The stock market didn’t crash this week. But after a seven-month spasm of retail-borne speculation, parts of the casino started clearing out.Cracks emerged across the risk-on landscape as bloated valuations and fresh doubts over the real-world payoff of artificial intelligence dragged US tech stocks to their worst week since April. Losses in megacaps like Palantir Technologies Inc and Oracle Corp. rippled through leveraged ETF and meme trades.The clearest signal of speculative distress: The crypto engine is sputtering. After a parabolic surge, Bitcoin and its peers have endured a violent unwinding that shattered confidence. This week, the coin slid repeatedly toward $100,000 amid a drought of ready buyers who had watched billions of dollars in leveraged positions get wiped out just weeks earlier — a shock the market has yet to recover from.Wall Street veterans have been warning for weeks that AI-fuelled tech valuations were outpacing fundamentals. That caution is now showing up in the same fast-moving trades where retail and institutional risk-taking had quietly converged — from upside-levered ETFs to crypto wrappers. Inflows haven’t vanished, but the payoff is no longer one-way.Peter Atwater, a professor of behavioural economics at the College of William & Mary, says the biggest blow yet to gambler spirits came Monday, when despite beating earnings forecasts Palantir saw its stock fall 8% the next day. The company, trading at a price-earnings multiple in the hundreds, is a bellwether for both hyperscaler tech and meme sentiment, he said.“It sits in the same neighbourhood as AI, as crypto,” he said. “Thematically, all of these different elements have the same intense-confidence correlation. These are all crowd favourites. So this is a crowd phenomenon.”The pullback isn’t universal. But for the first time in months, the speculative surge that once moved in near-lockstep is fragmenting. In equities, some high-octane trades are unravelling. A Meta Platforms Inc-linked ETF fell 8.5% this week and another focused on Palantir shed 22%. A Strategy Inc-minded product has slid more than 20%. Leveraged quantum and Super Micro Computer Inc. trades buckled, too.The group of tech giants known as the Magnificent Seven dropped 3% this week amid questions over their spending plans tied to AI infrastructure. A comment from OpenAI Inc’s CFO about the possibility of the government needing to “backstop” financing further grated nerves.“If you watch this week, there’s been a decided negative bias to what people are saying about AI,” Atwater said. “If we see the mood deteriorate, the scepticism should rise, the scrutiny should intensify. And those would be behaviours that ultimately limit the potential of the market to bounce.”Over the past week, indexes tracking meme stocks, non-profitable tech companies and recent IPOs all pulled back. An ETF focused on recent market entrants fell 5%, the most since September, while a basket of non-profitable names within the innovation space dropped 7%, the most since August.Meanwhile, more than $700mn has been pulled from digital-asset ETFs over the past week alone, including nearly $600mn from BlackRock’s Bitcoin fund and $370mn from its Ether counterpart. Solana and Dogecoin-linked products are down double-digits since their recent launches. Even the freshly minted MEME ETF — pitched as a retail sentiment play — is off more than 20% since its launch a month ago.“Investors are on edge,” said Stephen Kolano, chief investment officer at Integrated Partners. “Seems like the profit taking is coming from the things that have run the most since early April which is AI and anything connected with it which explains the pressure in” cryptocurrencies.That shift may matter beyond the meme complex. Retail risk appetite — from prediction markets and tokenised assets to Robinhood Markets Inc.’s fresh boom — helped fuel 2025’s bounce across broad markets despite stress on the tariff and labour market front. But now, with the gap between winners and losers rising and some risky trades draining capital, liquidity could be getting tighter at the edges.None of this signals a broader crash. The S&P 500 is off just 2% from recent highs. But for a crowd used to buying the everything-goes-up narrative, this week lands differently: Timing matters again. The tide may not be lifting all boats. Leverage cuts both ways.Bitcoin’s 15% slide over the past month is raising eyebrows not just for its scale, but its timing. A growing camp of Wall Street analysts now sees the token as a lead indicator for both high-volatility tech stocks and retail-driven liquidity. Among the chief concerns flagged in recent days is that so-called whales — investors who hold large, long-term positions — have been declining, according to Citi. This cohort has in the past tended to hold onto their hoards even during the roughest of declines.“Bitcoin has a knack for sniffing out things ahead of time,” said Bloomberg Intelligence’s Eric Balchunas. “It’s always trading, so there’s a lot of chances for it to be a price-discovery vehicle. It’s open all the time — like a 7-Eleven. And the people who trade Bitcoin are perpetually online and so plugged in.”The reversal is especially striking given the political momentum behind digital assets. Bitcoin’s early-year surge was powered in part by President Donald Trump’s campaign to rebrand the US as the crypto capital of the world. But after peaking near $4.4tn in October, the total market cap of digital tokens has since dropped nearly 20%, wiping out most of 2025’s gains. For traders betting that regulatory clarity would unleash a new supercycle, the speed of the comedown has been sobering.“There’s simply not enough new capital to offset locals exiting. Too many in the industry just can’t stomach another crypto cycle — they’ve had enough, both financially and emotionally,” Marex’s Ilan Solot wrote in a note this week. “For the uptrend to resume, the whales need to stop selling. Stabilising ETF flows would help too.”