk assets. He cites inflation data that is coming in too hot for the Fed to cut rates in the near term, long-term inflation expectations that are unanchoring to the upside, and U.S. economic data that suggests the 'Trump bump' was a dead cat bounce.

On the crypto front, Thompson is blunt in his assessment: "Every possible good news item imaginable has come and gone without much upward pressure on price," he said. "Investors have forgotten that bear markets are possible and what they look like." Despite the current market conditions, Thompson is targeting the $70,000s for Bitcoin by the end of March.