China’s AI stock bubble keeps deflating. On October 27, the STAR50 index fell 4.81%, extending a roughly 40% slide from July that erased about $480 billion.
Bitcoin, however, holds near $80,400, and two scenarios could decide whether the selloff reaches crypto.
Scenario One: Why Global Contagion Could Hit Bitcoin
The greater near-term danger is a mirror effect on Wall Street, not a direct Chinese crypto dump. If upcoming US tech earnings show that massive AI infrastructure spending continues to outpace realized revenue, concerns about overvaluation could spread.
The index closed at 1,252.28, while the CSI 300 dropped about 4.81% in the last 24 hours. Market data shows tech names led a late-session selloff.
Still, China bans crypto trading and previously pushed miners offshore. As a result, Chinese selling has no direct path into Bitcoin.
Instead, the key risks lie elsewhere:
- US tech earnings could show AI spending still outpacing revenue.
- Spot Bitcoin ETFs have tied BTC more closely to tech stocks.
- Fund managers often sell liquid assets during sharp equity drops.
Prediction markets also show elevated odds of more pressure on Western chip and AI stocks.
Scenario Two: Could Capital Rotate Back Into Bitcoin?
CryptoQuant CEO Ki Young Ju recently argued that an AI bust may barely affect Bitcoin. In his view, Bitcoin largely missed the AI rally.
Meanwhile, Scott Melker highlighted comments from ARK’s Brett Winton.
Winton said AI compute absorbs capital like a “black hole,” raising the opportunity cost of holding Bitcoin.
The bullish case rests on three points:
- Investors who sold Bitcoin to chase AI stocks could return.
- Bitcoin does not depend on chip supply chains or state subsidies.
- Rotation could support prices once initial risk-off selling fades.
However, Ju stressed that an AI crash is not automatically bullish or bearish for Bitcoin.
What Analysts Expect for Bitcoin’s Next Price Move
In the short term, traders are watching key levels. Ted Pillows noted that Binance has kept buying. He added that Bitcoin needs a daily close above $81,000 to regain momentum.
Meanwhile, Michaël van de Poppe pointed to a packed week of macro events and earnings. He noted that a growing bearish consensus often appears near a local bottom, so an upside surprise remains possible.
Ultimately, Bitcoin’s path may depend less on China and more on whether US AI spending narratives hold. For now, markets await earnings and Fed signals.
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