The stock and crypto markets are declining today, February 3, as investors react to rising geopolitical tensions and fears that the artificial intelligence (AI) bubble is deflating.
Stocks and Crypto Markets Crashed Today
Bitcoin price crashed to $73,000, erasing all the gains made after Donald Trump won the election. Ethereum price plunged to $2,200, while the market capitalization of all coins fell by 3.5% to $2.5 trillion. Some of the top laggards in the crypto market were Chiliz, Canton, Optimism, Arbitrum, and Dash.
The stock market also tanked, with the tech-heavy Nasdaq 100 Index falling by 500 points and the S&P 500 falling by 1.35%. The top laggards in the index included PayPal, Thomson Reuters, Intuit, Cognizant Technologies, Shopify, and Booking Holdings.
These technology stocks are plunging as investors remain concerned about the AI industry. For example, Thomson Reuters and Verisk stocks declined after Anthropic released a major update to its legal help.
PayPal stock price declined after publishing weak financial results and downgrading its forward guidance. Companies such as Intuit, Workday, and Atlassian declined as investors remained concerned about AI-driven disruption.
On the other hand, the top gainers in the Nasdaq 100 Index were companies such as Western Digital, Palantir, PepsiCo, Fastenal, and Wal-Mart, whose market capitalizations crossed the $1 trillion mark for the first time.
READ MORE: Solana Chain Fees are Soaring as it Closes the Gap With Justin Sun’s Tron
Geopolitical Risks are Elevated
The stock and crypto markets are concerned about geopolitics after the US military shot down an Iranian drone in the Middle East.
Most analysts believe the upcoming talks between the US and Iran will not be successful because the gaps between the two sides are so big. The US is pushing Iran to stop funding proxies in the region, to end its ballistic missile program, and to curtail its civilian nuclear program. Iran will not agree to these limits.
At the same time, President Trump is facing substantial pressure from top neocons like Mike Pompeo, Lindsey Graham, Marco Rubio, and Mark Levin, who have argued that it was useless to negotiate with Iran.
A new war in the region will have major implications, including a rebound in crude oil prices. Data shows that Brent and West Texas Intermediate (WTI) rose to $67 and $65, respectively. Gold and silver prices also rebounded as investors moved to safe-haven assets.
Bitcoin and the crypto market have proven that they are not safe haven assets. These assets have always declined when risk rises. At the same time, liquidations in the crypto market rose to over $670 million.
READ MORE: Pi Network Coin Sits at All-Time Low: Buy the Dip or Sell the Rip?
