Nasdaq 100 futures dropped 2% today alongside a 1.1% decline in S&P 500 futures, while South Korean tech stocks tanked as much as 10% before trading was briefly halted.
The past few weeks have spelled trouble for tech valuations overall with June 5th seeing the biggest daily drop for the Nasdaq since April 2025, falling well over 4%
The atmosphere has created strong risk-off sentiment, which has spilled over into crypto, leading Bitcoin and Ethereum to drop 4% and 6%, respectively.
Market factors
U.S. chip manufacturing giant Broadcom failed to meet quarterly sales expectations earlier this month, causing some uncertainty in the market. Sentiment is not aided by the major debt backing the massive AI expansion seen this year, with $750 billion worth of enterprise investment in AI and tech leaving the industry exposed to borrowing costs.
With the market now anticipating a potential interest rate hike in October, the future earning potential of AI companies for investors is now up for debate.
The SOX index measuring semiconductor stocks has now hit extreme volatility levels matching those seen in the 00’s dot com bubble, another concerning signal for tech investors.
Risk-off sellers offload crypto
Bitcoin has seen heightened correlation with tech stocks since 2025. BTC plunged below $62,000 earlier today in line with the drop in tech stocks, with Kalshi prediction market investors now favoring a decline below $60k this year.
Bearish sentiment has also stemmed from a stronger dollar, major ETF outflows earlier this year, and the executive order on quantum technologies signed by Donald Trump yesterday. ETH is now down 35% from its 2026 highs, while the broader altcoin market has often seen drops of over 50%.
While today’s price correction by no means spells doom for global markets, the price action is a firm reminder that the AI hype seen over the last year still relies on future profits rather than current revenues.
Source: CryptoPotato
