Wintermute: Bitcoin has lost the support of capital inflows, and altcoins should be viewed cautiously in the short term

Wintermute stated that the Federal Reserve's meeting minutes show that most officials expect another interest rate hike within the year, with the market pricing in a roughly 20% probability of a rate increase by the end of October. The yield on the 10-year U.S. Treasury bond rose to 5.24%. Against this backdrop, the S&P 500 index rose 1.2% last week, reaching a historic high, while the cryptocurrency market performed weakly. The rise in U.S. stocks was supported by expectations of corporate earnings growth, while the cryptocurrency market lacked similar earnings support and relied more on new capital inflows.

As capital flows reversed, the cryptocurrency assets' sustained upward momentum over the previous six weeks became difficult to maintain. Bitcoin fell back from around $86,000 to $87,000 last week, dipping to about $80,400 on Thursday before rebounding above $83,000 and regaining the range high of $82,500. The U.S. spot Bitcoin ETF saw a net outflow of approximately $679 million last week, the largest single-week outflow since late June, while the Ethereum ETF experienced a net outflow of about $542 million.

The cryptocurrency market has lost the support of capital inflows, while U.S. stocks still have earnings growth as a cushion. Therefore, in the short term, the market outlook will only remain optimistic if long-term Treasury yields stabilize and spot ETF funds turn back to net inflows. Before these two conditions are met, Bitcoin remains an asset that is more sensitive to U.S. stock volatility and has higher downside risks, making it inadvisable to chase low-quality altcoins. If the 30-year U.S. Treasury yield breaks above the 5.64% reached on September 30, or if Bitcoin continues to face resistance around $82,500, Wintermute will adopt a cautious stance. This week, attention should be focused on the U.S. September CPI data to assess whether energy inflation is spreading to core inflation, as well as the financial performance of financial institutions and AI-related companies.