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The US Federal Reserve's hawkish rhetoric triggered a large-scale capital outflow from the digital asset industry, but the artificial intelligence (AI) sector managed to turn the general panic into a local rally. According to a fresh report from market maker Wintermute, the main beneficiary of the shift in market sentiment was the Near Protocol (NEAR), which effectively took the AI-segment leadership crown amid falling key tokens.
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The published minutes of the Fed meeting confirmed that most officials expect another rate hike before the end of the year, pushing the yield on 10-year US government bonds to a multi-year high of 5.24%. Market reactions were polarized: the S&P 500 index hit a record high (+1.2% for the week), as growth in expected corporate earnings (+29% y/y) fully offset the high borrowing rate.
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The crypto market, lacking similar fundamental support, saw weekly outflows of $679 million from spot Bitcoin ETFs (the highest since June) and $542 million from Ethereum ETFs, while CoinGlass recorded forced liquidations of $1.19 billion ($1.06 billion of them longs). Bitcoin dropped 3.2% (to $83k), while Ethereum plunged 7.0% due to a reputational shock: an Ethereum Foundation researcher publicly urged users to migrate to new addresses immediately.
But the largest damage was done elsewhere.
The market's new favorite. How NEAR ignored the general storm
The main blow fell on the altcoin sector, where the median decline was 3.7% and the recent leader UNI collapsed by 15.8%. Of the 66 largest projects, only 11 closed in the green.
However, this crisis exposed an important trend: investors did not flee to fiat but changed narratives. Capital leaving classic DeFi platforms began actively flowing into tokens tied to artificial intelligence technologies.
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Near became the absolute leader of the movement. Historically positioned as an AI-oriented blockchain, the project effectively ignored the market storm and, after a symbolic dip, claimed leadership in the sector, continuing its aggressive growth.
Wintermute highlights two key drivers of this momentum: a technological news event (the network introduced support for post-quantum digital signatures to strengthen security) and market mechanics. Bears tried to short NEAR out of inertia along with the rest of the market, which triggered a powerful short squeeze: the forced buyback of short positions only accelerated the token's surge.
Why now is not the time to take risks
Until US government bond yields stabilize and net inflows return to Bitcoin ETFs, Wintermute considers buying altcoins on rebounds an unjustified risk. Attention is shifting to fresh US inflation (CPI) data and the financial reports of tech giants, which will determine whether the global AI trend continues to provide the industry with liquidity.