Bitcoin’s role as an indicator of market froth has been pointing downwards all year, and several other indicators are starting to follow.
Bitcoin has now dropped to as low as $US60,000, down from its record above $US124,000 set in October.
Gold and silver prices have weakened more recently after a stunning run upwards suddenly paused a week ago, and even US bond market yields are now falling after some tentative signs of weakness in the US jobs market.
Now, share markets have also turned down significantly, with the ASX 200 index on Friday plunging 2%, or 180.40 points, to 8708.90 points.
Local wipeout of $65 billion
That local wipeout of almost $65 billion saw all 11 sectors close lower in the biggest fall since the Trump-fuelled 4.2% Liberation Day drop on April 7 last year, and took the weekly drop to a hefty 1.8%.
There were plenty of lead-in factors, with AI concerns causing a sharp drop in the price of Google’s parent company Alphabet, which pulled the US market lower on Thursday to its sixth lower close in the seven days since it hit a record high.
Other ingredients helping to build the wall of worry included stretched valuations, sliding commodity prices, concerns about the cost of AI and the dive in Bitcoin.
A healthy pause or a looming correction?
It is certainly far from a disaster so far, with many traders seeing it as a healthy pause in a bull market, but it has focussed their attention on single-company risks and those operating over the broader market as well, with a lot of equity de-risking going on.
Some of the biggest investment trends of 2025, including AI, crypto, and precious metals, are all coming into focus as areas of possible weakness, with the ASX technology sector falling a hefty 12.6% for the week.
Tech hits the skids
In the US, Amazon shares fell 11% in after-hours trading after its plan to spend $US200 billion in capex raised concerns about whether big investments in AI would pay off, which translated into considerable technology weakness in Australia.
WiseTech Global shares (ASX: WTC) dropped 4.7% to $47.60, NextDC (ASX: NXT) shares were down 3.9% to $12.71 and TechnologyOne shares (ASX: TNE) lost 5% to $21.86.
AI contagion hits uranium
Some contagion was also operating with AI concerns pushing down uranium stocks with fears that the technology may not spark a boom in nuclear power.
Shares in Deep Yellow (ASX: DYL) were slashed by 12% to $2.20 and Paladin shares (ASX: PDN) crunched 10.9% to $11.01.
Commodities were mixed, with silver up 2% following an 18% fall in the previous session, while gold firmed slightly, closing in on $US4811 an ounce.
Big miners slump
The big miners were mostly lower with shares in BHP (ASX: BHP) down 3.1% to $48.79, South32 shares (ASX: S32) down 4.1% to $4.41 and Newmont shares (ASX: NEM) down 4.9% to $154.80.
Rio Tinto shares (ASX: RIO) were flat at $157.08 after it ended talks on a potential merger with Glencore that would have seen the combined group become the biggest miner in the world.
Profit results send stocks lower
Real estate stocks also weakened, led by a 6.1% fall in Goodman Group (ASX: GMG) to $28.99 and a 2.5% slide in the value of Scentre shares (ASX: SCG) to $3.88.
Profit results also played a part with shares in REA Group (ASX: REA) down 7.8% to $168.10 after its first-half result missed market expectations and it forecast fewer home listings in Australia.
Shares in hotel room aggregator Web Travel (ASX: WEB) dived 29.5% to $2.96 on news that its Spanish subsidiary would be audited by that nation’s tax authority.
Shares in News Corp (ASX: NWS) fell 5.4% to $38.32 despite growth at Dow Jones and its digital real estate businesses including REA offsetting weaker conditions in its Australian news division over the December quarter.
Neuren Pharmaceuticals shares (ASX: NEU) slid 5.2% to $12.52 as it started dosing the first participant in its Koala phase 3 trial of its new treatment called NNZ-2591 for Phelan-McDermid syndrome.
The week ahead
After a busy week in which the Reserve Bank increased official interest rates, this coming week the focus shifts to household spending with measures by the Bureau of Statistics (ABS) and the Commonwealth Bank both expected to show some weakening.
By contrast, the release of new home loan data is expected to show the value of loans written increased by around 6% in the December quarter.
Overseas, the big news will be the US jobs figures out on Wednesday which are expected to show that around 50,000 jobs were added in January with the unemployment rate steady at 4.4%.
US inflation figures are out on Friday with a 0.3% lift expected to both headline and core CPI, taking annual growth rates to 2.5% each.
Local profit season continues in the coming week with some of the larger company results out including James Hardie Industries, Commonwealth Bank, Evolution Mining, Dexus Industrial REIT, CSL, Computershare, AGL Energy, Northern Star Resources, AMP, ANZ, ASX, Breville, Insurance Australia Group, Origin Energy, Orora, Paladin Energy, South32, Cochlear, Nick Scali and Westpac.
Fourth quarter earnings are also continuing on Wall Street with some of the results including Coca-Cola, Spotify, Ford Motor, Gilead Sciences, Kraft Heinz, Cisco, McDonald’s, Airbnb, Pinterest, Rivian Automotive, and Moderna.
