On Wednesday, after Nvidia released its third-quarter (Q3) earnings and crushed Wall Street expectations, calming the AI crypto bubble fears, but the massive bets on AI and cryptocurrency prove sound, with experts predicting the global disruption could be unprecedented.
Everything now stretches beyond any possibility of a dramatic crash, associated with the crypto speculative mania.
Analysts fear a future where the AI-crypto boom never collapses, valuations keep rising, and early backers walk away as winners, leaving societies to absorb labor markets, information flows, and financial systems’ transformation at colossal speed.
Double the Bubble and AI Market Overvaluation
Some, like the 1935’s tulip craze or the 1980’s comic book and silver booms, simply burned out, hurting mostly latecomers.
Others, such as the 1929 stock market crash and the 2008 financial crisis, were so devastating to the degree it froze credit markets and crippled mass unemployment. Sometimes, the product’s overhyped is as as it can come real but at the same time overpriced. In the case of the 1990s internet bubble, early investors lost everything they put into the market, but others profited.
What history lacks is a major an AI crypto bubble where early investors win because there is no collapse at all, a pattern somehow compared to crypto market overvaluation and that’s the scenario now haunting economists.
Between $3 trillion and $6 trillion poured into AI hardware, software, and infrastructure, nearly all US economic growth escalated over the past year.
The top 10 US AI firms alone are now valued at $35 trillion, half of the US stock market. Crypto adds another layer, more than 20,000 cryptocurrencies worth $5.8 trillion, with Bitcoin dominating the field in what many describe as AI and Bitcoin hype.
Put together, AI and crypto investments are now worth more than a quarter of global GDP, making this arguably the biggest technology boom and possibly the biggest bubble in history, fueled in part by crypto speculative trading.
The AI crypto bubble crash would be detrimental, but if it remains unchecked, the long-term effects could be even more destabilizing, forcing massive adjustments in labor markets, taxation, and social welfare that governments are not yet prepared to confront, raising fears of a tech bubble burst.
The human cost of an AI driven future is becoming more complex, especially with predictions of crypto AI convergence.
AI is expected to justify its massive valuation by automating work, expanding productivity, and generating revenue from subscriptions and advertising. Tools like ChatGPT deliver real value, but they also enable deepfake videos, fabricated nude images, and automated exams, cheating early signs of more severe misuse to come.
AI written reporting now makes up 52% of online content, up from less than 10% in 2022. Companies are laying off workers due to AI-driven efficiencies, and markets are rewarding them for it. Estimates for permanent unemployment associated with the AI bubble range from 10% to 50%, trends some analysts call a modern Bitcoin price bubble in labor dynamics.
Historians compare the moment to the “Engels Pause,” a 50-year period from 1790 to 1840, when British workers suffered stagnant wages despite soaring national output.
Today, similar productivity-driven boom would complicate policy as governments could not use traditional tools, such as interest rate cuts or stimulus spending without triggering inflation, also linked to crypto bubble volatility.
With unemployment levels potentially too high to ignore but not high enough to force sweeping reform the result could be widening inequality and long-term hardship for millions while wealth accelerates at the top, a trend reminiscent of an AI stock bubble.
Economists now openly ask, “Is the AI market a bubble?” A question tied to fears of the next tech bubble burst.
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