Last week, we said $82.5K was the line. BTC went below it.
Since late July, BTC has been in a long consolidation as we addressed. It is a strong consolidation. Stocks and bonds have not been helping. US sellers have been active, and that is usually not good news. But the price has held up well. Week after week, more coins have changed hands inside this range, and more buyers now hold BTC at these prices. At the same time, fewer holders are taking profits. The selling is slowly drying up. This is a healthy sign.
So what do we think now? The break below $82.5K does not change our view. We are still cautiously bullish. In a long pause like this, we think it is better to trade less and buy on dips.
We also said BTC would hold up better than altcoins. That is what happened. We think BTC will keep leading.
What Changed
Macro. Inflation came in hot. Prices rose faster than expected, and not only because of gasoline. At first, the market priced in more rate hikes. Then several Fed officials said there is no rush. By the end of the day, most of the move was gone. The 10-year yield even closed lower than it started.
That is unusual after hot data. It may be the first sign that long-term rates are close to the top. We do not want to bet on it yet. The Fed still looks set to hike once more this year, most likely in December.
Oil is still high. This week, Trump said there is no plan to strike Iran before the election. This fits what we said last week: the bigger risk comes after the vote.
Next up: producer prices and retail sales, then the Fed meeting on October 28.
AI. This was a week of good results and falling prices. TSMC beat its forecast and raised its outlook. It said AI chip demand may grow even faster than it thought, and supply is still short. ASML said it cannot build enough machines to meet demand in the next few years.
Still, chip and memory stocks fell hard. In Asia, Thursday was a black day. Korea’s market fell so fast that trading had to pause. We see four reasons:
Hot inflation means higher rates, and AI is built with a lot of borrowed money.
Some AI cloud companies that grew on debt are now under pressure. Their bonds fell. This is the first warning from the credit market in this AI cycle.
There are new worries about memory supply from China.
After a big run, many investors held the same trades. When they sold, they sold together.
None of this changes the business. From what we see, the newest AI chips still earn very good returns for the companies that run them, and there is no sign of that slowing. That is not what a demand top looks like. We think the market is pricing fear, not facts. But fear can last longer than the facts suggest. So we keep our views, and we do not rush to add.
Crypto. The selling still came from the US. ETFs lost money for most of the week. But the price held up better than stocks in Asia, and much better than altcoins. Altcoins fell more, as we expected. ETH/BTC made a new low. A lot of altcoin leverage was cleared out. BTC is still our main position.
