## The Correlation That Terrifies Investors: Bitcoin as a Hostage to Tech Volatility

The decline on December 11 made it clear. Oracle lost approximately $80 billion in market value after disappointing earnings results, while increasing its AI capital expenditures from $35 billion to nearly $50 billion. That same day, Bitcoin plummeted below $90,000. It was no coincidence. Oracle's stock dropped 16%, dragging Nvidia, AMD, and the Nasdaq overall down with it. Market analysts quickly labeled the move as a reactivation of fears about an "AI bubble," with investors questioning whether the profitability of building massive data center capacity truly justifies those costs.

What this episode reveals is a troubling structural vulnerability: Bitcoin has become the high-beta tail of the AI operation. According to an analysis by 24/7 Wall St, the Pearson correlation between Bitcoin and Nvidia reached approximately 0.96 over a three-month rolling window prior to the November results. With the Nasdaq, data from The Block show a 30-day Pearson correlation coefficient of 0.53 as of December 10. This is not just a temporal coincidence: since the Fed began easing interest rates on September 17, Bitcoin has fallen about 20%, while the Nasdaq rose 6%. When tech stocks tumble, Bitcoin suffers even sharper declines.

## The Narrative of the Maturing Bubble, and Bitcoin at the Front Line

The story of a potential crisis in the AI sector is not new, but it has recently gained institutional credibility. Reuters reported in late November that valuations linked to AI and macroeconomic metrics like the Buffett Indicator have pushed US stock valuations beyond the extremes of the dot-com era. Indices with heavy AI exposure show sharp pullbacks and increasing volatility.

Funding for AI infrastructure has reached extraordinary proportions. Morgan Stanley estimated a funding shortfall of around $1.5 trillion for AI infrastructure development. Moody’s chief economist, Mark Zandi, warned that AI-related debt already surpasses the previous tech boom before the dot-com collapse. Publications like The Bulletin of the Atomic Scientists and The Atlantic cite approximately $400 billion in AI spending this year versus only about $60 billion in revenue. Most companies are deeply unprofitable, and the economy partly depends on a boom in investment that cannot last indefinitely.

## The Silent Mechanism That Would Amplify the Collapse for Bitcoin

If the AI bubble bursts, the damage to Bitcoin will go beyond mere correlation of price movements. Capital expenditure on AI has increasingly become a matter of structured credit. Financing deals for data centers and infrastructure jumped from about $15 billion in 2024 to nearly $125 billion in 2025, driven by bond issuance, private credit, and asset-backed securities.

Analysts warn that some of these structures share worrying patterns with the years prior to 2008, with "unproven" risks if tenants or cash flows do not meet expectations. Central banks have elevated this to the category of financial stability risk. The Bank of England explicitly highlights stretched valuations in AI-focused companies, warning that a sharp correction could threaten broader markets through leveraged players. The ECB, in its November Financial Stability Review, emphasizes that the AI investment boom is increasingly financed through bond markets and private equity, making it vulnerable to shifts in risk sentiment.

Oracle exemplifies this risk perfectly: its $50 billion capital expenditure plan for AI data centers, combined with a 45% increase in long-term debt and record spreads in credit default swaps, represents exactly the kind of overextended balance sheet that regulators worry about. If the bubble bursts, those spreads widen, refinancing costs rise, and leveraged funds that are long on debt and thematic AI stocks are forced to reduce gross exposure. Bitcoin is at the end of that deleveraging chain.

Chinese researchers have documented a strong positive relationship between Bitcoin prices and global liquidity (M2). They called BTC a "liquidity barometer" that performs well when liquidity is abundant but crashes when it contracts. If the AI bubble triggers a tightening of credit, the first-order effect is a global risk reduction and liquidity withdrawal. Bitcoin is one of the first things macro funds sell when margin calls arrive.

## The Second Act: How Policy Could Reverse the Destiny

However, there is another side to the coin. The same institutional actors warning about AI-driven corrections implicitly point to the likely response. If over-leveraged markets wobble enough to threaten growth, central banks will loosen financial conditions again.

The IMF’s Global Financial Stability Report warns of the probability of a "disorderly correction" but emphasizes the need for careful yet ultimately supportive monetary policy. History offers precedents. After the COVID shock in March 2020, aggressive quantitative easing coincided with a massive increase in crypto capitalization, from around $150 billion in early 2020 to approximately $3 trillion by the end of 2021. A recent Seeking Alpha report compared Bitcoin to global liquidity and the dollar index, showing that once serious easing begins and the dollar weakens, BTC tends to record large gains in subsequent quarters.

Narrative rotation also matters. If AI stocks go through a classic hangover with lower multiples and negative headlines, some speculative capital could rotate into a different bet: "the future of money" or "anti-system." Bitcoin is the clearest candidate. Recent stress has already seen capital re-concentrate in BTC. As liquidity dried up and volatility increased, Bitcoin’s dominance rose to around 57%, with ETFs serving as the institutional entry point.

## The Inescapable Dilemma

Bitcoin faces a structural paradox: it cannot decouple from the AI operation in the short term, but depends on policy responses for its medium-term bullish potential. In the immediate aftermath of an AI credit crisis, Bitcoin suffers as the high-beta tail of macro risk. In the following months, if central banks respond with easing and the dollar weakens, Bitcoin has historically captured disproportionate gains.

The key question for capital allocators is whether Bitcoin survives the first blow well enough to benefit from the second wave. The answer depends on how violent the AI correction is, how quickly policies change, and whether institutional flows through ETFs remain under pressure. The December 11 Oracle event was a preview of that vulnerability: Bitcoin dropped below $90,000 the same day Oracle’s value evaporated by $80 billion.

A positive indicator emerged later in the trading session. Nvidia recovered 1.5% from its intraday low, while Bitcoin not only followed but gained over 3%, recapturing $92,000. With Bitcoin (BTC) currently trading at $91.88K, the Pearson correlation between these assets remains the critical variable to monitor. If the AI bubble fully deflates, Bitcoin takes the first hit. Whether it emerges strengthened depends on what central banks do next.