Key Highlights

● Hut 8 fell sharply Friday as on-chain data showed large bitcoin transfers to exchanges.

● Bitcoin traded around $81,500 and was headed for a second straight weekly loss.

● MSCI's rules on non-operating companies weighed on Strategy and spilled into miners.

● MSCI's final list is due November 11, and the Fed decides October 28.

On-chain data spooks the market

Hut 8 (NASDAQ:HUT) fell sharply in Friday's session, finishing among the notable decliners on the Nasdaq Composite. According to market reports, the drop came as on-chain data showed large bitcoin transfers to exchanges. The reported figure reflected the stock's move around midday.

Traders often watch the flow of bitcoin onto exchanges because coins moved to trading platforms can be sold. Large transfers are sometimes read as a sign that holders may be preparing to sell, which can weigh on sentiment toward the cryptocurrency and toward companies whose results are tied to it.

Hut 8 mines bitcoin and operates data centers and power infrastructure. Like other miners, its revenue depends heavily on bitcoin's price, so its shares tend to move sharply when sentiment toward the cryptocurrency shifts.

Bitcoin heads for another weekly loss

Bitcoin traded around $81,500 to $81,600, slightly lower on the day, according to market data. Reports said it was headed for a second straight weekly loss, and a liquidation wave was cited from Thursday into Friday.

Miners moved lower as a group. The WGMI crypto-miner ETF fell steeply. A published headline showed TeraWulf (NASDAQ:WULF) lower, while morning declines were reported in Riot Platforms (NASDAQ:RIOT), which fell to $14.94, and Cipher Digital (NASDAQ:CIFR), which slipped to $9.75. IREN (NASDAQ:IREN) plunged.

MSCI rules add pressure

Bitcoin-linked equities faced an additional headwind from index provider MSCI (NYSE:MSCI). Per market data, MSCI approved rules that make non-operating companies, those that mainly hold investments, ineligible for its Global Investable Market Indexes. That weighed heavily on Strategy (NASDAQ:MSTR), which holds 848,250 bitcoin, and market reports said the pressure spilled into miners. The final list is due November 11, with changes taking effect after the November 30 close.

The AI-infrastructure overlap

Many bitcoin miners have been repurposing their data centers and power capacity to host AI computing, which tied them to Friday's other major theme. Market commentary said investors shifted from asking what AI can do to asking how it will be financed, and debt-funded AI infrastructure companies were hit hardest. CoreWeave (NASDAQ:CRWV) plunged to $61.39, per market data.

The Nasdaq Composite fell 572.99 points to 26,140.03, closing its worst week since the week ended June 26. The S&P 500 lost 84.62 points to 7,659.44, and the Dow Jones Industrial Average slipped 175.28 points to 52,002.41. The Russell 2000 fell 45.90 points to about 2,721. The VIX rose 3.53 points to 19.99, and its intraday high of 22.31 was the loftiest since June 11.

Hut 8 Watches Bitcoin Flows and MSCI

MSCI's November 11 final list under the non-operating company rules could affect sentiment toward bitcoin-linked equities. On the macro side, the Federal Reserve announces its next rate decision on October 28, and PCE inflation data follows on October 29. Fed Chair Kevin Warsh declined to preview the decision, saying, "I don't prejudge meetings."

For Hut 8 and its peers, bitcoin's direction is the most important variable. Traders will continue to monitor on-chain data, including exchange inflows, for signs of selling pressure or accumulation.