Not Geopolitics, but the Fed: The True Culprit Behind the Crash of Bitcoin, Gold, and SpaceX Stocks
Markets are in turmoil, and many investors habitually seek causes in geopolitical conflicts in the Middle East. However, as my observations show, the true catalyst for the current sell-off lies not on the battlefield, but in the boardroom of the Federal Reserve. The hawkish rhetoric from new Fed Chair Kevin Warsh, delivered on June 17, was the trigger that reversed the global flow of capital.
The market instantly repriced its expectations. Instead of the eagerly anticipated rate cuts, scenarios of rate hikes began to be priced in. The U.S. dollar hit new yearly highs, the S&P 500 index is steadily moving toward its fourth consecutive red weekly candle, and gold and silver are showing a notable correction. The situation is most dramatic in the high-risk asset sector: SpaceX shares have plunged 30% from their all-time highs. Money, as expected, is flowing into the "safe haven" — U.S. government bonds.
Why is capital fleeing to bonds?
The logic of this movement is simple and relentless. When the cost of money rises, companies' future cash flows are discounted at a higher rate. This deals a devastating blow to the valuations of growth stocks, especially in the tech sector, which was inflated by cheap credit. Capital, as always, senses these changes about a quarter in advance.
The drop in oil prices, which some might perceive as positive, is actually an alarming symptom of an economic slowdown. For the Fed, lower commodity prices no longer offset stubbornly rising service costs. Gasoline is getting cheaper, but insurance and rent continue to rise. Core inflation has become entrenched, and the regulator is forced to talk about raising rates to suppress demand.
The key argument in favor of bonds is positive real yields. The nominal yields on short- and medium-term securities are at multi-decade highs. Consequently, real yields are becoming anomalously attractive for major players. The notion that "it's better to make money in stocks" is a fatal mistake in the current environment. 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 — it doesn't generate a stable cash flow. As real yields rise, the opportunity cost of holding it becomes prohibitively high. Add to this the traditional end-of-quarter effect: large funds need to lock in profits in overheated assets and show clients a stable result. The safest way to do this is to shift into fixed-income instruments. I associate this rotation scenario with the actions of giants like Goldman and JP Morgan. JP Morgan alone needs to rebalance its portfolio by $165 billion by June 30. That's precisely why stocks, gold, and cryptocurrencies are all falling simultaneously.
Bitcoin and gold forecast
Over the next few months, I expect the Fed to maintain a pause. The first rate hike, if it happens at all, will occur no earlier than September. This means short-term yields will remain high, and capital will continue to flow into bonds. Metals will trade in a range with downside risk. If the market prices in several rate hikes, gold could be sold down to $3000. However, a full collapse is not expected due to ongoing purchases by global central banks.
For gold, I am not opening a short position from current levels. Instead, I am waiting for a local bounce to gradually build a position: the first entry around $4250 (25% of volume), a second zone for adding near $4400 (another 35%), and a final addition around $4500 with signs of buyer weakness. The level for a complete cancellation of the bearish scenario would be a price close above $4600.
For bitcoin, my calculation relies entirely on the classic cyclical model. The key global cycle reversal typically occurs approximately 826 days after the halving. After that, it takes another 70 to 110 days to reach the main event day. 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 roughly $50,000-55,000. However, I do not expect a sharp, single-move decline. A "bull trap" in July with a bounce to the $70,000 area is quite possible. 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 would begin toward autumn.
Expert opinion: The current situation is a classic example of how macroeconomic factors dominate everything else. As long as the Fed maintains a hawkish stance, risky assets, including bitcoin, will remain under pressure. Investors should prepare for a volatile summer and, possibly, an opportunity to enter the market at more attractive levels closer to autumn.