The Long End Cooled. Risk Assets Dipped. The Fed Barely Mattered.
Wednesday’s Fed minutes barely registered, and Friday’s consumer survey came in weaker than expected. The week turned on Thursday, when the president ruled out an attack on Iran before the midterms, a decent 30-year bond auction landed, and Treasury repeated its buyback, pushing long-term rates back down from their highs. The same day, word that OpenAI’s revenue pace is about $20 billion below what the Street had assumed hit risk assets that were already drifting lower, and they found their lows around midday. Stocks and Bitcoin are climbing back off those lows Friday. Section 03 has the story, and Section 04 shows which of Monday’s paths the week followed.
Long-term rates cooled from their highs, and risk assets dipped on OpenAI before bouncing.
Monday’s opener left two questions open: where long-term rates and hike odds would go, and whether Bitcoin fund buying would hold up. Long-term rates slipped, but not in a straight line: they climbed to their highest of the week early Thursday, then got knocked back down by a decent 30-year bond auction and Treasury’s repeat buyback. Hike odds for this month fell too, and the market now sees about a four-in-five chance the Fed does nothing at its October meeting. Bitcoin fund buying did not hold up: the funds went from last week’s buying to selling, with the biggest outflow Wednesday as long-term rates hit their highs, and Ethereum funds sold every day.
Bitcoin and Ethereum both fell this week, Ethereum by more, and long liquidations drove the drop, Section 05 has the detail. The alt coins fell harder than Bitcoin, with Bitcoin Cash down the most. Risk assets sold off Thursday, first on the Iran report and then on the OpenAI revenue story in Section 03, and found their lows around midday, with chip and AI-infrastructure stocks falling hardest. The dollar was flat. Gold rose and silver slipped, Section 06 has the detail. Oil swung on Iran headlines. A report Wednesday that the US was weighing strikes before the midterms sent oil higher and stocks lower. On Thursday the president said the US will not attack Iran before the November 3 midterms, described talks as productive, and kept the blockade of the Strait of Hormuz in place. Washington has sent a counterproposal that Tehran says it is considering, and Iran’s side says it will not give up uranium enrichment. Oil ended a little above Monday after swinging in a wide range.
What the week’s readings came in at, and what they signaled.
Long-term rates cooled just as OpenAI rattled risk. The Fed minutes were a bystander.
Wednesday’s minutes confirmed what the market already believed: officials expect another hike by year end and gave no date. The market shrugged, and Friday’s consumer survey, weaker than expected, did not change that.
Thursday did the work. The president said the US will not attack Iran before the midterms, a decent 30-year bond auction landed, and Treasury repeated its buyback. Long-term rates, which had climbed to their highest of the week that morning, settled back down.
The Iran pledge fits a pattern. The president tied it to the November 3 midterms, and reporting says officials know oil spikes feed the cost-of-living worries weighing on Republicans. Prediction markets on Polymarket give Democrats a strong edge in the House and the better odds in the Senate. We take no view on the vote. The read from the situation is that a calm Strait of Hormuz through the election is the White House’s most direct path to lower oil, and his comments fit that read.
Thursday, the Financial Times reported that OpenAI told investors its revenue pace is about $20 billion below what the Street had been assuming, mostly because of how revenue is counted. Risk assets had been drifting lower from Tuesday’s highs as long-term rates climbed. Thursday they were hit further and found their lows around midday, just as rates were coming off, the opposite of what Monday’s opener said would happen if rates eased.
So the week in one line: a decent bond auction and Treasury’s buyback calmed the long end, OpenAI’s reset rattled risk at the same moment, and the Fed watched from the sidelines.
Chain 3 played out, with one interruption.
Monday’s opener laid out three paths. Chain 3, long-term rates easing toward the Fed’s path with the buyback as the backstop, is the one that played out: the minutes showed no rush, and long-term rates settled lower after the bond auction and the buyback. What Chain 3 did not count on was OpenAI. It expected stocks and Bitcoin to get room, and instead the revenue reset hit them the same day. Chain 2, firm numbers, showed up only at the edges, in Monday’s prices reading and Friday’s edging-up price expectations. Chain 4, minutes leaning toward another hike, did not show: the minutes saw a hike by year end and gave no date. The question heading into next week is whether Wednesday’s inflation report keeps the Fed’s next hike pointed at December or pulls it forward to October.
Hard selling on both coins, and long liquidations did the damage.
BTC: Longs took the damage while new shorts opened underneath.
Since we last published, BTC is down about 3.3%. $198.9 million got liquidated across the market this stretch, and about five dollars in six of that came from long positions getting forced out, a real cascade. Open interest rose about 1.5% while price fell, the signature of fresh shorts opening rather than just longs leaving. Funding stayed calm, and the profitable traders' positioning showed no real lean either way. One short of $25.3 million sits about 2.0% above price, a large position close to being forced out, shown for context and not part of our scoring. Net result, a real selloff led by long liquidations, with new shorts opening underneath it.
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: Down 8%, and nearly every liquidated dollar was a long.
Since we last published, ETH is down about 8.0%. $161.4 million got liquidated across the market this stretch, and 99 cents of every dollar came from long positions getting forced out, a real cascade. Open interest fell about 5.8% while price fell, longs capitulating, and the cost of holding longs eased. One wallet also ran a $2.0 million sell order at about $148,000 an hour, above the pace we count as a real signal. A long of $29.9 million, from a wallet we've flagged before, sits about 1.2% from being forced out. Net result, a hard drop with heavy long liquidation, and longs still close to the edge.
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.
The S&P 500 held up while the Nasdaq 100 slipped, and oil’s funding turned sharply negative.
Bitcoin funds flipped from buying to heavy selling, and Ethereum funds sold every day.
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 about $241 million. This week, through Thursday, they lost about $702 million. Wednesday, the day long-term rates hit their highs, was the worst, a $487.07 million outflow and the largest in at least two weeks, with another $244.13 million out Thursday.
Ethereum funds lost money every day this week, about $486 million through Thursday, and have now sold eight days running. Friday’s figure posts after the close, so the next opener closes that loop.
Long-term rates cooled, risk assets dipped on OpenAI, and the Fed barely mattered. Position for headlines.
Rates eased on Thursday and risk assets still sold off, so this week’s weakness was not only about rates.
The Pulse shows the selloff was mostly long liquidations. On Ethereum, one of the five largest longs sits very close to being forced out, so a small further drop could trigger more selling, and on Bitcoin one large short sits just above the price, so a small bounce could force it out, Section 05 has the detail. The president’s promise covers only the stretch before the November 3 midterms, and the Fed meets October 27 to 28. If you trade commodity perpetuals, watch for wild funding swings through the monthly roll, which runs from the fifth to the tenth business day. Over the latest day, natural gas funding annualized at more than 800% and crude’s at about negative 57%, so size around those readings, Lesson 7 has the detail.
This week showed two things that moved markets with nothing to do with the Fed: Treasury’s own buying and one company’s revenue reset. Waiting for a clearer signal is a position too.
Earn is for putting dollars to work: buy the coin and sell the perpetual contract against it to collect funding. This week the best place to do it was Hyperliquid, paying 9.6% annualized on the 7-day average, up from 8.6% on Monday, so earners got a little more, though the latest day paid 6.4%. Borrow is for people who need cash without selling their Bitcoin, and the cost is the funding you pay while you keep your exposure. This week the cheapest place was Crypto.com, at 0.7% annualized on the 7-day average, down from 2.6% on Monday, so borrowing was cheaper over the week, but the latest day cost 8.3%, so it is getting more expensive again. Over the past 30 days the cost averaged 0.7%.
Lesson 3 readings as of Fri about 2:13pm ET.
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. On the November 27 expiry, 49 days out, Bitcoin at $82,494.59 has the $92,000 call, 11.5% out of the money, paying $1,464.28 per Bitcoin, a 13.3% annualized yield, and the wider $93,000 call, 12.7% out, paying $1,299.29, an 11.8% yield. On Ethereum at $2,483.41, the $2,750 call, 10.7% out of the money, pays $83.19 per Ethereum, a 25.2% yield, and the wider $2,800 call, 12.7% out, pays $72.02, a 21.8% yield. The strikes moved down with the price, so fees are lower in dollars, but at about the same distance out of the money the yields are close to Monday’s, 13.3% against 13.9% on Bitcoin and 25.2% against 25.5% on Ethereum.
Deribit option marks as of Fri about 2:25pm ET, mid prices.
Read the Lesson →The WTI against Natural Gas carry spread, long oil and short natural gas, a funding-carry trade rather than a directional bet, sits at 26.73, down from 29.42 on Monday, and down 9.38% over the last 100 hourly bars, about four days, natural gas gaining ground. The funding it paid was large. On a $200,000 position, the last seven days of funding came to about $6,855.81, and the 7-day average now projects $29,382.03 over 30 days, against $1,947.61 on Monday.
Most of that jump is the monthly contract roll. Oil and natural gas perpetuals track a futures price, and that price rolls from the November contract to the December contract between the fifth and tenth business day of the month, with a fifth of the index moving to the next contract each day. December crude is cheaper than November, so crude’s funding has been negative, which pays the long side. December natural gas is more expensive than November, so natural gas’s funding has been positive, which pays the short side. Both legs of this pair collected, so the jump reflects the roll and is not a steady rate.
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, sits at 0.2758, down from 0.3095 on Monday, and down 11.37% over the window, Tesla gaining ground. SanDisk, a flash memory maker, against Dell, a computer maker, sits at 2.75, down from 3.11 on Monday, and down 10.46% over the window, Dell gaining ground. Bitcoin against QQQ sits at 109.96, down from 113.03 on Monday, and down 2.74% over the window, QQQ gaining ground.
Spread charts and the carry projection as of Fri about 2:04pm ET.
Read the Lesson →This content is produced by Harmonic for educational purposes. It is strategy education, not investment advice.