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What’s happening to Bitcoin? Will it go to Zero? (Photo illustration by Dan Kitwood\/Getty Images)<\/p>\n
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Bitcoin is down 30% from its peak and gold is tumbling from $4,200+. According to Financial Times,<\/a> Nasdaq had its worst week since April 2025, especially the tech heavy companies. Many of my friends are asking me \u201cIs Bitcoin going to $0?\u201d after believing the potential of the asset highlighted in this Forbes article<\/a> when Bitcoin hit $126K!<\/p>\n When the ‘digital gold’ crashes alongside actual gold, and AI darling stocks crater together, are we witnessing a fundamental shift or just a spectacular correction? Is this the great unraveling of 2025 where everything falls together?<\/p>\n It is unusual when everything, including those instruments who typically have opposite characteristics, go down together. So I did some research to figure out what is happening. <\/p>\n The bottom line is that the 2025 crash isn\u2019t just a Bitcoin story or an AI story. It\u2019s really a liquidity story. <\/p>\n And liquidity stories rewrite correlations. <\/p>\n What\u2019s Happening in the Market and to Bitcoin? <\/p>\n Just one month ago, according to CME’s FedWatch tool,<\/a> the probability of the Federal government cutting rates was 93.7%. Now the probability of the cut now has dipped to 44.9%, a dramatic drop in a short period of time. When investors realize they are all collectively wrong about the Fed\u2019s direction, they all self-correct at the same time. <\/p>\n Rate cuts usually boost both stocks and alternative assets like gold and digital assets making borrowing cheaper and cash less expensive. Both when that turns out to be incorrect, the opposite happens and sometime, like in 2025, in brutal reversal. <\/p>\n At the same time, there is talk about an AI Bubble. <\/p>\n According to CBS news analysts<\/a>, \u201cThere\u2019s a recognition that if they (companies) spend all this money on data centers, it will weigh on their earnings.\u201d The numbers tell a stark story. Microsoft and Google collectively announce over $250B in combined AI infrastructure spending 2024-2025, yet their revenue streams remain largely unquantified in earnings calls. <\/p>\n More troubling, enterprise software companies riding the AI wave show disconnect between promises and performance. Palantir trades at 180x trailing earnings while customer acquisition costs have doubled year over year. The echo of dot com is unmistakable. <\/p>\n A recent McKinsey report found that only 23% of companies using Generative AI report measurable productivity gains, yet those same companies are increasing their AI spend. Everyone has been talking about the value that AI brings to businesses, but AI has been hard to measure<\/a> and hardly any company is talking about their results.<\/p>\n Even the FANG (Facebook, Amazon, Nvidia, Google) companies are having issues. Nvidia announced positive revenue growth, but their stock price went down. It really shows that in these volatile times, even great execution cannot overcome the inertia in the market. Note: the circular revenue didn\u2019t help either. According to the Register<\/a>, Nvidia was going to invest $100M in OpenAI, and OpenAI in turn was going to buy $100M in Nvidia chips, so it appeared like Nvidia was bankrolling its own revenue. <\/p>\n Finally the US Dollar has surged in the last three months to highs. This actually makes the purchase of gold, bitcoin and other assets more expensive to international buyers. So breaking gold\u2019s traditional safe haven means investors didn\u2019t run to buy gold and other precious metals. Gold lost its defensive spot with a high dollar, and didn\u2019t provide a place for investors to hide. <\/p>\n Bitcoin\u2019s Death Spiral or Growing Pains?<\/p>\n