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This week’s focus turns to Bitcoin’s sharp pullback to its lowest levels since May, a move that has rattled sentiment.

While BTC corrects from October’s highs, macro conditions are shifting as expectations for a December Fed rate cut decline sharply, tightening short-term liquidity. Equities have also pulled back from recent highs, and with global valuations diverging, investors are reassessing risk as we move deeper into Q4.

Here’s what we’ll cover today:

Let’s dive in 👇

Bitcoin has retreated to its lowest levels since May, trading around $97,000 after reaching highs near $126,000 in October. While the decline has been sharp, it's important to remember that BTC remains significantly higher than earlier in the year, and corrections of this size are typical within broader bull cycles. For investors who have been underallocated or waiting for more favorable entry points, this pullback may present an opportunity to begin building exposure through dollar-cost averaging or initial allocation, especially given Bitcoin’s historical pattern of recovering strongly from similar drawdowns.

Market expectations for a December Federal Reserve rate cut have also shifted, moving from nearly a fully priced 25 bps cut to barely 10 bps anticipated as of Thursday. While this reduction in easing expectations removes some of the near-term macro tailwinds, it also signals that economic conditions remain solid enough for the Fed to adjust policy gradually rather than resorting to emergency measures. In other words, the broader macro backdrop remains stable, even if markets temporarily recalibrate.

The S&P 500 has pulled back below 6,800 after reaching highs above 6,900, raising short-term technical concerns for momentum traders. However, zooming out tells a different story: the index remains far above the April panic lows near 5,000, and pullbacks of this magnitude are normal within a long-term uptrend. Periods like this often improve the risk-reward profile for quality companies with strong fundamentals, making selective accumulation more attractive.

U.S. equities continue to trade at a substantial premium to international markets, with the S&P 500 valued at roughly 23x forward earnings compared to about 15x for the MSCI ex-USA index. This nearly 50% valuation gap highlights the importance of geographic diversification and selective positioning. While U.S. markets have delivered outstanding returns, the current spread suggests that incremental capital may find better risk-adjusted opportunities in international equities or alternative assets, especially for investors already heavily concentrated in U.S. exposure.

The Bottom Line:
While current market weakness may feel uncomfortable, corrections are a healthy and necessary part of broader market cycles and they often set the stage for strong future performance. For investors considering Bitcoin exposure, this pullback offers a materially more attractive entry than the recent highs. Importantly, the market environment does not resemble a cycle peak: we are still far from the euphoric sentiment that typically marks macro tops. As discussed in our previous frameworks, liquidity was expected to tighten into late October and early November, and our data continues to support the thesis for stronger performance into year-end as these seasonal headwinds begin to ease.