Bitcoin plunged more than 6% on Wenesday, slipping below the $100,000 mark for the first time since June, as global markets faced renewed volatility and investor sentiment turned risk-averse.

The fall followed warnings from top Wall Street executives of a potential market correction.

Bitcoin’s drop came as investors retreated from risk assets, including cryptocurrencies, in response to growing fears of tighter monetary conditions and slowing economic momentum. The digital asset fell under $100,000, erasing months of gains driven by optimism over institutional adoption and artificial intelligence-related investments.

Major U.S. stock indexes also saw steep declines. The S&P 500 lost 1.17%, while the Nasdaq Composite fell 2.04%, led by a sharp sell-off in technology and semiconductor stocks. The Dow Jones Industrial Average shed 251 points, or 0.53%, to close at 47,085.24.

Investor anxiety intensified after Goldman Sachs and Morgan Stanley CEOs cautioned that U.S. equities might face a correction of over 10% within the next two years. The warnings, delivered at an investment summit in Hong Kong, added to concerns that valuations across sectors, especially in tech, have overheated.

Semiconductor giants led the decline, with Nvidia shares tumbling 4%, while the broader chip index dropped by a similar margin.

Palantir shares drop despite strong earnings

Palantir Technologies shares slid more than 8% despite the company reporting robust quarterly results. The data analytics firm projected stronger-than-expected fourth-quarter earnings, fueled by rising demand for its artificial intelligence solutions.

However, profit-taking weighed on the stock after it more than doubled in value earlier this year. Adding to bearish sentiment, “Big Short” investor Michael Burry revealed fresh short positions against both Palantir and Nvidia in a regulatory filing on Monday.

The global shift toward safety saw the U.S. dollar climb to a four-month high against the euro, while Treasury yields fell. The 10-year U.S. Treasury yield eased two basis points to 4.087%, signaling investors’ move into government bonds.

The euro fell for a fifth straight session to $1.148, its weakest since August 1, while sterling weakened 0.72% to $1.3044 after the U.K. finance minister warned of “hard choices” in the upcoming budget.

Meanwhile, oil prices slipped as the stronger dollar weighed on commodities. U.S. crude dropped 49 cents to settle at $60.56 a barrel, while Brent crude declined 45 cents to $64.44.

Fed outlook and economic uncertainty add pressure

The U.S. dollar’s strength was underpinned by fading expectations of near-term rate cuts by the Federal Reserve. While the Fed reduced rates last week, Chair Jerome Powell cautioned that another cut in December was “not a foregone conclusion.”

Market data from CME FedWatch showed traders now see a 65% probability of a December rate cut, down sharply from 94% a week earlier. The uncertainty has contributed to volatile trading and cautious positioning across global markets.

Compounding the tension, a U.S. government shutdown has delayed key economic data, including the monthly jobs report that was due Friday, leaving investors with limited visibility on labor market trends.

MSCI’s global equity index dropped 1.14% to 996.34, while Europe’s STOXX 600 slipped 0.3%. Despite the downturn, optimism surrounding artificial intelligence and major tech partnerships had supported markets earlier in the week.

On Monday, stocks rose after Amazon.com announced a $38 billion cloud services deal with OpenAI, the maker of ChatGPT — a sign that AI investments continue to drive long-term optimism despite near-term market turbulence.