On October 12, US stocks: Nasdaq 100 fell 0.71%, the Philadelphia Semiconductor Index plunged 2.67%, optical communication leader Lumentum dropped nearly 10% in one day, and Micron fell nearly 4%.
On October 13, South Korean stocks: KOSPI opened down 3.1% at 6186 points, and the decline widened to over 4% within minutes.
On the same day, BTC fell below $82,000, with $1.16 billion liquidated in 24 hours, 90% of which were long positions.
Many people saw this and their first reaction was "the whales are dumping again." Wake up, whales don’t have that much power. US stocks are falling, Korea is falling, and your coins are falling too—is that a coincidence? It’s the same rope.
This rope is called the US Treasury yield.
The US 30-year Treasury yield is 5.70%, the highest since 2002. The 10-year yield once reached 5.35%. Government-backed, earning over 5% just by holding—why would you take on the volatility of BTC and Nvidia dropping several points in a day?
Why are yields rising? Brent crude oil prices have surpassed $110, the Middle East is unstable again, and inflation is uncontrollable. The Fed just raised rates in September, and in the minutes, 9 out of 18 members think more hikes are needed this year. The market’s probability of a December rate hike has exceeded 80%.
The most critical point: tech stocks and cryptocurrencies are actually the same type of asset.
They are both "longest duration" assets, meaning their stories are told farthest into the future and the money takes the longest to realize. When the risk-free rate climbs from 3% to over 5%, all assets relying on "future" stories must be discounted again. Once discounted, no one escapes.
Look at another detail. The Nasdaq hit a record high in early October but didn’t hold. It surged up then reversed, indicating no one is taking over at the top and early buyers are cashing out.
Where did the money go? In US stocks, money flows from high-valuation tech to defensive sectors like pharmaceuticals, consumer staples, and financials. In crypto, BOME and BLUR dropped 20% to 30% in one day, money pulled out of altcoins and flowed back into BTC and stablecoins. The logic on both sides is identical: moving from high volatility to low volatility.
You think you diversified: some BTC, some Nasdaq funds, and some Korean chips. Wrong. You only placed one bet: that interest rates won’t rise further. Three baskets, one handle.
What’s next? Tomorrow (the 14th) the September CPI will be released. If the data exceeds expectations, the probability of a rate hike in October will immediately rise, and risk assets may face another sell-off. If the data is below expectations, everyone can breathe easier, and BTC and Nasdaq may rebound. This week also has PPI and retail data, and on Friday Fed Chair Warsh will speak.
So stop just watching BTC’s candlesticks. To know where crypto is headed, first look at CPI.
The correlation between BTC and Nasdaq has been rising these past two years, and the pattern of rising and falling together won’t change in the short term.
$BTC$BLUR$MU #SeptemberCPIReleaseImminent, Harmak says further rate hikes are still needed
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