Bitcoin Slides as AI Tech Rout and Fed Uncertainty Pressure Crypto Market

Bitcoin Drops to 10-Day Low Amid Risk-Off Mood

Bitcoin, the world’s largest cryptocurrency, traded 3.1% lower at $63,494.8 by 01:42 ET (05:42 GMT) on Tuesday, its weakest level since July 17. The move extended recent weakness, as the token has struggled to sustain a recovery after rebounding from earlier lows this month.

Recent gains have been undermined by continued outflows from U.S.-listed spot Bitcoin exchange-traded funds, weighing on broader sentiment in the cryptocurrency market. Higher U.S. interest rate expectations have also reduced the appeal of non-yielding assets such as cryptocurrencies.

Market participants are focused on the conclusion of the Federal Reserve’s two-day meeting on Wednesday. According to CME FedWatch, traders are pricing in roughly a 38% probability of a surprise quarter-point rate increase this week, while expectations for a September hike have risen above 80%.

AI Tech Rout and Macro Factors Pressure Crypto

The cryptocurrency decline coincided with a sharp selloff in Asian technology stocks, particularly in AI-linked chipmakers. South Korea’s KOSPI index slumped more than 10% as investors reduced exposure to AI-related names.

Shares of Samsung Electronics and SK Hynix fell sharply amid concerns over the sustainability of heavy AI infrastructure spending. Intensifying competition from Chinese memory-chip manufacturers added further pressure on sentiment in the technology sector, with spillover effects into crypto assets.

The market also monitored improving geopolitical sentiment following indications that the U.S. and Iran are shifting toward diplomatic talks, with both sides holding off attacks since Sunday. Attention is additionally turning to a busy week for technology earnings, which are expected to test whether substantial AI infrastructure spending can continue to support broader risk appetite.

U.S. Senate Delays Action on Digital Asset Market Clarity Act

In Washington, the U.S. Senate has put consideration of the Digital Asset Market Clarity Act on hold. Lawmakers are prioritizing a Russia sanctions package and the processing of federal nominations ahead of the August recess.

Senate Majority Leader John Thune is expected to focus on nominees before taking up legislation targeting Russia, with sanctions procedures likely to occupy the chamber for several days. As a result, the crypto market structure bill is unlikely to reach the Senate floor until next week at the earliest.

The CLARITY Act, which passed the Senate Banking Committee in May, aims to define oversight responsibilities between U.S. regulators and establish a regulatory framework for digital assets.

Altcoin Moves: Ether Gains as Peers Slip

Most major altcoins extended losses amid the cautious market environment. XRP fell 4.6% to $1.0593, Solana declined 4.2%, Cardano dropped 6%, and Dogecoin slipped 4%.

In contrast, Ethereum moved higher, with the world’s second-largest cryptocurrency rising 5% to $1,888.03.

FAQ

Why did Bitcoin fall on Tuesday?
Bitcoin declined more than 3% as a selloff in AI-linked technology shares, particularly in Asian markets, spilled over into cryptocurrencies, while investors remained cautious ahead of the U.S. Federal Reserve policy decision.

What are markets expecting from the Federal Reserve?
Traders are pricing in about a 38% chance of a quarter-point rate hike at this week’s meeting and see the probability of a rate increase in September above 80%, according to CME FedWatch.

What is happening with the Digital Asset Market Clarity Act?
The U.S. Senate has delayed consideration of the Digital Asset Market Clarity Act as it focuses on a Russia sanctions package and federal nominations, making it unlikely that the bill will reach the Senate floor before next week.

How did major altcoins perform?
Most altcoins declined, with XRP, Solana, Cardano, and Dogecoin all falling, while Ethereum bucked the trend with a 5% gain to $1,888.03.