The AI Reckoning Arrived, and the Binance Hack Shook Crypto.
AI earnings shook the stock market this week, and a hack at Binance shook crypto. Alphabet was punished for burning cash on AI spending and Intel for a weak outlook, and the Nasdaq 100 fell about 3% from Monday’s opener. Then a hack hit Binance, one of the world’s biggest crypto exchanges, on Thursday night, and Bitcoin slid below $77,000. The Fed’s statement was mild and Thursday’s inflation and growth numbers came in firm, yet traders priced a December hike as less likely by Friday. Section 02 shows who reported what and how the market took it, and Section 03 explains why.
AI stocks and crypto fell hard, while rates and the dollar went nowhere.
Stocks fell hard, led by AI names. The Nasdaq 100 lost the most, and the S&P 500 held up better.
Bitcoin and Ethereum fell with tech, then dropped again on Thursday night when a hack hit Binance, one of the world’s biggest crypto exchanges. Section 03 has the details.
Gold and silver sold off too, with silver the weakest. Oil finished a touch above Monday’s level after swinging between peace hopes and attacks on shipping.
Rates and the dollar ended about where they started, though Treasuries rallied in the scare, so the week’s damage came from stocks and crypto, not from bonds. Traders ended the week less sure of a December hike. Section 03 explains why.
What the week’s reports came in at, and how markets took them.
Stock figures are OKX perpetual prices. Fri close is the 5pm ET price, and vs Monday is the move from Monday’s opener print. Night of earnings is the 8pm ET move on the day the company reported, and day after earnings is the next day’s close, both against the close on the report day. 7-day funding is what holders of the perpetual paid or collected over the week. Ranges can run wider than the stock’s own in thin after-hours trading.
Cash-burning AI spenders were punished even as cloud sales grew, and a Binance hack hit crypto on top.
This week the market stopped asking whether AI demand is real and started asking who pays for it. Some companies, the spenders, pour enormous amounts into AI computing, and others, the earners, make money by selling them the chips and memory. Cloud sales grew at every big spender, but the market punished the ones that burned the most cash.
Alphabet and Amazon showed it most clearly. CNBC reported Thursday that Alphabet’s cash burn was larger than analysts expected, and Yahoo Finance reported Friday that Amazon’s cash burn hit a record. Microsoft’s stock barely moved.
The earners did not escape either. Intel warned that next quarter would be weaker, and SanDisk fell hard even though it raised its outlook.
The Fed was the quiet voice. CNBC reported Wednesday that it held rates on a 10 to 2 vote, with two members wanting a hike, and that Chair Warsh said the Fed is not on a set path. Thursday’s inflation and growth numbers came in firm, with growth beating forecasts, CNBC reported. On Friday, CNBC reported that St. Louis Fed President Musalem said more hikes are needed soon. Even so, traders priced a December hike as less likely than a week earlier, and our read is that the tech selloff made a hike look harder to deliver.
When fear spikes, investors usually sell riskier assets like stocks and crypto and buy safe havens like Treasuries, which pushes bond yields down. That is called a flight to quality, and it showed up late in the week. CNBC reported Thursday that the 10-year Treasury yield fell more than 8 basis points to below 5%, and yields dipped again Thursday night when the Binance hack hit, before recovering Friday. Our read is that bonds took the safe-haven bid, because gold and silver fell with the rest and the dollar ended flat.
Then, late Thursday, Binance was hacked. Binance said Friday that about $6.3 billion in client assets was affected and about $3 billion has been frozen, CNBC reported, and it said it will cover all losses. TRM Labs tied the attack to North Korean hackers, according to CNBC and Al Jazeera. Bitcoin fell with the news, and Binance expects withdrawals to resume by Sunday morning, CNN reported.
Oil’s story was shipping. CNBC reported Friday that a tanker was hit in the Strait of Hormuz and the Houthis stepped up attacks on Saudi Arabia, which kept oil on course for a fourth straight monthly gain. The Wall Street Journal reported Wednesday that the U.S. told Gulf states to prepare for a short, intense campaign after Tuesday’s midterms, and CNN reported Monday that Trump had not made up his mind.
Earnings spoke loudest, and a Binance hack landed on top of it.
Monday’s opener named three things that could move the market this week: earnings, the Fed and Thursday’s data. Earnings spoke loudest, and instead of calming the AI selloff they made it worse. Then a hack nobody saw coming hit crypto.
What comes next depends on whether the next round of AI-linked reports calms the cash worry.
Three Academy lessons, run against this week’s real numbers.
Earn means buying the coin and selling the perpetual contract against it to collect funding. Borrow means raising cash against Bitcoin you keep, and the cost is the funding you pay. Earners got more than Monday for a fourth issue in a row, though the latest day paid 9.2%, below the 7-day average, so the gain is cooling. Borrowing on Deribit got much pricier, at 6.1% on average, and the latest day cost 7.4%, so the cost is still rising. Over the past 30 days it averaged 4.9%.
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, so your gain stops at that price. The board now uses the December 25 expiry because November’s is under 30 days away, and its strikes reset lower because prices fell. At a similar distance out of the money as Monday, yields rose, 13.3% against 11.0% on Bitcoin and 26.3% against 22.9% on Ethereum, even though the expiry is longer.
| Call | Strike | OTM | Fee per coin | Annualized yield |
|---|---|---|---|---|
| Bitcoin, closer | $85,000 | 10.7% | $1,785.42 | 15.3% |
| Bitcoin | $86,000 | 12.0% | $1,555.05 | 13.3% |
| Ethereum | $2,500 | 11.8% | $89.43 | 26.3% |
| Ethereum, wider | $2,600 | 16.3% | $65.95 | 19.4% |
Trade of the week: long UNI, short TRX. A spread trade bets on one asset doing better than another, not on the market’s direction, which is the idea behind Lesson 7. Our earlier Lesson 7 trades, Bitcoin against QQQ and oil against natural gas, have played out well but took time to get there. This one was immediate. After the Binance hack, blockchain firms reported on Friday that the attacker sold tokens like UNI (Lookonchain) and swapped stolen funds into ETH and TRX (Arkham), and on OKX UNI fell about 13% while TRX rose about 11% in about 90 minutes, so the UNI to TRX ratio dropped from about 22 to 17.5 by 6pm ET Thursday. Our desk bought that dislocation after the hack, long UNI and short TRX, and made about 15% as the ratio snapped back to 20.9 by Friday’s close. It was one trade, and buying a dislocation like this can fail if the forced flows keep going.
The standing carry trade, long oil and short natural gas on $200,000, would have collected $563 over seven days, up from $445 on Monday, as oil gained ground on gas. Among the stock pairs, Intel fell hard against Tesla, which is the earner losing to the spender, while SanDisk edged ahead of Dell.
| Pair | Now | Monday | Gaining ground since Monday |
|---|---|---|---|
| UNI vs. TRX | 20.91 | 21.37 | TRX |
| WTI vs. natural gas | 35.60 | 33.71 | WTI |
| Intel vs. Tesla | 0.1633 | 0.2322 | Tesla |
| SanDisk vs. Dell | 2.71 | 2.68 | SanDisk |
| Bitcoin vs. QQQ | 110.92 | 111.94 | QQQ |
AI stocks, crypto and metals fell, while oil held its ground.
On Hyperliquid, Silver open interest jumped 40% to $215M as price fell, a sign of fresh shorts. Bitcoin saw the biggest liquidations, $187.18M of longs and $57.04M of shorts.
| Asset | Backdrop | Open interest change | Volume | Longs liquidated | Shorts liquidated |
|---|---|---|---|---|---|
| Bitcoin | flat | +0.38%$3.3B open | $13.75B | $187.18M | $57.04M |
| Ethereum | longs giving up | -11.19%$2.2B open | $5.77B | $47.92M | $19.06M |
| WTI crude | shorts covering | -10.99%$200M open | $1.10B | $452.3K | $486.1K |
| Gold | longs giving up | -3.62%$306M open | $220M | $4.69M | $6.2K |
| Silver | fresh shorts opening | +39.89%$215M open | $485M | $5.13M | $6.8K |
| Nasdaq 100the index QQQ tracks | longs giving up | -8.09%$262M open | $1.12B | $1.57M | $1.80M |
| S&P 500the index SPY tracks | longs giving up | -5.73%$363M open | $1.18B | $1.82M | $2.29M |
Hyperliquid is a different exchange from the prices above, so its numbers will not match them exactly. Nasdaq 100 and S&P 500 are the indexes that QQQ and SPY track. Hyperliquid lists the indexes themselves and has no QQQ or SPY market.
Open interest is the number of contracts still open, measured in contracts so price moves do not distort it. Volume is the dollar value of all trades over the same window, estimated from Hyperliquid’s one-minute price data. A backdrop needs price and open interest to each move 0.5% or more: open interest up with price down is fresh shorts opening, both down is longs giving up, open interest down with price up is shorts covering, and smaller moves read flat. A liquidation is a position an exchange force-closes because the trader can no longer cover the losses. Longs liquidated are traders betting on a rise who were forced out as price fell, and shorts liquidated are the reverse.
Bitcoin funds kept buying through Thursday while Ethereum funds kept selling.
A Bitcoin ETF is a fund big investors use to get exposure to Bitcoin without holding it directly. When money flows in, that usually means institutions are buying, and when money flows out, that usually means they are selling. Through Thursday the funds took in about $441 million, more than they did in all of last week, and they bought every day, though Thursday’s $17.07 million was the smallest of the four.
Ethereum funds lost about $276 million through Thursday. They sold all four days, and Thursday’s $105.48 million was their biggest outflow of the week. Friday’s figure posts after the close, so the next opener closes that loop.
The AI selloff and the Binance hack set the tone. Next week brings earnings, the midterms, the jobs report and Iran strike risk.
Bitcoin fell with tech and then dropped again on the Binance hack, though the funds kept buying through Thursday. Binance expects withdrawals to resume by Sunday, and next week’s reports, Tuesday’s midterms and Friday’s jobs report can move it.
Hyperliquid shows leveraged Bitcoin and Ethereum longs were flushed out, fresh shorts piled into silver, and the index markets liquidated more shorts than longs. A hack headline, a Fed speaker, a chip report or news from Iran can gap prices again, and oil trades through the weekend, so Sunday night can gap too.
This week the market rewarded cash flow over growth at the big AI spenders. Watching how next week’s reports land before choosing a direction is a position too.
This content is produced by Harmonic for educational purposes. It is strategy education, not investment advice.