Bitcoin's next major move may hinge on broader macroeconomic pressures, including AI credit stress and surging oil prices, just days before the Federal Reserve's next policy meeting. A report by QCP highlights how Bitcoin remains tied to risk-off sentiment, failing to decouple from equity market weakness despite its potential as a safe haven. The firm points to CoreWeave’s five-year CDS at 1,128 basis points, over three times Oracle’s 30 bps, as evidence of growing concerns about AI infrastructure financing. This stress has spread beyond CoreWeave, impacting equities and crypto, while longer-dated US Treasuries have benefited from a flight to quality.
The report also notes the violent equity market response, with South Korea’s KOSPI plummeting over 14% in a single week, its worst performance since 2008. Chip stocks have been particularly hard hit by AI-financing concerns and foreign selling. Bitcoin has continued to trade in line with broader equity sentiment, rather than establishing itself as an independent safe haven, following a recent inflation-driven correction.
On the oil front, QCP’s report highlights distorted tanker traffic through the Strait of Hormuz, with estimates suggesting actual flows were between 3.7 million and 13 million barrels per day. Brent crude oil tapped $114 per barrel on Friday, the highest level since May 5, after renewed Houthi attacks on Saudi infrastructure revived fears of another supply shock. Shipping costs and insurance premiums remain extremely high, further complicating the outlook for inflation and Fed policy.
Together, these factors create a challenging environment for Bitcoin, as high energy costs and AI credit stress could keep inflation sticky and delay aggressive Fed easing. While market expectations for an October rate hike have dropped close to zero, experts do not anticipate any rate cuts soon.