Recent Market Bearish Signals: AI Bubble Drives US Stock Volatility, ETF Records Massive Outflows Fueling Market Sell-off, December Rate Cut Prospects See Significant Swings

On November 22nd, following the hitting of an all-time high on October 7th, Bitcoin came under continuous selling pressure. The largest drop in 46 days exceeded 35%. Yesterday, it nearly slipped below the $80,000 mark, leading the entire cryptocurrency market to experience consecutive days of decline and "bloodletting". Now, it has seen a slight rebound to around $85,000. Recently, the global financial markets have faced increased downside risks. The AI bubble theory has influenced the rise and fall of the US stock market. The record-breaking "shutdown" of the US government has led to the delay in the release of various essential macroeconomic data, causing a sharp liquidity crunch. The probability of a rate cut in December has fluctuated significantly. The specific bearish factors are summarized as follows: · The market has questioned NVIDIA's high receivables that may not be recoverable, with cash conversion rates lower than those of industry peers. At the same time, multiple AI companies have been using funds in a circular manner, and some transactions have repeatedly counted revenue, leading to several investment institutions selling off NVIDIA stocks. The long-lasting AI bubble has suppressed the US stock market, causing an overall market decline. Yesterday evening, a Federal Reserve official expressed optimism about AI, and NVIDIA's CEO clarified concerns about the AI bubble, resulting in a recovery in the US stock market; · BlackRock IBIT saw a record outflow of $523 million in a single day on the 19th of this month, with massive net outflows exceeding $2.5 billion this month. This marks the highest continuous trading day market capitalization evaporation in history. Analysts believe that retail investors in the US stock market selling off spot Bitcoin and Ethereum ETFs are the main selling pressure on the crypto market, causing significant damage to native cryptocurrency users; · The US government has just ended a record-breaking 43-day shutdown. During this period, various essential economic and employment data were temporarily unavailable. In September, non-farm payrolls unexpectedly increased by 119,000. The Fed's "hawkish" stance on continued inflation concerns has led to a significant fluctuation in the probability of a December rate cut. Over the past month, the initial probability of a rate cut in December (25 BP), which was as high as 70%, has fallen to 30%. At one point, traders bet that there would be no rate cut in December. In the early hours of today, several Fed officials collectively turned "dovish" again, raising the rate cut probability to 71.3% (25 BP), reigniting rate cut expectations.