Two Soft Reports. One Stubborn Bond Market.
Inflation came in cooler than expected, and the jobs report came in much weaker. The chance of a Fed rate hike later this month went from likely to unlikely in a single week. Stocks and Bitcoin tried to rally on both reports, but long-term interest rates kept climbing, and each rally lost steam. The short end of the market got the memo. The long end is dancing to a different beat, and risk assets are stuck in the middle.
The Fed's next hike faded fast, and long-term interest rates went the other way.
Bitcoin is a little higher than where Monday's opener left it, after a sharp run around today's jobs report that it mostly gave back. Ethereum slipped slightly. Stocks fared better, with QQQ, the ETF that tracks the Nasdaq 100, rising the most and the broader market edging higher. Oil eased a bit as talks between the US and Iran dragged on and European governments weighed releasing emergency reserves. Gold held flat and silver fell, though the heavy betting on gold finally cooled, Section 06 has the detail. The dollar rose even as the Fed's hike odds collapsed, Section 04 has the detail. Zcash kept giving back last week's rally, down about 11% since Monday, while Bitcoin Cash, Solana and XRP held roughly flat.
What the week's reports came in at, and what the Fed was signaling.
Soft reports calmed the Fed's outlook. Long-term interest rates kept climbing anyway.
The market that prices the Fed's next move took the hint from both reports. Long-term bonds mostly shrugged them off. The cost of borrowing for thirty years kept climbing, and that is what spoiled the party for stocks and Bitcoin.
Short-term interest rates follow what the Fed is expected to do next. Long-term rates follow something broader: what investors think inflation, government borrowing and risk will look like for years, and how much extra they need to be paid to lend that long. This week those two stopped moving together.
Wednesday's inflation reading came in cooler than expected, partly because the government changed how it measures some prices. Friday's jobs report was much weaker. After each one, risk assets tried to rally, and each time the long end took the rally back: borrowing costs dipped for a moment and then climbed right back. Thursday, the 30-year borrowing cost touched its highest level since 2002, and stocks sank to their lows of the day before recovering. Today it dipped after the jobs report and had recovered most of the drop by early afternoon.
The Fed's own signals, laid out in Section 02, were split on timing but not on direction, and none of them said the hiking is over. That may be part of why long-term bonds weren't reassured, though the numbers can't prove it.
Other pressures were stacking up on the long end at the same time. Oil stayed expensive, and expensive oil keeps inflation worries alive. Worries about how much the government borrows keep adding to what investors demand for lending long. Buyers also showed up weakly at last week's government sale of five-year notes, a sign they wanted higher rates to lend. Nobody can say for certain which of these matters most, and that uncertainty is part of why stocks and Bitcoin look confused.
Oil ran on its own logic in the background, worth keeping separate from the Fed story. It swung hard but ended the stretch a little lower. Talks stalled Wednesday after Trump denied offering Iran relief from sanctions, oil jumped Thursday on the risk of renewed fighting and then closed lower as Gulf exports recovered, and it fell again Friday on talk of European governments releasing reserves.
Chain 3 played out, and then the bond market added a layer none of the chains had.
Monday's opener laid out three paths. This is the cool-inflation path, where a softer reading eases the Fed's hike odds and gives risk assets room. The first two steps happened, and then some: hike odds didn't just ease, they collapsed. Risk assets did get room, but only for a few hours at a time.
One step went the other way. The path assumed the dollar would soften as the Fed's odds fell. Instead the dollar rose, from 101.1 to 101.9, topping out near 102 on Thursday. It followed the long end of the bond market, not the Fed's odds, which is what you would expect if higher long-term US rates were drawing money into dollars, though the numbers can't prove it.
None of the paths had a place for the bond market, and it turned out to be where the real action was. A chain can describe how the Fed's side of the market reacts. It can't promise the rest of the market will cooperate. The question heading into next week is whether long-term rates follow the short end down, or whether hike expectations have to build back up for the two to agree again.
A balanced week on liquidations, with a real squeeze risk building on BTC.
BTC: Liquidations split close to evenly, but a short cluster is now sitting inside our proximity floor.
Since we last published, BTC is essentially flat. $82.9 million got liquidated across the market this stretch, split close to evenly between longs and shorts, not a clean read either way. Open interest also barely moved, so we're not calling a clean Backdrop signal there either. A short position is now sitting inside our proximity floor, a real squeeze risk if price breaks higher from here. Funding stayed calm and the profitable traders' positioning showed a real lean toward the longs. Net result, a quiet stretch price-wise, with balanced liquidation flow and a real squeeze setup sitting just below the surface.
This comes straight from Hyperliquid, a crypto exchange where every trade and every wallet is public. We pull it to see who's actually winning right now and which way they're leaning, not just what price did.
ETH: A quiet week on price, but a real long-side cascade underneath it.
Since we last published, ETH is essentially flat, down about a quarter of a percent. $17.4 million got liquidated across the market this stretch, and over four dollars in five of that came from long positions getting forced out, a real cascade. Open interest rose a real amount over the same stretch, but price barely moved, too small to clear our own threshold. One long position, a wallet we've flagged before, is sitting just outside our proximity floor again, the fourth straight issue it's been the nearest cluster here. Funding and the profitable traders' positioning both stayed quiet. Net result, a quiet stretch price-wise, with a real long-side cascade underneath it.
Same read as the BTC section above, pulled from Hyperliquid for ETH specifically. Same exchange, same method, different asset.
Reading The Pulse. Six things get pulled and scored every check. Open interest against price shows the crowd's real position, not just its size: both rising means fresh longs are opening, both falling means longs are capitulating, OI rising while price falls means fresh shorts are opening, OI falling while price rises means shorts are covering. Funding's 1-day trend against its 7-day baseline: running above the 7-day average means the cost of holding longs is rising, running below means that cost is easing. TWAPs shows both the largest order on the board and the fastest one, often different wallets, since the largest shows commitment and the fastest shows who's actually pressuring price right now. Liquidations already realized are read by which side got forced out, since forced-out longs and forced-out shorts mean opposite things. Liquidations still ahead looks at the nearest-to-forced-out wallets on each side, since the single largest position is often not the closest to getting wiped out. Tug of War compares the profitable wallets' positioning to the underwater crowd's: whichever side the profitable wallets are leaning is the side currently winning.
Gold's funding finally eased after climbing for two straight issues.
Bitcoin fund buying slowed to a trickle, and Ethereum funds turned to selling.
A Bitcoin ETF is a fund big investors use to get exposure to Bitcoin without holding it directly. When money flows into the fund, that usually means institutions are buying. When money flows out, that usually means they are selling. Tracking that separately from price shows whether a move came from real buying and selling pressure. Last week the funds took in more than $2.38 billion. This week, through Thursday, the total was about $51 million: $31.07 million Monday, $66.19 million Tuesday, a $148.69 million outflow Wednesday, the same day the cooler inflation reading landed, and $102.67 million back in Thursday. Friday's figure posts after the close.
Ethereum funds went the other way. They took in $17.10 million Monday, then lost $2.81 million Tuesday, $59.58 million Wednesday and $55.37 million Thursday, about $100.7 million out for the stretch. So Bitcoin's price rose without much help from fund buyers, while Ethereum's price slipped alongside real selling. Wednesday was the one day both sets of funds saw real selling, though the numbers can't tell us why.
Two markets disagree. Until they agree, rallies have been losing steam.
Bitcoin is a little higher with only a trickle of fund buying behind it, and Ethereum's funds have been selling since Tuesday. That isn't a break in the longer case for holding, but it means price is leaning on the bond market's mood more than on institutional demand right now.
Short sellers on Bitcoin sit closest to being forced out, according to the Pulse, and today's run toward the high $80,000s was the kind of move that squeezes them. Gold's and silver's funding both eased this week, but both are still positive, so longs are still paying up to hold.
This week's lesson: two markets can disagree, and the one setting long-term rates doesn't always follow the one pricing the Fed. Waiting for them to agree is a position too.
The Earn side, buy spot and sell the perpetual, paid 8.1% annualized on Hyperliquid's 7-day average this week, down from 11.4% last issue and 9.6% in Monday's opener, the second straight decline. The 1-day reading, 8.9%, sits 0.8 points above its own 7-day average, well under the 3.5-point threshold this series treats as a real signal, so nothing unusual to flag there. The 7-day figure also sits a little below both its 14-day average, 9.9%, and its 30-day average, 8.7%, a cooler stretch than the recent norm.
The Borrow side flipped. Last issue the long side was net collecting on Crypto.com, -1.7% annualized on the 7-day average and -12.6% on the 1-day. This week the 7-day average is -0.4%, still a hair in the long side's favor, but the 3-day average has turned to 5.9% and the 1-day to 8.9%, meaning the long side is paying again. That puts a 9.3-point gap between the 1-day and the 7-day, far over the 3.5-point threshold, a real signal that the turn is recent and fast. The 30-day average, 0.6%, hasn't moved.
Deribit's Earn reading is not included this issue, current figures weren't available at publication.
Read the Lesson →A covered call is when you hold a coin and sell someone the right to buy it from you at a higher price, collecting a fee up front. If the price never gets there, you keep the fee and the coin. If it does, you sell at the higher price and your gain stops there. This week's board is on the November 27 expiry, 56 days out, a longer window than last issue's 34 days, so premiums and yields aren't a clean like-for-like with last issue.
On Bitcoin, with spot at $84,087.80, the same two strikes as last issue. The $92,000 call, 9.4% out of the money, pays $2,081.17 per Bitcoin, a 16.3% annualized yield, with a breakeven of $82,006.63 and a most you can make if called away of $9,993.37. The wider $95,000 call, 13.0% out of the money, pays $1,450.51, an 11.3% yield, breakeven $82,637.29, and a most you can make of $12,362.71. The nearer strike pays five points more in yield. The wider one leaves about $2,370 more room for the price to climb before your gain stops.
Ethereum's board stepped down $100 from last issue's pair, with spot at $2,666.18. The $2,900 call, 8.8% out of the money, pays $121.31 per Ethereum, a 29.9% annualized yield, breakeven $2,544.87, most you can make $355.13. The wider $3,000 call, 12.5% out of the money, pays $95.32, a 23.5% yield, breakeven $2,570.86, most you can make $429.14. Same pattern as Bitcoin: the nearer strike pays about six points more in yield, the wider one leaves about $74 more room.
Deribit option marks as of Fri about 3:26pm ET, mid prices.
Read the Lesson →The Bitcoin against the Nasdaq 100 spread, Bitcoin's price divided by QQQ's, rising when Bitcoin gains ground on stocks, sits at 112.24 now, down from 113.63 in Monday's opener and 112.80 a week ago. Over the 100-hour window the tool tracks, it slipped 1.00%, QQQ gaining ground. The ratio spiked to about 116 overnight into Friday as Bitcoin ran up ahead of the jobs report, then slid back after it as Bitcoin gave up its gain and QQQ rose. Still well above the 87.08 entry from Lesson 7.
The WTI against Natural Gas carry spread, long oil and short natural gas, a pure funding-carry trade rather than a directional bet, sits at 29.99, with WTI at $91.19 and natural gas at $3.041. The ratio itself rose 0.75% over the window, oil gaining ground, after peaking near 31.7 Thursday. The funding side is what matters. On a $200,000 position, $100,000 per leg, the 7-day average projects $2,259.86 over 30 days and $27,494.96 annualized, a little lower than Monday's $2,411.72 and $29,342.62. Both legs are earning: long WTI's funding is -6.57% annualized, which means the long side is paid, and short natural gas is +20.93%, which means the short side is paid.
The carry stays positive on every window, but how rich it looks depends heavily on which one you read. The 1-day average projects $72,862.32 annualized and the 30-day $70,013.68, while the 7-day and 14-day both sit near $27,500. That spread between windows is the reason not to treat any single reading as a promise.
The Intel against Tesla pair, the earner-versus-spender rotation that tracks whether the market favors companies profiting from the AI buildout over those spending heavily on it, has stalled at 0.3228, about where Monday's opener left it at 0.322, and below last issue's 0.3304.
Spread readings as of Fri about 3:29pm ET.
Read the Lesson →This content is produced by Harmonic for educational purposes. It is strategy education, not investment advice.