Rekt Mkts: Sunday liquidation flush takes BTC to August lows

Crypto had another bloodbath over the weekend. BTC dropped over $2k in about 15 minutes late on Sunday to its lowest level since August, with more than $1bn of leveraged longs liquidated across the market and ETH traders taking the bigger share of the damage. Thin weekend books plus the Nvidia news plus stalled Iran talks is the explanation doing the rounds, altho the speed of the move looks a lot more like forced selling than anyone making a considered decision. Buyers did step in quickly, but we're sitting well below last Wednesday's post-election high and ETH is still down around 5% over 24H. Stocks are a different story so far today. S&P 500 and Nasdaq-100 futures are up 0.9% and 1.0% respectively, helped by a sharp drop in oil, while Nvidia is down around 5% pre-mkt after its board opened an investigation into whether Jensen Huang was targeted by a foreign intelligence effort. The selling in chips had only just started to ease on Friday and now the stock that carries the whole AI trade has a leadership question hanging over it.

WTI futures are down 4.4% to $86.79 after Trump said further strikes on Iran were highly unlikely as long as talks progress. Rubio has since said a breakthrough isn't close and called some of Iran's demands outrageous, and both sides reported shipping being hit near Hormuz over the weekend, so the market is pricing restraint rather than a deal. Brent fell 16% last week, its steepest weekly drop since the start of COVID, which tells you how much war premium has already come out. Gold futures are up 1.4% to $4,133.90. The US 10Y is around 4.84%, down roughly 2bps from Friday's close near 4.86%. China's October data gave us a weak consumer side (CPI up 0.7% YoY, below expectations) alongside factory-gate inflation at 5.7% YoY, the fastest in over four years and driven almost entirely by energy. Cheaper oil helps on the margin, but the inflation pipeline hasn't cleared. US CPI for October lands tomorrow with the market expecting the Fed to hike again in December, so a hot print has the potential to undo today's futures relief pretty quickly, while a softer one would let the rebound in AI names breathe. Either way, given recent price action I feel like tomorrow could potentially be a volatile one.

Nvidia is down around 5% pre-mkt following the investigation into whether Huang was targeted by a foreign intelligence effort. That more than wipes out Friday's 2.8% gain, which itself followed Thursday's 9.3% fall. Huang has admitted an affair to staff and said he'll cooperate, the board says it has no reason to believe company secrets or national security were compromised, and the company says he stays on as CEO throughout. House Republicans have asked him to a closed-door briefing next week. The investigation is unresolved, and there's no obvious successor if it goes badly, which is the actual risk the market is pricing rather than the headline itself. So far the damage is contained to Nvidia. Intel, Marvell and Arm are down around 1% pre-mkt and the broader futures are higher, which suggests the market is treating this as a single-stock problem rather than another reason to sell the AI buildout. Friday's rebound was pretty small beside Thursday's destruction: the Nasdaq-100 closed up 1.35% and the S&P 0.3%, with Micron up 5.1% and Sandisk 3.6% after falls of 17.5% and 22.3% respectively on Thursday. Nebius recovered 7.6% after losing 14.9%. Decent daily gains, but still a long way from where these stocks were a week ago. Asian memory hasn't followed through with anything like Friday's US gains. SK Hynix finished up 0.4% and Samsung 0.6%, while Kioxia lost another 2.5%. TSMC was the standout, closing 4.7% higher. This week's results matter more than usual for the AI demand picture: CoreWeave reports Tuesday after the close, then Nebius Thursday morning and Cisco and Applied Materials Thursday evening. CoreWeave in particular will tell us whether the customer revenue and financing are keeping pace with the capex after a week where the market decided it turned skeptical.

BTC is down around 1.6% over 24H, ETH 4.9%, SOL 2.7% and HYPE 5.2%. ETH is down roughly 3.4% against BTC over the same period, so it's still losing ground to the majors as well as in dollars. Sunday's flush was ETH-heavy too, with ETH longs accounting for more of the $1bn-plus in liquidations than BTC longs did. BTC has also closed a week below its 50-week moving average for the first time in eight weeks and is trading below the short-term holder cost basis, which means the ppl who bought in the last few months are now underwater on average. That's the kind of setup where rebounds get sold into until it's proven otherwise so from a TA standpoint things are certainly looking precarious, but famously, I choose not to follow TA and simply try to buy low and sell high. US spot BTC ETFs lost $411.9m on Friday, 6 November, while ETH funds lost $93.3m. That takes last week's net withdrawals to $1.282bn for BTC and $365.2m for ETH, with Wednesday the only positive session for either. Almost all of the BTC figure came from IBIT, which lost around $1.21bn on the week while the rest of the complex was close to flat. Those were the final numbers before Sunday's price action, so we won't see how the flush showed up in flows until tomorrow. ZEC is down 3.8% over 24H, with its BTC ratio down around 2.3% over the same period. That's a second brief in a row where ZEC isn't repeating the outperformance we saw last week, altho it's still holding up far better than ETH or HYPE. Despite the small pullback, it continues to perform extremely well and I continue to favour it as the core long in the book. Good luck this week.