Wintermute: AI trading loses Washington tailwinds, S&P drops 4.4% in a single day

On November 10, crypto market maker Wintermute stated in its latest market weekly report that after Democrats secured wins in both the House and Senate of the US midterms, markets repriced AI regulatory risks, causing the previously priced-in "Washington tailwind" to vanish; the S&P 500 fell 4.4% last Thursday, marking its worst single-day performance since April 2025 (Trump tariffs).
Tightening expectations simultaneously intensified: last Friday, US nonfarm payrolls added 165,000, far exceeding expectations of approximately 60,000, pushing the probability of a December rate hike from 67% a week ago to around 77%. Wintermute believes the market should take this seriously, as wage growth is sufficient to leave the Fed with no reason to wait for the stock market to stabilize; raising rates during an AI-driven pullback is the most difficult combination for crypto assets to weather, simultaneously draining liquidity and risk appetite.
In terms of asset performance, Bitcoin briefly rebounded with oil stocks on Wednesday, surging to $81,000, but gave back all gains by Friday. It fell to $73,500 on Sunday, stopping just above the ~$73,000 200-day moving average before closing below the 50-week moving average; spot Bitcoin ETFs saw net outflows of $1.28 billion last week. Brent crude fell 13% last week, marking its largest weekly decline since 2020, and recovered to around $96 near Monday; gold rose 4.5%. Nvidia dropped approximately 5% premarket as its board launched an independent investigation into reports that Jensen Huang was targeted by foreign intelligence, an event preceding the November 17 earnings report.