Bitcoin's price experienced an accelerated sell-off towards the end of the month, falling to $107,328 shortly after the New York open, with an intraday low recorded at $106,800. This movement coincided with a slight weakness observed in US stock markets, where the S&P 500 and Nasdaq showed minor losses despite expectations that third-quarter earnings for major Big Tech companies would exceed forecasts.
Major technology firms such as Meta and Microsoft saw their share prices decline by 10% and 3% respectively. This dip occurred as investor skepticism regarding Big Tech companies' substantial investments in AI infrastructure began to overshadow positive earnings reports. Meta has increased its capital expenditure guidance for AI to a range of $70 billion to $72 billion, while Alphabet has projected capital expenditures of up to $93 billion specifically for AI development.
The market also appears to be reacting with caution to President Trump's optimistic description of his trade deal meeting with Chinese President Xi Jinping. Apart from a reduction in fentanyl-related tariffs and China's agreement to postpone its ban on rare earth exports by one year, few specific details about the discussions and any resulting agreements have been disclosed. This lack of clarity leaves the US-China trade war as a lingering risk factor for investors.
Bitcoin's recent price performance has been a disappointment for investors who had anticipated a rally towards previous highs. Such a rally was expected to occur if a trade deal between the US and China was secured, the Federal Reserve implemented a 25 basis point cut to interest rates, and quantitative tightening policies concluded by the end of October.
Market Sentiment and Downside Risks
Currently, the prevailing trend for Bitcoin suggests a downward trajectory. Data from Hyblock's liquidation heatmap indicates the most immediate liquidity levels at $103,800, highlighting a significant area of potential price support.
Analyzing a 1-month lookback period, which incorporates longer-held positions, reveals further liquidity for long positions at $100,500 and $98,600. These levels are also considered critical points where significant trading activity might influence price movements.
Charts suggest that a downside movement to $103,800 and a subsequent flush below the $100,000 mark represent the most probable short-term outcomes for Bitcoin. This outlook is influenced by investor concerns regarding the substantial capital expenditure costs associated with AI infrastructure among major technology companies, indicating a market driven by speculation.