Monday’s rally in crypto markets quickly unraveled on Tuesday with bitcoin falling below $104,000.
After briefly topping $107,000 overnight, the largest cryptocurrency fell to $103,200 in US morning hours. The drop erased gains driven by President Donald Trump’s “tariff dividend” plan and growing optimism that the U.S. government shutdown is nearing an end.
Ethereum ether fell 1.2% below $3,500 and large-cap altcoins like Solana’s SOL , and fell between 3% and 4%, marking a broad pullback in digital assets.
The selling spread to cryptocurrency-related stocks, especially among bitcoin miners positioned as infrastructure players in the rise of artificial intelligence (AI). CleanSpark (CLSK) fell 8%, Hut 8 (HUT) fell almost 9% and Core Scientific (CORZ) fell 11.5% in early sessions. TeraWulf (WULF) and Bitdeer (BTDR) also posted double-digit declines.
The sector-wide weakness was due to a list of companies that reported weaker-than-expected earnings and growth prospects, in a sign that the red-hot AI infrastructure trade, driven by high expectations for demand for more computing capacity, is due for a correction.
Cloud computing provider CoreWeave lowered its outlook for the next quarter, citing delays in data center development, sending its shares down 15% to the weakest level since early September. TeraWulf reported weak earnings and BitDeer reported larger-than-expected losses and delays to its next-generation ASIC chips.
To complete the negative headlines, Japanese investment bank SoftBank sold its entire stake, valued at $5.8 billion, in chipmaker giant and AI leader Nvidia (NVDA), sending shares in the world’s most valuable company down 3.5%. The tech-heavy Nasdaq index fell 0.7%, while the S&P 500 lost 0.3%.
Also this morning, ADP reported that U.S. private employers cut an average of 11,250 jobs per week in the four weeks ending October 25, indicating a deterioration in the labor market.
The CME FedWatch tool now rates a roughly 67% chance of an interest rate cut at the Federal Reserve’s December meeting, while Polymarket sees it slightly higher at 72%.
With Tuesday’s drop, BTC has filled the so-called CME gap formed over the weekend. The gap comes as bitcoin futures traded on the CME, the preferred market among U.S. institutions, open higher or lower than where they closed the previous session.
BTC’s revision of these gaps in price is often seen in market behavior, although not all gaps are necessarily filled, noted CoinDesk senior analyst James Van Straten.
While overall sentiment in cryptocurrency markets has improved in recent days as BTC and ETH rebounded from lows, traders are using the bounce as an opportunity to take profits across the board, Jasper De Maere, OTC desk strategist at trading firm Wintermute, wrote in a Tuesday note.
“When it comes to alts, the theme is still profit taking, leading to short-lived outperformance,” he said. “Consensus is building that large companies should be promoted first.”
