Wintermute Weekly Report: Fed Rate Hike Triggers Market Volatility, AI Fund Forced to Liquidate

According to the market weekly report released by market maker Wintermute (@wintermute_t), the past week saw multiple shocks across macro and crypto markets: On the macro front, the Federal Reserve held interest rates steady at 3.50–3.75% in a 9–3 vote, with officials Hammack, Kashkari, and Logan unusually voting together in favor of a 25-basis-point hike—the second meeting since Chair Warsh’s appointment to feature such dissent. The 30-year U.S. Treasury yield briefly touched 5.24%, a level not seen since July 2007, while the 10-year yield stood at 4.67%, resulting in a bear-flattening yield curve that reflects market skepticism toward the Fed’s credibility on inflation. On the equity side, the AI leveraged fund Situational Awareness (managed by Leopold Aschenbrenner) faced a margin call due to its extreme 400% leverage, causing its assets to plummet from $45 billion in early July to approximately $10 billion. It was forced to sell its entire public portfolio at a discount to Citadel, triggering sharp declines in AI infrastructure longs such as SK Hynix and CoreWeave—partly explaining the continued weakness in chip stocks throughout July. In crypto, BTC fell 2.84% for the week and ETH dropped 3.63%, but Wintermute noted that major sellers appear nearly exhausted, with pain-driven positioning shifting upward. ETH has now outperformed BTC for two consecutive months.