Has the bull run ended? Pompliano writes to the anxious investors.

The intense selling in the latter part of last week caused the originally optimistic atmosphere to suddenly turn cold. Tech stocks plummeted, and Bitcoin BTC fell in tandem, coupled with public speculation about whether the bull run is about to end, all of which made investors feel a long-lost pressure. Many are worried about whether Bitcoin will experience another substantial correction of over 70% like in the past. However, before being overwhelmed by fear, what needs to be questioned more is what really happened in the market? Well-known Bitcoin Whale investor Pompliano provided the following analysis in the latest episode of his Podcast.

The two major pillars of the market are starting to loosen.

This year, the driving force behind the market mainly comes from the fervent expectations of artificial intelligence and the cycle of declining interest rates, which has led to a renewed influx of funds into risk assets. The massive infrastructure demand brought about by the AI wave has justified the high valuations of tech stocks. However, both of these pillars have recently shown signs of instability. There is still uncertainty about whether the Federal Reserve will initiate interest rate cuts in December, and some policymakers may still oppose it. The funding pressure on AI companies has also been exposed under the spotlight, as OpenAI explicitly stated the need for government support, leading investors to begin questioning whether a company expected to reach $20 billion in revenue this year can truly support a massive infrastructure commitment of $1.4 trillion. As a result, the market has begun to reflect on whether the valuations of AI-related assets are overly optimistic.

Pompilano pointed out the observation of Dan Niles, founder of Niles Investment Management: the key forces driving the stock market up this year are actually just two: a loose funding environment and a fervent expectation for AI.

The restart of the interest rate decline cycle improves market liquidity, providing nourishment for overvalued technology stocks, growth stocks, and even speculative assets.

The capital expenditure boom driven by AI.

Investors are betting that AI will become the next generational wave of technology, and the surge in hardware spending by related companies has pushed supply chain prices in semiconductors, data centers, and more to new highs.

However, the two key pillars have started to weaken over the past two weeks: whether the Federal Reserve can cut interest rates on 12/10 remains uncertain, and it may even face opposition from multiple members. OpenAI stated that the cost of AI infrastructure is enormous and requires government support, leading investors to question whether companies can sustain long-term investments. When the market begins to doubt the prospects of interest rates and the “sustainability” of the AI narrative, the current high valuations are naturally the first to be affected. The result is:

The S&P 500 rose slightly by 0.1% last week.

The Magnificent 7 fell by 1.1%.

AI index plunged further by 3.2%

The Russell 2000, which is heavily reliant on capital, fell by 1.8%.

These fluctuations reveal a fact: the market is re-pricing the future, and prices are always more honest than emotions.

Prices quickly react to market concerns.

The market's repricing is immediately reflected in the indices. Although the S&P 500 has seen a slight increase, the tech sector is clearly under pressure, with the seven major tech giants all declining simultaneously, and artificial intelligence-related indices even experiencing a drop of over three percentage points. Small to medium-sized enterprises relying on loose funding are hit harder, with the Russell 2000 index close to a two percent decline, and more than a third of its constituent companies still in a loss-making state, making their valuations particularly vulnerable amid uncertain interest rates. These subtle but consistent adjustments indicate that the market is reassessing the future, and prices often signal direction earlier than sentiment.

The White House is trying to stabilize public sentiment.

In response to market concerns, the White House and policy officials quickly stepped in to try to stabilize public sentiment. Trump's economic advisor Kevin Hassett emphasized that purchasing power has rebounded by $1,200 during the new administration, gradually repairing the damage caused by inflation. Treasury Secretary Scott Bessent even predicted that in the first half of 2026, the real purchasing power in the United States will significantly improve. Notably, Bessent explicitly stated that he would not use statistical data to persuade the public, as they are not actually that uncomfortable. In recent years, the subjective feelings of the American public have clearly diverged from official data, which is also reflected in voter sentiment and consumer behavior. Policy is not the only driver of market trends, but the market certainly will not ignore policy signals.

In the face of emotional turmoil, policy officials quickly came forward to explain. The White House economic team pointed out that during the Biden administration, household real purchasing power has declined by about three thousand dollars due to inflation, while it rebounded by about one thousand two hundred dollars after the Trump administration took office, trying to emphasize that the cost of living may be improving. The Treasury Secretary believes that the decline in energy prices and interest rates will significantly boost households' real purchasing power in the next two years. He also acknowledged that purely relying on statistical data cannot fully reflect the feelings of the public and will not attempt to persuade the public that “it's not that bad.” In an environment where the public's subjective feelings are gradually decoupling from official data, such frankness actually makes policy signals more persuasive.

The structure of retail investors is changing the market.

Amid ongoing economic pressures, ordinary American families are flooding into the financial markets at an unprecedented pace. Among those with annual incomes between $30,000 and $80,000, more than half now have investment accounts, nearly half of which were opened in the past five years. Of Robinhood's 25 million users, nearly half are first-time investors. Among those aged 25, nearly 40% now hold investments, compared to only about 6% in 2015. Households earning below the median now account for one-third of JPMorgan's investment accounts, up from 20% a decade ago. The stock holdings of investors under 40 have increased nearly threefold since 2020. This structural rise of retail investors has made the sources of funding in the market broader, younger, and more sustainable.

Corporate profits remain the strongest support for the market.

Regardless of the emotions, the strong performance of corporate profits is the most substantial support for the market. With the dual effects of efficiency improvement and technology introduction, many large enterprises can create higher profits with fewer human resources, synchronously enhancing value and productivity. Companies with a market capitalization reaching trillion-dollar levels still maintain a nearly 30% annual growth rate. These achievements cannot be fabricated through narratives or predictions, but are a true display of competitive strength. As long as corporate profits do not decline, the market will not easily enter a long-term bear market.

Extreme fear in Bitcoin does not necessarily mean a crash.

In the crypto market, the Fear and Greed Index has remained at extreme fear levels for eight consecutive days. Historical data shows that whenever the index falls below twenty, Bitcoin's subsequent performance is often quite good. Past average results indicate that the day after extreme fear typically sees a slight increase, a noticeable stabilization after a week, an average increase of nearly twenty percent after a month, and often over sixty percent cumulative increase after three months. Although history cannot predict the future, this data generally suggests that extreme panic is usually not the eve of a crash, but rather a phase where a new upward cycle may be brewing.

Corrections are not the end; the fundamentals of the bull run have not changed.

Overall, the current market environment resembles a healthy correction rather than the final chapter of a bull run. Uncertainty in interest rates and pressure from artificial intelligence funds have triggered short-term volatility, but the underlying forces driving the market upward remain intact, including corporate profits, innovative technology, diverse sources of funding, and the rapid growth of young investors. These factors form the underlying logic that makes the end of a bull run unlikely and are the main momentum supporting the market's continued progress.

In the face of volatility, what often needs to be examined is not the market, but one's own investment portfolio. If a short-term fall causes investors to feel uneasy, it may indicate that their positions are overly concentrated, leverage is too high, or that the assets do not align with their own risk tolerance. Market fluctuations are always present, but the victory of long-term investors often comes from their ability to maintain patience during periods of intense emotional change.

Is this article saying the bull run is over? Pompliano writes to the hesitant investors. First appeared in Chain News ABMedia.