Market Liquidation Accelerates as AI-Tech Correlation Drags Crypto Lower
Bitcoin (BTC) plunged below the psychological $70,000 threshold on Thursday, effectively wiping out over a year of market progress and resetting prices to levels last seen prior to the November 2024 U.S. election. The sell-off, driven by a deepening correlation with faltering AI and tech stocks, has triggered over $2.5 billion in liquidations across the crypto ecosystem in the last 24 hours.
Data from Coindesk indicates the asset struggled to defend the $70,000 line before capitulating, marking a 44% retracement from its October 2025 all-time high of $126,000. Volume on major exchanges spiked as stop-losses triggered in cascading fashion, forcing leveraged longs out of the market.
The AI Anchor
The collapse is being exacerbated by Bitcoin’s newfound status as a “high-beta” proxy for the artificial intelligence sector. Analysts at ByteTree noted that the correlation coefficient between Bitcoin and the iShares Expanded Tech-Software Sector ETF (IGV) has climbed to 0.73, a near-record high.
“Bitcoin’s essence is open-source software… it is not immune to the rising AI-related costs and intensifying competition currently facing software companies.”
As AI darlings like Nvidia and AMD face a rout due to “AI bubble” fears, crypto assets are moving in lockstep. Institutional capital, which had treated BTC as a diversification tool, is now deleveraging across both asset classes simultaneously. The “tech wreck” has spilled directly into crypto-equities as well, with MicroStrategy (MSTR) and Coinbase (COIN) posting double-digit losses in intraday trading.
XRP and Altcoins Decimated
The downturn has been particularly brutal for legacy altcoins. XRP crashed to $1.44, its lowest price point since the onset of the “Trump Trade” in November 2024. The token has now erased the entire premium built up following the regulatory clarity expected from the current administration. On-chain data from Glassnode reveals that 44% of the total Bitcoin supply is now held at a loss, creating a heavy overhead resistance as “underwater” holders look to exit at break-even.
