The great crypto-crash has just begun – and it’s only going to get worse

In the same way some men like to boast that their yacht is the biggest, that obsession with size (I could use another analogy but I suspect you can guess) can be witnessed in the tech bros when it comes to AI. So, up has stepped Jeff Bezos and waved a $200bn (£147bn) investment in AI development and infrastructure. It’s after Mark Zuckerberg (he of the newly gym-honed, ripping physique) said Meta would spend $135bn, and Google boss Sundar Pichai jumped in with $185bn. Funny how their numbers get ever higher. Funny, but few are laughing. These are billions, don’t forget, not millions. It’s the madness of crowds, or rather the craziness of a small bunch of macho-boys who believe that biggest means best. Same with their boats, houses, and – oh, let’s not go there.The lessons of history, of bubbles growing and bursting, don’t bother them. The past? Nah, that’s old-school. Where do you find that stuff? In books. Urgh. This is about now – the future – and it belongs to us. Tulip mania? What are you talking about? They ignore too, the shock of DeepSeek: that there were the clever Chinese coming up with AI that was much cheaper. Where would you put your money? On those who strut their stuff and flex their biceps and more besides, or on the quiet ones, who play a carefully thought out, below-the-radar, long game? Unfortunately, we don’t have a choice, as the US behemoths dominate the stock markets, and we can only watch as they (and, I daresay, our pensions) are caught up in their headlong rush. This week, the three plus Microsoft have announced they are committing $650bn to AI and related projects. While they love detailing the headline figure, as to when they expect to begin to recover their outlay, they are vague. Again: funny, that. Amazon chief executive Andy Jassy told analysts that AI is “an unusual opportunity”. It will be profitable in the future; sure it will. “I passionately believe every customer experience we have today will be reinvented by AI,” he declared. OK. Then he added: “We're going to invest aggressively.”Beautiful, except that Amazon shares fell 11 per cent on his call. The Amazon $200bn (this is on top of last year’s $125bn) was accompanied by other company news – that the online and media giant was laying off 16,000 workers, after cutting 14,000 in October. It also followed the layoffs at the Bezos-owned Washington Post, but hey ho. Amazon was not alone. Meta and Microsoft also saw their stocks drop, and AI worries drove down equities across the board. It’s no coincidence, either, that Bitcoin is taking a hammering, plunging below $65,000 – the lowest level since 2024 – and wiping out the gains it has made since Donald Trump returned to the White House. Bitcoin is the world’s most popular cryptocurrency, and it was the worst-affected, but others also suffered. Some of that crash is due to investor jitters over AI, which means that anything tech is vulnerable. Something else is responsible, though, which is the nagging thought that crypto may be overblown; that the hype is not translating into anything near the reality. Not yet; possibly not ever. The AI men (always men) were out in force for Trump’s inauguration last year, afforded the best seats in the house. He loves them, and he adores their industry, as he does crypto. There, he pledged to make the US the “crypto capital of the world”. Banished would be those regulators with their petty rules and concerns; they didn’t get it. He, Donald J Trump, would show ’em. On the back of his bravado – chin out, hard stare, finger-pointing – Bitcoin and crypto had a ball, with Bitcoin reaching more than $125,000 at one point. He did sign crypto-friendly measures. But then what? The promised US legislative drive has not materialised. Nor has his enthusiasm been replicated in many other countries. Some, but by no means all – the UK remains sceptical, and elsewhere, progress towards crypto-world remains slow. Trump may be the “Bitcoin president” – an epithet he was given by Michael Saylor, who heads Strategy, a company specialising in hoovering up Bitcoin (well he would, wouldn’t he?) – but that hasn’t stopped shares in Saylor’s firm from losing a third of their value so far this year. Saylor is sitting on paper losses that would make your eyes water – a $12.4bn deficit in the fourth quarter alone, and that was before Bitcoin’s latest downward lurch. Perhaps he can take comfort in his shares not being the hardest hit. Shares in Gemini, the crypto exchange, have plummeted by 80 per cent since the company went public in September. Gemini is also reducing its workforce (sound familiar?) and cutting back some of its operations. Crypto may bounce back. It has done so previously. But this feels more serious. That wave of euphoria is fast disappearing, maybe never to return. Certainly, the lift-off proclaimed by Trump has not happened – or rather, it did, only for crypto to fall back to earth. Gold and silver, meanwhile, continue to climb. Once more: funny, that.