Bitcoin faces AI selloff risk as K33 flags Anthropic IPO

Bitcoin’s (BTC) correlation to equity market selloff is increasing as inflation concerns and leverage in technology stocks threaten to amplify losses across risk assets, according to Wintermute.

AI stock weakness put Bitcoin at risk of deeper sell-offs

In its Tuesday market report, the trading firm warned that rising correlation to artificial intelligence (AI) stocks could make Bitcoin more vulnerable to a broader market downturn.

The firm argued that equity market conditions now play a critical role in determining Bitcoin’s direction, as household wealth, leverage and institutional investment flows become increasingly connected to technology stocks.

"BTC rose with the AI rebound on Wednesday and fell with the chip selloff on Thursday, so it’s clear that BTC is following a wider macro closely," Wintermute wrote.

The market-making firm also added that Bitcoin’s upside increasingly depends on retail investment, the equity wealth effect and ETF flows, leaving the cryptocurrency exposed to shifts in broader market sentiment.

FOMC decision and inflation data in focus

The report identified Wednesday’s Federal Open Market Committee (FOMC) decision and Thursday’s personal consumption expenditures (PCE) inflation report as immediate catalysts for Bitcoin and broader risk assets.

According to the CME FedWatch tool, markets are pricing in a 92.8% chance of the Fed holding rates steady, but the central concern is whether policymakers signal a possible December rate hike as Oil prices above $100 increase inflation risks, Wintermute noted.

A statement that strengthens expectations of a December hike could push yields higher and put renewed pressure on Bitcoin’s $80,000 support. Conversely, leaving the December decision open could allow prices to recover toward $82,500.

Wintermute warned that a dovish hold followed by hotter-than-expected PCE inflation could trigger a selloff led by AI stocks and extend losses across crypto markets.

The firm says it is maintaining a cautious outlook pending confirmation that the FOMC decision passes without major surprises and Bitcoin reclaims $82,500.

Anthropic IPO and US midterms add to Bitcoin uncertainty

Beyond the Fed’s interest rate decision, analysts at K33 identified the November 3 US midterm elections and Anthropic’s planned initial public offering (IPO) as additional sources of uncertainty for Bitcoin. In a Tuesday report, K33’s Head of Research, Vetle Lunde, said the elections could affect the prospects for crypto regulation, while uncertainty around the outcome may weigh on market sentiment.

“Either outcome should impact BTC directionally, but the uncertainty itself may be enough to soften BTC performance,” Lunde wrote.

K33 also warned that Anthropic’s expected $100 billion IPO could encourage investors to sell Bitcoin to raise capital for the offering. The firm pointed to the SpaceX IPO, which raised $75 billion, as a possible precedent. In the 23 days between SpaceX’s registration statement and its IPO, Bitcoin fell from $77,000 to $63,000, while Bitcoin ETPs recorded substantial outflows.

Regardless, K33 warned that unusually low trading activity could set the stage for a sharp increase in volatility. Bitcoin’s 30-day price volatility had fallen to the second percentile of readings recorded during the 2020s. Volatility in perpetual futures open interest stood at 1.3%, among its lowest readings since June 2021.

The firm argued that prolonged calm allows leverage to build gradually before a price move forces traders to close positions, potentially accelerating market swings.

BTC is trading at $80,670, up 1% in the past 24 hours at the time of writing.