US stock bull market faces "roadblock": Interest rate cut expectations cool down, government shutdown drags confidence, AI + cryptocurrency double whammy, is it still time to enter the market now?

Yesterday, the three major U.S. indices closed lower collectively, with the Nasdaq leading the decline. Nvidia fell nearly 4%, and cryptocurrency-related stocks generally declined. The core reasons for this drop include the Fed's interest rate cuts, the government shutdown crisis, tariffs, and debates over the AI bubble. However, I believe this decline was expected. If there's no correction, frankly, I'd be somewhat concerned.

1. Multidimensional Analysis of the U.S. Stock Market Decline

1.1 Macro Level: Increased Policy Uncertainty

The Fed's policy path becoming unclear has become the market's primary concern. Previously, the market widely expected the Fed to continue cutting rates in December, but recent hawkish remarks from several Fed officials have significantly cooled these expectations, with the probability of a December rate cut dropping from about 90% to 71%. The unpredictability of the policy path has directly impacted market risk appetite, especially for high-valuation tech stocks sensitive to interest rates.

The ongoing U.S. government shutdown crisis has introduced a second source of uncertainty. The federal government shutdown has lasted for an extended period and is about to break historical records, delaying the release of key economic data, including the non-farm payroll report. Both the market and the Fed are in a "data blind spot", making it difficult to accurately assess the true health of the U.S. economy and increasing decision-making difficulties. This is also a key reason for the Fed's dovish stance on rate cuts.

1.2 Industry Level: Tech Stocks Face a Double Blow

Authoritative signals of short-selling forces have directly impacted market confidence. Legendary investor Michael Burry (protagonist of *The Big Short*) disclosed that his fund has established bearish positions in Palantir and Nvidia. This move was interpreted by the market as skepticism about the current over-optimism in the AI sector, triggering widespread follow-up selling.

Earnings and valuation divergence triggered profit-taking. Even though data services company Palantir delivered better-than-expected earnings, its stock price fell about 8%. The core issue is its forward P/E ratio exceeding 200 times, raising doubts among investors about its sustainable growth. This case highlights widespread concerns about overvaluation in AI-related stocks, leading to a broader tech sector correction.

1.3 Market Sentiment: Institutions Turn Cautious

Major Wall Street financial institutions have recently issued risk warnings. CEOs of Goldman Sachs and Morgan Stanley have publicly stated that U.S. stocks are overvalued and may face a 10%-20% technical correction. These remarks have intensified panic selling, prompting some investors to withdraw from high-risk assets. Of course, as I've said, this is normal—just a minor episode in the bull market.

1.4 Asset Linkage: Cryptocurrency Market Also Declines

The cryptocurrency market shares a highly overlapping investor base and similar risk attributes with tech stocks. When concerns about a tech bubble rise, funds simultaneously withdraw from the crypto market. Bitcoin fell below the $100,000 psychological threshold for the first time since June, triggering forced liquidations of leveraged long positions. Over 470,000 accounts were liquidated in the past 24 hours, creating a negative spiral of selling.

But Bitcoin's strategic importance is becoming increasingly prominent. Against the backdrop of U.S. debt pressure, its reserve attributes are gaining market attention comparable to gold. From Trump's early support for innovation with the *Genius Act* to the recent leniency toward Changpeng Zhao, this trend is evident.

Thus Bitcoin breaking its all-time high is only a matter of time, and the likelihood of reaching the $150,000 target in the next six months remains high.

2. Market Outlook and Investment Insights

2.1Short-Term Market Trends

In the next 1-2 months, the market is likely to enter a phase of high volatility and range-bound fluctuations. Tech stocks, especially AI-related sectors, will continue to face valuation scrutiny, with stocks whose performance doesn't justify high valuations facing greater adjustment pressure. The correlation between the crypto market and tech stocks may remain high in the short term, leading to synchronized risk appetite fluctuations.

The recent U.S. stock decline and cooling rate-cut expectations are essentially a systemic correction of overly optimistic expectations. Against the backdrop of the AI-driven tech rally and overly aggressive Fed rate-cut expectations, any negative catalyst could trigger a chain reaction. Investors should remain cautious, manage risks, and adjust asset allocation to navigate potential continued volatility.

Investors can consider:

1. Rotate from growth to value stocks, focusing on traditional sectors with reasonable valuations and stable cash flows
2. Increase cash and defensive asset allocations to buffer against further market volatility
3. Monitor Fed speeches and economic data closely to catch early signals of policy shifts
4. Stay cautious on high-valuation tech stocks and crypto, waiting for better entry points

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