The Fed, not geopolitics: Why Bitcoin, gold, and SpaceX are falling simultaneously
The market has sharply shifted its priorities. Geopolitical tensions in the Middle East have taken a back seat, giving way to the hawkish rhetoric of the Federal Reserve. After new Fed Chair Kevin Warsh adopted a hawkish stance on June 17, financial markets reacted instantly. Investors are not just pricing out rate cuts—they are actively hedging against a rate hike.
The US dollar hit a new yearly high. The S&P 500 index is steadily moving toward its fourth consecutive red weekly candle. Gold and silver are showing a noticeable correction, and SpaceX shares have plunged 30% from their peak values. Capital is now flowing into government bonds—this is the main signal of a trend shift.
Why capital is fleeing to bonds
The logic is simple: when the cost of money rises, future corporate cash flows are discounted at a higher rate. This primarily hits growth stock valuations, especially in the tech sector, which was heavily inflated by cheap credit. The market senses such changes about a quarter in advance.
The drop in oil prices is not a reason for joy, but a clear symptom of an economic slowdown. For the Fed, lower commodity prices no longer offset the persistent rise in service prices. Gasoline in the US is getting cheaper, but insurance, rent, and services continue to rise. Core inflation has become entrenched, so the regulator is talking about rate hikes to curb demand.
Bonds now offer the highest yields in the last ten years. Real yields are becoming anomalously attractive for major players. The notion that it's better to earn in stocks is a fatal mistake. Why take on the risk of a 20% correction in the S&P 500 when a risk-free instrument offers guaranteed returns?
Gold clearly loses out in this scenario for the same reason: the asset does not generate a stable cash flow. As real yields rise, the opportunity cost of holding it becomes prohibitively high.
Additionally, the traditional end-of-quarter effect is adding pressure. Large funds need to lock in profits in overheated assets and show clients stable results. The safest way to do this is to shift into fixed-income instruments. I associate this capital rotation scenario with the actions of Goldman and JP Morgan. JP Morgan itself needs to rebalance a $165 billion portfolio by June 30. That's why stocks, gold, and cryptocurrencies are all falling simultaneously right now.
Scenarios for gold and bitcoin
In the coming months, the Fed will maintain a pause. The first rate hike, if it happens at all, will occur no earlier than September. Short-term bond yields will remain high, and capital will continue to flow into bonds. Metals will trade in a range with downside risk. If the market believes in multiple rate hikes, gold could be sold down to $3,000. However, a crash is not expected due to ongoing purchases by global central banks.
For gold, I am not opening a short from current levels. Instead, I am waiting for a local bounce to gradually build a position: the first entry around $4,250 (25% of volume), a second zone for adding near $4,400 (another 35%), and a final addition around $4,500 if there are signs of buyer weakness. A full cancellation of the bearish scenario would be a price close above $4,600. I plan to take profits in stages.
For bitcoin, the calculation relies entirely on the classic cyclical model. The key global cycle reversal typically occurs about 826 days after the halving. After that, it takes another 70 to 110 days to reach the main bottom. In relation to the current cycle, the 826-day zone falls at the end of July. Thus, the potential main bottom is expected in October–November in the range of approximately $50,000–$55,000.
However, I do not expect the price to fall in one sharp move. A "bull trap" in July with a bounce to the $70,000 area is quite likely. My current tactical goal is to catch a long position in the $58,000–$58,500 zone. This would allow profiting from a move to $67,000–$70,000, after which a new wave of decline toward autumn would begin.
My conclusion: The market is undergoing a fundamental paradigm shift. The era of cheap money is over, and investors will have to adapt to a new reality where the risk-free yield of bonds becomes the main competitor for risky assets. The current correction is not panic, but a rational reassessment of the cost of capital.