3 hours ago
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Japan’s Nikkei 225 plummeted roughly 5.43% on Thursday, falling to 63,208 points in what became one of the worst single-day trading sessions the index has seen in recent memory. Taiwan’s benchmark index wasn’t far behind, dropping more than 4% as the entire Asia-Pacific region bled red.
The broader Asia-Pacific ex-Japan index fell approximately 3%, tracking a tech rout on Wall Street from the prior session. The Nikkei had been trading above 73,000 before this correction took hold, meaning the index has shed roughly 10,000 points in a remarkably short window.
Semiconductors at the center of the storm
TSMC, the Taiwanese foundry that essentially manufactures the world’s most advanced chips, saw its shares drop between 2% and 3.6%. Mixed earnings reports from the company gave investors the excuse they’d been looking for to take profits after an extended rally in AI-related names.
In Japan, the carnage was even more concentrated. Kioxia Holdings, the memory chip manufacturer, cratered 15% in a single session. Tokyo Electron, SoftBank Group, Advantest, and Murata Manufacturing all posted significant declines.
Geopolitics poured gasoline on the fire
Geopolitical tensions between the US and Iran added another layer of anxiety. Rising tensions in the Middle East pushed oil prices sharply higher, reigniting inflation fears. Higher oil prices are a particular problem for Japan’s export-heavy economy, as Japan imports nearly all of its energy, meaning spiking crude prices act as a direct tax on corporate margins.
What this means for crypto investors
Many of the same hedge funds and asset managers that hold semiconductor stocks also maintain crypto positions. When they face margin calls or need to raise cash, they sell whatever is liquid. Bitcoin, trading 24/7 with deep order books, is often among the first assets to get liquidated during a broad de-risking event.
AI tokens and projects related to decentralized compute have seen their valuations swell in tandem with traditional AI stocks. If the market is telling us that AI valuations have gotten ahead of themselves, that reassessment could easily extend to AI-themed crypto projects that have even less fundamental revenue to justify their prices.
Crypto traders should be watching the US semiconductor ETF closely as a leading indicator. If the tech selloff in Asia bleeds into another session of weakness on Wall Street, the probability of correlated selling pressure hitting Bitcoin and Ethereum rises significantly.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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