Anthropic IPO: K33 highlights Bitcoin’s exposure to AI sell-off risk

• Bitcoin remains under pressure. Its correlation with AI stocks and the approaching FOMC decision could drive further price declines.
• $100 billion is Anthropic’s planned IPO fundraising target. The offering could fuel concerns that investors may sell Bitcoin to finance their stakes.
• As leverage accumulates ahead of major market catalysts, Bitcoin’s historically subdued volatility increases the risk of sharp price moves, K33 warns.

Bitcoin (BTC) is becoming more closely correlated with the equity market sell-off, according to Wintermute. Inflation worries and leverage in technology shares threaten to magnify losses across risk assets.

AI stock declines threaten deeper Bitcoin sell-offs

Greater correlation with artificial intelligence (AI) shares could leave Bitcoin more exposed to a wider market decline, the trading firm cautioned in its Tuesday market report.

With household wealth, leverage and institutional investment flows increasingly tied to technology shares, equity market conditions have become crucial to Bitcoin’s direction, the firm argued.

Wintermute wrote: "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,"

Retail investment, the equity wealth effect and ETF flows are increasingly important to Bitcoin’s upside, the market maker added. This leaves the cryptocurrency vulnerable to changes in wider market sentiment.

FOMC and inflation releases set near-term Bitcoin outlook

For Bitcoin and other risk assets, the immediate catalysts are Wednesday’s Federal Open Market Committee (FOMC) decision and Thursday’s personal consumption expenditures (PCE) inflation report, the report said.

A 92.8% probability of unchanged Fed rates is priced into markets, according to the CME FedWatch tool. Wintermute noted, however, that the key issue is whether policymakers indicate a possible December rate hike, with oil above $100 adding to inflation risks.

Bitcoin’s $80,000 support could face fresh pressure if a statement reinforces expectations of a December hike and drives yields higher. If the December decision remains open, however, prices could recover towards $82,500.

Should a dovish hold be followed by stronger-than-expected PCE inflation, an AI stock-led sell-off could spread losses further across crypto markets, Wintermute warned.

Until the FOMC decision has passed without major surprises and Bitcoin has regained $82,500, the firm says its outlook remains cautious.

Anthropic IPO and US midterms compound Bitcoin uncertainty

The November 3 US midterm elections and Anthropic’s planned initial public offering (IPO) present further uncertainty for Bitcoin beyond the Fed’s rate decision, according to K33 analysts. K33’s Head of Research, Vetle Lunde, wrote in a Tuesday report that the elections could shape the outlook for crypto regulation. Uncertainty over the result may also dampen market sentiment.

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

$100 billion is the expected size of Anthropic’s IPO, which K33 warned could prompt investors to sell Bitcoin to fund participation. As a potential precedent, the firm cited the SpaceX IPO, which raised $75 billion. Over the 23 days from SpaceX’s registration statement to its IPO, Bitcoin dropped from $77,000 to $63,000 and Bitcoin ETPs saw substantial outflows.

Even so, exceptionally quiet trading could precede a sharp rise in volatility, K33 cautioned. Bitcoin’s 30-day price volatility had dropped to the second percentile of observations recorded in the 2020s. At 1.3%, volatility in perpetual futures open interest was among the lowest readings since June 2021.

During extended periods of calm, leverage can accumulate gradually, the firm argued. A subsequent price move may force traders to close positions and potentially intensify market swings.

$80,670 is BTC’s price at the time of writing, representing a 1% gain over the past 24 hours.