We would be the first to admit that BTC didn’t have a good week; in fact, it didn’t have a good month despite some expectations, but the surrounding market environment arguably looks much worse.
From Wall Street and China to monetary policy, geopolitics, and a massive hack, several major risk factors have deteriorated simultaneously. Yet, BTC continues to trade in the upper $70,000s.
Global Markets Crashed
Selling pressure accelerated last week, with brutal sessions for US tech stocks. The Nasdaq Composite dropped by almost 3% on Friday alone, its steepest decline since June, while individual stocks such as Intel and AMD collapsed by double digits. The tech-heavy index finished nearly 8% below its October 6 record amid growing concerns that massive AI spending may not generate adequate returns.
This weakness, though, was not isolated to the US. China’s CSI 300 fell by 1.4% on Friday and closed October with a massive 8.5% loss. This became its largest monthly decline in over a decade. The index has now dumped around 15% over 12 consecutive losing weeks. Tech shares were among the biggest casualties, with the STAR50 plunging 5.5% during that session.
Normally, that sort of synchronized risk-off move would be a highly uncomfortable environment for Bitcoin. The asset indeed plunged on Friday, but it was mostly driven by the painful $6.3 billion hack against Binance and actually managed to rebound by almost $2,000 since the low of $76,100.
Meanwhile, the US Federal Reserve left rates unchanged last week, but hotter economic data has quickly shifted expectations toward additional tightening. US GDP grew at a 3.4% annualized rate in the third quarter, while headline PCE inflation jumped to 3.6% in September from 3.4% in August.
Markets moved to price in roughly an 80% probability of a 25-basis-point Fed hike in December, as Reuters reported.
Another Risk Looms
Multiple reports emerged over the weekend that US President Donald Trump spoke with Israeli Prime Minister Netanyahu to resume bombing Iran as soon as next week. Recall that the POTUS has warned on several occasions that the strikes will continue once the mid-term elections are over, which would be on Tuesday.
The administration has also warned Arab Gulf countries to prepare for a “short and intense” military campaign after November 3.
The aforementioned Binance hack was the latest piece of this all-out pressure. Somewhat expected, BTC indeed dumped hard in October, closing with a decline of more than 7%. However, given the scope of the hack, pressure on financial markets, the expected rate hike in December, the midterms, and potential subsequent attacks in the Middle East, trading between $77,000 and $78,000 isn’t as bad as it should be.
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