The AI scare trade has been used to explain price drops across multiple industries. Crypto has also fallen with the rest of the market, also falling prey to the influential market narrative. 

The AI scare trade spread contagion across markets. The narrative that new AI-powered tools can upend business models of major industries caused panic selling in multiple sectors of the stock market. 

The AI scare trade first showed its effect in January and has since become a major narrative over the past two weeks. The first industry to be affected was software, as the S&P software industry index dropped by over 18% in the year-to-date. 

The narrative spilled over to other stocks, including private credit companies, insurance, real estate,…