Why Reddit Stock Is Plummeting This Week: Whale Movements Signal Crypto Shift

Reddit's stock takes a nosedive as institutional whales pivot hard into digital assets—because why hold legacy social media when you can chase alpha in decentralized protocols?

Wall Street's favorite meme stock gets memed by its own community as crypto inflows hit record highs. Retail traders aren't just posting diamond hands—they're deploying them into actual digital assets.

The numbers don't lie: while traditional tech stocks bleed, cryptocurrency volumes surge 40% week-over-week. Even the SEC's latest regulatory theater can't stop the institutional stampede into blockchain infrastructure.

Here's the real tea: Reddit's valuation was always built on hype, while crypto's built on code. One produces memes—the other produces generational wealth. Guess which one smart money prefers?

Another week, another reminder that traditional equity markets are just crypto's beta test. The whales have spoken—and they're buying the dip where it actually matters.

Image source: Getty Images.

New AI research from MIT has hurt Reddit stock

On Tuesday, the Massachusetts Institute of Technology (MIT) published research that resulted in significant selling pressures for AI stocks. According to the new study published by the famous tech-research university, 95% of companies that have invested in integrating generative AI into their business operations have yet to see any profitability gains.

The research raised concerns that valuations for AI stocks could be in a bubble, and it was a significant factor in pullbacks for many companies with exposure to the artificial intelligence market this week. Reddit stock is still up 107% over the last three months, and sales momentum connected to the company's licensing of data for AI models has been a driving factor in the rally.

Inflation concerns are back in focus

After the Bureau of Labor Statistics published July Producer Price Index data last week that showed levels of inflation that were much hotter than expected, some investors started bracing for the possibility that higher inflation WOULD start showing up in the consumer side of the economy. Worrying indicators along those lines showed up in second-quarter earnings reports fromandthis week.

Home Depot said that it will be raising some prices due to tariffs, and Target said that it was also seeing pricing pressures and weak consumer spending due to tariffs. If consumer-facing inflation starts accelerating, the Federal Reserve may be wary about delivering substantial cuts for interest rates. Such developments could put significant dents in valuations for Reddit and other growth stocks.