Key Highlights

● WGMI plunged, one of the sharpest declines among the sector and thematic funds tracked.

● Bitcoin traded near $81,500 to $81,600 and was headed for a second weekly loss.

● Miners with AI hosting businesses, including IREN and Cipher Digital, plunged.

● MSCI's rule on non-operating companies could remove Strategy after the Nov 30 close.

A steep drop

The WGMI crypto-miner ETF plunged on Friday, according to market data, one of the sharpest declines among the sector and thematic funds tracked. Software and semiconductor ETFs also fell, but WGMI's slide stood out.

The fund holds shares of companies that mine bitcoin, so its performance is closely tied to the price of the cryptocurrency and, increasingly, to the AI computing businesses many miners have built alongside their mining operations.

Bitcoin under pressure

Bitcoin traded around $81,500 to $81,600 on Friday, slightly lower on the day, and was headed for a second straight weekly loss. A roughly $1 billion liquidation wave hit crypto markets from Thursday into Friday. Reports differed on the trigger, with one citing a hot consumer price report and another a hotter-than-expected producer price reading.

Hut 8 (NASDAQ:HUT) fell sharply by midday after on-chain data showed large bitcoin transfers to exchanges.

The AI data-center connection

Many mining companies have pivoted part of their business to hosting AI computing, and that link hurt on Friday. Investors moved from asking what AI can do to asking how it will be financed. IREN (NASDAQ:IREN) and Cipher Digital (NASDAQ:CIFR) plunged, as did Applied Digital (NASDAQ:APLD). CoreWeave (NASDAQ:CRWV) plunged amid concerns about its debt load of more than $50 billion, and reports said the cost to insure its debt hit a record.

TeraWulf (NASDAQ:WULF) fell, and Riot Platforms (NASDAQ:RIOT) slid to $14.94 in the morning, moving with pressure on bitcoin-linked stocks without company-specific news. Cipher settled zero-coupon convertible notes on Friday that were priced this week to fund its Barber Lake data center, and CleanSpark (NASDAQ:CLSK) signed a 20-year, $6.6 billion triple-net lease at its Sandersville site.

Index-rule pressure

MSCI (NYSE:MSCI) approved rules making non-operating companies, those that mainly hold investments, ineligible for its Global Investable Market Indexes. The rule could remove Strategy (NASDAQ:MSTR), which holds 848,250 bitcoin, from MSCI's global indexes after the Nov 30 close, with the final list due Nov 11. Strategy tumbled to $136.72, and reports said the pressure spilled into miners.

The Nasdaq Composite slid 572.99 points to 26,140.03, capping its worst week since June. The S&P 500 fell 84.62 points to 7,659.44 and the Dow Jones Industrial Average lost 175.28 points to 52,002.41. The Russell 2000 fell 45.90 points to about 2,721. The Cboe Volatility Index rose to 19.99 after touching its highest level since June 11, and money flowed into energy, utilities and consumer staples.

"The AI group is now splitting between companies that can fund the buildout themselves and those that have to borrow," one market commentator wrote.

WGMI Dates: Meta, Fed and MSCI

The Federal Reserve decides on rates Oct 28. Big Tech earnings next week, including Meta Platforms (NASDAQ:META) on Oct 21, could shift views on AI spending. MSCI's Nov 11 list is a key date for bitcoin-linked stocks, and WGMI's next moves will hinge on bitcoin and on sentiment toward AI infrastructure.