Crypto market sheds more than $1tn in six weeks amid fears of tech bubble
More than $1tn (£760bn) has been wiped off the value of the cryptocurrency market in the past six weeks amid fears of a tech bubble and fading expectations for a US rate cut next month,Tracking more than 18,500 coins, the value of the crypto market has fallen by a quarter since a high in early October, according to the data company CoinGecko,Bitcoin has fallen by 27% over the same period to $91,212, its lowest level since April,Investors around the world are on edge as fears mount over an artificial intelligence bubble in the stock market, with even the boss of Google’s parent company warning that “no company” will be immune if the bubble bursts,The UK’s blue-chip FTSE 100 index fell 1.
3% on Tuesday, its fourth day in the red in a row and the worst day since April.The Stoxx Europe 600, which tracks the biggest companies on the continent, fell 1.8%.Wall Street was also trading lower, with the Dow Jones, Nasdaq and S&P 500 all down about 1% on Tuesday afternoon in the US.It followed steeper falls in Asia, where in the Japan the Nikkei 225 index shed 3.
2%.Hong Kong’s Hang Seng index dropped 1.7%.Sundar Pichai, the head of Google’s parent company, Alphabet, said in an interview with the BBC that there was “irrationality” in the current AI boom.He warned that in the event that the AI bubble bursts, “no company is going to be immune, including us”.
Meanwhile JP Morgan Chase vice chairman, Daniel Pinto, said that booming AI valuations are due for a reassessment.“There is probably a correction there,” he said at the Bloomberg Africa Business Summit in Johannesburg on Tuesday.“That correction will also create a correction in the rest of the segment, the S&P and in the industry.”The chief executive of Klarna, Sebastian Siemiatkowski, also sounded the alarm this week, warning that huge sums being poured into computing infrastructure made him “nervous”.He told the Financial Times: “I think [OpenAI] can be very successful as a company but at the same time I’m very nervous about the size of these investments in these datacentres.
That’s the particular thing that I am concerned about,”The Klarna co-founder added that the rising valuation of AI companies, including the chipmaker Nvidia, was also a source of concern,Nvidia became the first company to hit a market value of $4tn this year, later followed by Apple and Microsoft,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotion“That makes me nervous, because of the amount of wealth that is currently automatically allocated into this trend, without some more thoughtful thinking,” Siemiatkowski said,“You can say, ‘I disagree with the fact that Nvidia is worth that much and I don’t care, some rich people are going to lose some money.
’ But the truth is, because of the index funds and how this works, your pension right now is going into that theory that it is a good investment.”An AI bubble is now seen as one of the most serious risks in the stock market, and a survey by the Bank of America found that 45% of its polled fund managers believe it is the biggest tail risk.The price of gold, which is traditionally seen as a safe haven asset, is also falling.The spot price fell by 0.3% to $4,033.
29 an ounce on Tuesday morning, after earlier hitting its lowest level in a week.The drop comes amid fading expectations that the US Federal Reserve will cut interest rates next month.Higher interest rates make gold relatively less appealing as the metal does not pay a yield.However, Giovanni Staunovo, an analyst at the Swiss investment bank UBS, said the gold price was likely to fall further but would soon recover.“I would expect gold prices to bottom out soon, as I still see the Fed cutting rates several times over the coming quarters, and central banks’ diversification into gold remains strong,” he said.
Klarna says AI drive has helped halve staff numbers and boost pay
Klarna has claimed that AI-related savings have allowed the buy now, pay later company to increase staff salaries by nearly 60%, but hinted it could slash more jobs after nearly halving its workforce over the past three years.Chief executive Sebastian Siemiatkowski said headcount had dropped from 5,527 to 2,907 since 2022, mostly as a result of natural attrition, with departing staff replaced by technology rather than by new staff members.The figures add to the impact of an internal artificial intelligence programme, which had steadily reduced its use of outsourced workers including those in customer service, with technology now carrying out the work of 853 full-time staff, up from 700 earlier this year.It meant the company, which was founded in Sweden in 2005, had managed to increase revenues by 108% while keeping operating costs flat. Siemiatkowski told analysts on an earnings call on Tuesday that it was “pretty remarkable, and unheard of as a number, among businesses”
Ocado shares fall 17% after US partner announces warehouse closures
The value of online grocer Ocado has fallen sharply after Kroger, it’s major partner in the US, announced the closure of three warehouses using the UK company’s high-tech equipment.Ocado signed a deal to build 20 automated warehouses – known as customer fulfilment centres – for Kroger, the US’s fourth largest retailer, in 2018. Eight of those facilities are currently operating with two more planned for next year. The deal was seen as a major part of Ocado’s plan to sell its online grocery delivery technology internationally.However, on Tuesday, Kroger said sites in Frederick in Maryland, Pleasant Prairie in Wisconsin, and Groveland in Florida would close in January
Cloudflare outage causes error messages across the internet
A key piece of the internet’s usually hidden infrastructure suffered a global outage on Tuesday, causing error messages to flash up across websites.Cloudflare, a US company whose services include defending millions of websites against malicious attacks, experienced an unidentified problem that meant internet users could not access some of its customers’ websites.Some site owners could not access their performance dashboards. Sites including X and OpenAI suffered increased outages at the same time as Cloudflare’s problems, according to Downdetector.The outage was reported at 11
Amazon vs Perplexity: the AI agent war has arrived
Hello, and welcome to TechScape. I’m your host, Blake Montgomery.A tech titan and a startup are fighting over who controls the next phase of artificial intelligence.Amazon has sued Perplexity AI, a prominent artificial intelligence startup, over a shopping feature in that company’s browser that allows it to automate placing orders for users. Amazon accused Perplexity AI of covertly accessing customer accounts and disguising AI activity as human browsing
Ben Stokes the thunder god primed for Ashes series that may change his Australian legacy
Perth has some good memories for England captain at the culmination of a four-year project cast in his aggressive imageEngland hope to strike a healthy balance between work and play and at the start of this Ashes week: as Australia trained at the ground to prepare for the first Test, the tourists were being, well, tourists.As well as the usual golfers, a handful of players took a boat trip out to Rottnest Island, with Brydon Carse later showing off an impressive fish he had caught. No doubt some of the grouchier past players would sooner his mind was on reeling in a far bigger one: Steve Smith.But they resumed in earnest on Tuesday morning in nets that had Joe Root purring about their quality. There was certainly more pace and bounce than during the warmup game at Lilac Hill last week, Root confident that three good sessions is plenty before the big push on Friday
‘This wasn’t about money, this was a life at stake’: the world of a sports lawyer
Simon Leaf was sitting in the doctor’s office next to a footballer receiving news that would change the player’s life. The footballer knew something wasn’t quite right and medical tests had been ordered. This was not long after Fabrice Muamba had been saved by the speed of paramedics after having a cardiac arrest on the pitch at White Hart Lane, Leaf recalls, so tensions were heightened.As the player’s lawyer, Leaf was asked to attend when the worst was confirmed and the consultant revealed the player had hypertrophic cardiomyopathy – the same condition as Muamba, where the heart muscles thicken and blood is pumped less efficiently.“To get the results with him, to talk him through his options, to try to guide him through that process was a truly humbling experience,” Leaf says
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