Free Weekly Report: The Shadows of the AI Rally, Institutional Outflows in the Crypto Ecosystem, and Geopolitical Fault Lines
What Did You Miss Last Week?
Last week witnessed one of the sharpest recent divergences among asset classes in global markets. On one hand, US stock indices hit new all-time highs fueled by AI optimism; on the other hand, digital assets came under heavy liquidity pressure with record levels of institutional capital outflows. The fact that the indices peaked while the Fear and Greed Index hovered in the 'Extreme Fear' and 'Fear' zones throughout the week revealed the deep contradiction in market psychology and the selectivity in the risk perception of institutional capital.
Top 3 Macro Developments of the Week
- US-Iran Tension and Energy Markets: The main focus of the markets throughout the week was the diplomatic and military chess match between the US and Iran. While ceasefire hopes—which the Trump administration claimed were being negotiated—and the possibility of the Strait of Hormuz reopening put pressure on crude oil prices, mutual military exercises and mobilization in southern Iran kept the geopolitical risk premium alive. This dual scenario caused a severe pricing squeeze in energy markets.
- AI-Driven Stock Market Rally and Bubble Concerns: Driven by the insatiable demand for AI infrastructure, the S&P 500 and Nasdaq achieved a record nine-week winning streak. However, behind this rally, significant warning signals accumulated, such as unsustainable GPU and chip costs, record-high Credit Default Swap (CDS) volumes in Big Tech stocks, and a shift of institutional capital toward defensive sectors (defense, semiconductor infrastructure) against a potential 'AI bubble'.
- Record Institutional Outflows in Crypto Assets: Digital asset markets experienced a complete negative decoupling from equity markets. Record net outflows from spot Bitcoin ETFs, exceeding a total of $3 billion throughout the week, indicated a sharp decline in the risk appetite of institutional investors. This situation created severe liquidity pressure on Bitcoin and the broader altcoin market, triggering steep sell-offs.
Weekly Assessment Across Asset Classes
- Equities (S&P 500): The strong uptrend continued, and the index surpassed the $7,580 level to reach a new all-time high. Although the RSI indicator hovering in the overbought zone (around 70) throughout the week confirms the strength of the momentum, it also indicates an increased risk of a potential technical correction. The trend is moving upward led by AI, but its structure has become increasingly fragile.
- Gold (XAU/USD): The precious metal went through a consolidation week, getting stuck in the $4,400 - $4,600 band. While hawkish Fed expectations and a high-interest-rate environment limited upward movements, geopolitical risks prevented downward breakdowns. Low RSI levels (dropping below 20 at times) indicate that the selling pressure is exhausted, but a macro catalyst is needed for a new trend.
- Crypto Assets (Bitcoin): A distinct downtrend prevailed. The price dropped from the $77,000 levels at the beginning of the week down to the $73,000 band. The selling wave triggered by record ETF outflows pushed the price to critical support levels. Although the RSI indicator retreating to oversold territories (below 30) creates the potential for short-term reaction buying, it confirmed that the main trend is downward due to institutional outflows.
Critical Levels for the Coming Week
What roadmap do the Erilium Algorithms draw for the new week? Here are the critical thresholds to watch for next week, where volatility is expected to increase:
- S&P 500: There is no new resistance level above for the index at its historical highs. In case of pullbacks, the $7,174.12 level is the first major support point to monitor for the health of the trend. A close below this level could deepen the correction process.
- Gold: For gold, where consolidation continues, $4,419 stands out as support below and $4,593 as resistance above. A breakout outside this band will determine the trend direction for the new week.
- Bitcoin: If the selling pressure continues, $72,435.62 holds critical importance as the main support level. Losing this level could accelerate the liquidation wave. In case of potential reaction rallies, the $77,000 - $78,000 band appears as the first serious resistance zone to overcome.
1/5: Panorama of the Week: Markets experienced a sharp divergence between AI euphoria and geopolitical/liquidity risks. While equities broke records, historic capital outflows were observed from crypto assets. Here is Erilium Finance's 5-point summary:
2/5: EQUITIES: The S&P 500 continued to break records on the back of AI stocks. However, in the background, institutional capital was observed taking positions against 'bubble' risks with record CDS volumes as cost concerns mounted. The euphoria is cautious.
3/5: CRYPTO ASSETS: A historic decoupling took place. As equities peaked, record outflows totaling over $3 billion weekly occurred from Bitcoin ETFs. Institutional capital's flight from risk is creating heavy liquidity pressure on digital assets.
4/5: MACRO & COMMODITIES: Ceasefire talks on the US-Iran front and Strait of Hormuz scenarios pressured energy markets. Gold continued to seek direction, squeezed between hawkish Fed policies and geopolitical risks. Consolidation prevails.
5/5: NEXT WEEK: $7,174 will be watched as the critical support for the S&P 500, and $72,435 as the critical base level for Bitcoin. Institutional capital's shift to selective sectors like defense and semiconductor infrastructure is expected to continue. Be prepared for volatility.