(Oct 26): Bitcoin retreated below US$80,000 on Monday as broader risk-off sentiment ahead of a Federal Reserve meeting and concerns over the artificial intelligence trade weighed on cryptocurrencies.

The largest digital asset fell as much as 1.4% to under US$79,300 before paring some losses to trade around US$80,000 in afternoon trading in Asia. Smaller tokens including Ether, XRP and Solana also declined. The moves came after investors pulled US$772.4 million from US-listed spot bitcoin exchange-traded funds on Thursday and Friday, a sharp reversal from more than US$1 billion of net inflows earlier in the week.

The declines accompanied a broader market slump that extended from last week as investors questioned massive spending on AI and looked toward this week’s earnings reports from tech giants for clues about the outlook. The Kospi Index in South Korea — a bellwether for the AI trade — fell 0.2% and chip-related stocks were among the biggest decliners in Japan’s Nikkei.

“Bitcoin has so far been relatively resilient to the AI debt concerns that are weighing on all risk assets,” said Caroline Mauron, co-founder of Orbit Markets. “The market focus is now on the Fed meeting, followed by the US midterm elections.”

Bitcoin remains in the risk-off basket for many systematic funds and algorithmic traders, leaving it vulnerable to deteriorating sentiment, said Pratik Kala, portfolio manager at Apollo Crypto.

Kala pointed to online discussions about AI, including comments from SpaceX and Tesla CEO Elon Musk about potential consolidation next year, as contributing to market strain. Advances in AI have also exacerbated potential security risks for crypto, making some investors skittish, he added.

Uploaded by Arion Yeow