Bitcoin capitulation ahead of schedule, the market waits for Nvidia to "break the situation".

Author: Bootly

Before the market awaits Nvidia's earnings report, global risk assets have already reacted in advance: sentiment has shifted from panic to a “stampede” panic.

On Tuesday, the Dow Jones index fell by 499 points, a decrease of 1.07%; the S&P 500 has fallen for four consecutive days, marking its longest losing streak since August; the Nasdaq has dropped over 6% since reaching a historic high in October, evaporating approximately $2.6 trillion in market value.

The cryptocurrency market, seen as a barometer for high-risk assets, has experienced a “bloodbath”: Bitcoin briefly fell below $90,000 for the first time in seven months; Ethereum dropped below the $3,000 mark.

Behind the synchronized plunge in the U.S. stock and cryptocurrency markets, investors' panic over the “AI bubble” and the uncertainty regarding the Federal Reserve's monetary policy are creating a double “blow.”

NVIDIA's earnings report is approaching, and discussions about the AI bubble are reaching a peak.

This time, the decline in the US stock market is closely related to the AI topic.

Earlier today, Nvidia and Microsoft announced plans to invest up to $10 billion in Anthropic for the next round of computing power competition. This was a piece of positive news symbolizing future growth momentum in the industry, yet it barely managed to boost the market.

In the past six months, large technology companies have seen exponential growth in their investments in AI infrastructure—data center construction, energy expansion, and GPU procurement are all in the hundreds of billions of dollars. Nvidia's market value once soared to 5 trillion dollars, and the weight of AI companies in the S&P 500 is rapidly approaching one-third.

This has also made the market panic, with the voices claiming that “the bubble is accelerating” becoming louder.

Sundar Pichai, CEO of Google's parent company Alphabet, pointed out in an interview with the BBC that the current AI frenzy has “irrational components.” He warned, “If the AI bubble bursts, no company will be able to stand alone, including us.”

Wharton School professor Jeremy Siegel said in a Bloomberg TV interview this week: “AI is revolutionary, but that doesn’t mean valuations can detach from fundamentals.”

This sentence to some extent portrays the contradictory emotions of investors: they have unwavering confidence in the future of AI, but are also concerned that the gains of the past year have exhausted future growth.

Therefore, before the Nvidia financial report is released, some funds choose to withdraw first and reassess the risk-return ratio of the AI sector.

Sonu Varghese, a global macro strategist at Carson Group, pointed out in his analysis report: “The technology sector has been thriving this year, so the volatility is not unexpected. The intensified fluctuations in tech stocks are also due to the highly concentrated risks—both in terms of index composition and investor positions. Despite the significant gains, investors heavily invested in AI-related stocks are always walking on thin ice, as any pullback could trigger a chain reaction. More seriously, when stock prices begin to fall, the simultaneous behavior of many investors seeking to diversify their risks can exacerbate market turmoil.”

Macroeconomic variables: Missing data will soon be filled in, but the interest rate outlook remains the biggest uncertainty.

The key economic data that was previously missing due to the government shutdown is being rapidly restored. The U.S. Department of Labor has confirmed that it will complete all missing weekly initial unemployment claims data by this Thursday, and will respectively reissue the September PPI and import and export price indexes on November 25 and December 3.

However, the core anxiety of the market lies not in whether “data is missing,” but in: what interest rate path will be indicated after the data is filled in?

According to the CME FedWatch Tool (as of November 19, Beijing time): the probability of the Federal Reserve lowering interest rates by 25 basis points in December is 48.9%, and the probability of maintaining the current rate is 51.1%.

In other words, the market's expectations for whether there will be a rate cut in the near future are almost a “fifty-fifty” situation, which makes interest rate expectations particularly sensitive and fragile.

Tech stocks and crypto assets belong to asset classes that rely on high valuations and strong growth expectations, making them extremely sensitive to interest rate changes. If the upcoming data reinforces narratives of “inflation remaining sticky” or “labor market resilience exceeding expectations,” leading to further delays in rate cut expectations, then the pressure of tightening liquidity will continue to loom over risk assets.

Industry insiders: Is it a “deep correction” or a “perfect bottom fishing”?

In recent years, the correlation between Bitcoin and US tech stocks, especially the Nasdaq 100 index, has continued to strengthen. The latest data shows that the 30-day correlation between Bitcoin and the Nasdaq has reached approximately 0.80, a new high since 2022.

Industry insiders generally believe that Bitcoin's performance increasingly resembles that of a “leveraged tech stock,” surging in bull markets and being sold off during periods of heightened risk aversion, with the declines being amplified.

In the face of Bitcoin's pullback, opinions among cryptocurrency industry professionals have diverged:

• Long-term profit-taking: Analysts such as Gerry O'Shea from Hashdex Asset Management believe that part of Bitcoin's struggles are due to long-term holders taking profits and locking in significant gains from recent years.
• Technical Alert: FxPro Chief Market Analyst Alex Kuptsikevich pointed out that Bitcoin has broken below the 50-week moving average, confirming the rupture of a two-year bull market trend. His forecast scenario is that Bitcoin may further decline to the 200-week moving average (approximately in the range of $60,000 to $70,000).

• Signal of “Extreme Panic”: CoinMarketCap's sentiment index shows that current crypto investors are in a state of “Extreme Fear”. However, OKX Global Managing Partner Haider Rafique believes that the market's performance in the coming days will determine whether this is merely a “sharp, temporary pullback” or if it will evolve into a “deeper reset.”
• Optimists call for entry: Ryan Rasmussen of Bitwise Asset Management and others remain optimistic, believing that when the market is at an extreme of “fear”, it is the “perfect opportunity” for investors to build existing positions or enter the market. Geoffrey Kendrick, head of digital asset research at Standard Chartered, pointed out in a recent report that the current Bitcoin pullback is a healthy adjustment within the cycle, and if it can hold the $100,000 area, Bitcoin will form new structural support.

In summary, the current market is in a typical “wait-and-see period.” It is recommended that investors control their positions and avoid chasing highs or panic selling. Technology stocks and crypto assets may continue to exhibit a weak oscillating pattern in the short term. The market is waiting for new directional anchors, including fundamental data, policy signals, and validation of AI narratives. Before that, risk assets will enter a more restrained consolidation phase.