Wintermute: Bitcoin Loses Inflow Support, Cautious Short-Term Outlook for Altcoins

October 13 — Wintermute stated that the Federal Reserve meeting minutes show most officials expect another rate hike this year, with the market pricing in about a 20% probability of a rate hike by the end of October, and the U.S. 10-year Treasury yield rising to 5.24%. Against this backdrop, the S&P 500 rose 1.2% last week and hit a record high, while the crypto market showed weakness. The rally in U.S. equities was supported by expectations of corporate earnings growth, whereas the crypto market lacks similar earnings support and relies more on new capital inflows; as capital flows reversed, the crypto assets' previous six-week contrarian rally became unsustainable.

Bitcoin pulled back last week from around $86,000 to $87,000, briefly falling to about $80,400 on Thursday, then rebounding above $83,000 and reclaiming the $82,500 range high. U.S. spot Bitcoin ETFs saw net outflows of about $679 million last week, the largest weekly outflow since late June, while Ethereum ETFs saw net outflows of about $542 million.

The crypto market has lost the support of capital inflows, while U.S. equities still have earnings growth as a backstop. Therefore, in the short term, the market will only remain bullish if long-term Treasury yields stabilize and spot ETF flows turn back to net inflows. Until these two conditions are met, Bitcoin remains an asset more sensitive to U.S. equity volatility with elevated downside risk, and chasing low-quality altcoins is not recommended. If the 30-year U.S. Treasury yield breaks above the 5.64% touched on September 30, or if Bitcoin continues to face resistance near $82,500, Wintermute will turn cautious. This week, focus on the U.S. September CPI data to be released on Wednesday to assess whether energy inflation is spreading to core inflation, while also watching the earnings performance of financial institutions and AI-related companies.