Crypto news

The main driver for all risk assets has shifted dramatically. Geopolitics in the Middle East has been replaced by a sharp pivot in the Fed's rhetoric. After new Federal Reserve Chairman Kevin Warsh took a hawkish stance, the financial world reacted instantly. The market didn't just erase rate cut chances from pricing; it began actively pricing in a rate hike.

The US dollar has already hit a new yearly high. The S&P 500 index is steadily moving towards its fourth consecutive red weekly candle. Gold and silver are undergoing a notable correction, while SpaceX shares have plummeted 30% from their peaks. Capital is currently hiding in government bonds.

Why Capital is Fleeing to Bonds

The logic behind this movement is built on a rapid reassessment of market risks. When the cost of money rises, companies' future cash flows are discounted at a higher rate. This primarily hits the valuations of growth stocks, especially in the technology sector, which was heavily inflated by cheap credit. Capital senses such changes about a quarter in advance.

The decline in oil prices in this context is not a reason for joy, but a clear symptom of an economic slowdown. For the Fed, falling commodity prices no longer offset stubbornly rising service prices. Gasoline in the country is getting cheaper, but services, insurance, and rent continue to rise rapidly. Core inflation has become firmly entrenched, which is why the regulator is talking about hikes to suppress demand.

The main argument in favor of bonds is the positive real interest rate. The nominal yield on short and medium-term securities is at its highest in over a decade. Consequently, the real yield becomes abnormally attractive for major players. The reasoning that it's better to make money in stocks is a common 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 scheme for the same reason. The asset does not generate a stable cash flow. Therefore, when real yields rise, the opportunity cost of holding it becomes prohibitively high.

Additionally, the traditional end-of-quarter effect is at play in the market. 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. This capital rotation scenario is directly linked to the actions of Goldman and JP Morgan. JP Morgan itself needs to rebalance a $165 billion portfolio by June 30. That's precisely why stocks, gold, and crypto are all falling simultaneously. The first thing to do in such a situation is to actively hedge with shorts.

Scenarios for Gold and Bitcoin

Over the next few months, I expect the Fed to remain on hold. The first rate hike, if it happens at all, will come no earlier than September. This means short-term bond yields will stay high, and capital will continue to flow into bonds. Metals, in my forecast, will trade in a range with downside risk. If the market believes in several rate hikes, gold could be pushed down to $3000. 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 yet. Instead, I am waiting for a local bounce to gradually build a position: first entry into the market around $4250 (25% of position size); a second zone for adding near $4400 (another 35% of position size); a final addition near the $4500 level with signs of buyer weakness. The level for a complete cancellation of the entire bearish scenario would be a price close above $4600. I plan to take profits in stages.

For bitcoin, the calculation relies entirely on the classic cyclical model. The key reversal of the global cycle typically occurs approximately 826 days after the halving. After that, it takes another 70 to 110 days to reach the main event day. Relative 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 drop in one sharp move. 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 towards autumn would begin.

My expert conclusion: The market is transitioning into a "risk-off" phase, initiated not by external shocks but by the Fed's internal policy. Investors should reconsider their portfolio structure in favor of defensive assets and short-term trading strategies, rather than long-term holding of overheated positions.