Bitcoin continued to trade within the well-defined $65k–$75k corridor we highlighted previously, with upside attempts fading near the top of the range and downside protection still holding above the mid/high‑$60s.

On the macro side, March CPI was dominated by the energy shock: headline inflation printed hot, but the core leafed in softer than consensus, leaving the Federal Reserve with the same uncomfortable mix of inflation pressure and slower/uneven labour signals.

Separately, the “AI capex” risk cluster we’ve flagged before tightened: Bloomberg reported that a large share of planned US data centres are being delayed or cancelled, and OpenAI paused a major UK data-centre initiative, explicitly pointing to regulation and energy costs, both of which also connect back to the energy shock.

Crypto

BTC spent the week oscillating inside ~$67.7k–$73.8k, consistent with the broader 65–75k corridor. The week’s low printed on 7 April as the “deadline/ultimatum” rhetoric dominated, while the local high printed on 11 April as markets leaned (briefly) into the weekend diplomacy window.

From a structure perspective, the key point is unchanged: a re‑escalation of the conflict that drags oil risk premia higher again is still the cleanest path to re-testing the lower band of the range; a credible de‑escalation and normalisation of traffic through Hormuz is still the cleanest path towards a sustained push above ~$75k. The “range until proven otherwise” framing is also consistent with our 23 March note.

ETH tracked BTC’s tape but with a clearer “hold the level” narrative: it briefly traded up to printed on 7 April. Importantly, ETH spent much of the week fighting to remain around ~$2.2k, with a softer close into Sunday.

Geopolitics and the energy channel

The centre of gravity stayed with United States–Iran dynamics, and specifically the “control of Hormuz” dimension. The most consequential development for the weekly tape was that high-level talks in Islamabad, Pakistan ended without an agreement after marathon negotiations led on the US side by JD Vance. with uranium enrichment and Hormuz control among the core sticking points.

Early in the week, oil prices were still reflecting “escalation risk” around the deadline posture. Then, ceasefire headlines triggered an air‑pocket move lower: reporting described Brent falling ~15% on 8 April , one of the sharpest daily drops since 2020.

But the week ended with renewed stress as talks collapsed: Donald Trump publicly threatened a US Navy blockade in response to the lack of agreement, and markets immediately re-focused on what “freedom of navigation” looks like in practice over the coming days.

Even during the “ceasefire optimism” window, shippers emphasised they needed clarity on terms before resuming normal transit, and Reuters reported substantial trapped inventory and ongoing maritime risk.

On Polymarket, the “US x Iran permanent peace deal by…?” market implied low odds of a near-term permanent deal as of

• 22 April, 8%

• 30 April, 14%

• 31 May, 28%

Macro and rates

The week’s macro picture can be summarised as: headline inflation is being pushed around by energy, while the core trend is less explosive, but still sticky enough to keep the Fed cautious.

In the March CPI release, the energy index rose 10.9% in March, and gasoline rose 21.2% (BLS notes this was the largest monthly increase in that series since it began in 1967). This is an inflation shock tied to the Iran war’s impact on energy prices, with CPI up 0.9% m/m and 3.3% y/y, while core inflation was more moderate at 2.6% y/y.

Weekly jobless claims rose to 219,000 for the week ending 4 April (up from 203,000 prior), exceeding consensus and marking the highest level since early February, while continuing claims fell.
This keeps the Fed in the “tricky seat” described in the draft: growth signals are not collapsing, but inflation sensitivity has increased, and labour is no longer a one-way “too tight” story.

At the March meeting, the Fed held the target range at 3.50%–3.75% and explicitly noted that Middle East developments add uncertainty to the outlook.
This week, the market’s rate-cut narrative shifted with the ceasefire headline: CME FedWatch-implied odds of a rate cut by end‑2026 jumping sharply after the ceasefire announcement.

But the “no permanent resolution” outcome re-raises the risk that energy stays higher for longer, and that the Fed chooses caution over easing. The post-ceasefire shift improved rate-cut odds but still leaving a cut “unlikely,” expectations of hold.

Risk assets, AI , and Software

Two cross-asset observations mattered this week: (1) energy is rewriting the macro constraint set; (2) the AI trade is becoming more internally inconsistent, with infrastructure bottlenecks meeting valuation sensitivity.

Equities wobble, software breaks, crypto holds up better.
It was a tough week for software: the iShares Expanded Tech-Software Sector ETF (IGV) saw a sharp drawdown, while BTC moved the other way, staging a rebound. That divergence challenges the idea of crypto, particularly BTC, as a clean “risk-on proxy” for this corner of equities, and raises the possibility that the long-standing correlation is starting to break.

The split is clear in the weekly numbers: IGV dropped roughly ~7% between April 6–10, while BTC posted gains over the same Mon–Fri window, and even after Sunday’s fade, still closed above the prior week’s levels.

AI: The “plumbing” is the constraint.
Bloomberg reported that a large share of US data centres planned for 2026 are expected to be delayed or cancelled, citing shortages in electrical equipment (transformers/switchgear) as a key bottleneck. TechRadar’s write-up of the same Bloomberg reporting framed the scale as “nearly half,” linking delays to supply-chain constraints, power availability, and local opposition, exactly the kind of real-economy friction that can puncture AI narratives even when capital is available.

Reuters reported that OpenAI paused a major UK data-centre project, explicitly citing regulation and high energy costs, reinforcing the idea that “energy prices and permitting” are now first-order variables for AI infrastructure rollouts.

Our take remains consistent with the draft: if geopolitics calms and oil risk premia compress, risk can rally and crypto with it. But the AI build‑out increasingly looks like it can be slowed by non-chip constraints, leaving the second order effects of chip making aside, and that keeps the “AI bubble / AI capex disappointment” risk live, especially if equities continue to de-rate.

Policy and regulation

The regulatory narrative is “incremental progress, but not an immediate tape driver.”

CLARITY Act: pressure is rising, calendar is still the calendar.
Reuters reported that Scott Bessent urged Congress to pass the CLARITY Act, arguing the US needs a clearer federal framework for digital assets.

On timing, crypto press reporting indicated Bill Hagerty said at an event at Vanderbilt University that Republicans planned to begin moving the bill through the Senate Banking Committee “starting next week.”
However, as of 12 April, the official markup calendar page for the Senate Banking Committee shows the last listed item in 2026 as a postponed January executive session, with no April markup date posted there yet.

This keeps the base case intact: policy progress is a medium-term unlock, but it is unlikely to overpower a geopolitically-driven downtrend by itself if the energy shock remains the dominant macro input.

Looking ahead

The coming week is still about sequencing, not narratives.

First, the geopolitics–oil linkage remains the gatekeeper. Even during ceasefire windows, shipping and transit normalisation has been conditional and fragile; if markets sense “traffic normalisation is failing,” oil risk premia can reassert quickly.

Second, in the 23 March Insider we framed the environment as a four-phase playbook

In our read, this week looked like a brief Denial-adjacent bounce (ceasefire optimism) that quickly reverted towards Realisation once the diplomacy failed and inflation data kept the “rates constraint” in view.

Third, watch whether BTC continues to hold up relative to software and broader risk proxies. The recent divergence matters, if sustained, it would be one of the few genuinely “new” signals in an otherwise unchanged regime, hinting that crypto may be starting to decouple at the margin.

From a levels perspective, the range remains clearly defined:

• $65k → key support. A loss here likely signals escalation (macro/geopolitical), opening downside into the low $60s.

• 72k → mid-range / local pivot. Acceptance above keeps short-term momentum constructive.

• $75k → range high. A clean break likely requires de-escalation and/or a tailwind from macro (oil lower, rates repricing).

Until one of these breaks decisively, BTC remains range-bound, with positioning dictated more by external catalysts than internal momentum. The rest of the market is likely to continue taking cues from BTC, trading in a high-beta fashion to its moves.

We remain cautious in the short term.

Share

Subscribe now

ETF flows matched the tone change. US spot bitcoin ETFs saw strong net inflows early (about +$199m on both 16 and 17 March), then flipped to net outflows mid and late week (about -$164m on 18 March and -$52m on 20 March). That pattern felt like institutional risk management: dip-buying when the tape looked stabilising, then stepping back once the “energy shock → inflation expectations → rates” channel asserted itself.

BTC remains stuck in the 65-75k range, and until something breaks on either side, we expect the range to be intact unless further escalation and de-escelation in geopolitical conflict.

Cross-asset tape and correlations

Cross-asset price action began to diverge over the week. Bitcoin outperformed early, holding up better than SPX, QQQ and particularly gold, which continued to drift lower. The move wasn’t aggressive, but it was consistent, crypto bid while traditional risk struggled to find direction.

Relative performance still matters here. BTC outperformed gold across the week, continuing a trend that has been building for a while. The BTC–gold correlation has now moved back toward zero after spending time in negative territory, reinforcing the idea that the two are currently being driven by different time horizons of risk.

Gold continues to look like a lagging expression of macro stress. There is an emerging pattern where BTC leads moves in risk perception, while gold follows with a delay, currently around a few months. The interpretation is relatively simple: bitcoin is reacting to forward-looking uncertainty, while gold is reacting once that uncertainty becomes embedded in the present.

Equities, meanwhile, remained caught in the middle. SPX and QQQ traded softer but not disorderly, reflecting a market still trying to balance growth concerns against inflation persistence. The result is a market that is not in full risk-off, but also not willing to reprice higher with conviction.

The broader takeaway is that correlations are loosening, not breaking. Crypto is showing signs of relative independence, but it is still ultimately tied to the macro impulse, particularly when that impulse is driven by geopolitics and energy.

Geopolitics and energy shock

Last week’s macro pressure was an energy-infrastructure story. Reuters reported that Donald Trump urged Israel to avoid further attacks on Iranian energy infrastructure after the bombing of Iran’s South Pars gas field, and noted discussions about a potential US military build-up in the region.

Trump’s weekend ultimatum escalated the risk narrative. Reuters reported threats to “obliterate” Iranian power plants unless the Strait of Hormuz was reopened within 48 hours, with Iran threatening further retaliation (including potentially closing Hormuz completely) if strikes were executed. Markets treated that as executable, not rhetorical and the timing mattered: equities could not price it immediately, but BTC traded through it over Saturday and Sunday.

Markets also continued to price a higher probability of “boots on the ground” than we would normally associate with a base case. On Polymarket, “US forces enter Iran by…?” implied about

• 21% odds by 31 March

• 56% by 30 April

• 72% by year-end

with meaningful traded volume. Whatever one thinks of prediction markets, those levels helped explain why traders described de-escalation as “not priced” in the near term.

Macro

The Fed meeting landed inside this energy shock. In its official March statement, the Federal Open Market Committee held the federal funds target range at 3.50%–3.75% and explicitly noted elevated uncertainty, including uncertainty about the implications of Middle East developments for the US economy.

What changed was the distribution, not the decision. Market has started to price a small but rising chance of an April hike: Market is assigning roughly 12% for a quarter-point hike to 3.75%–4.00%. The probability was still “low confidence” by normal standards, but the directional message was clear: cuts were not being priced near term, and a hike tail returned.

Policy and regulation

Washington was not the driver of daily price, but it mattered to the medium-term upside case. The CLARITY Act appeared closer to moving again as senators converged on a compromise over stablecoin “yield”. CoinDesk reported that the agreement would bar rewards on passive stablecoin balances, and Yahoo Finance reported similar progress involving the White House.

That policy progress also showed up in market narratives. Citigroup cut its 12‑month BTC and ETH targets (BTC: $112,000 from $143,000, ETH: 3,175 from $4,304) and pointed to stalled progress on the CLARITY Act as reducing the odds of a regulatory catalyst that could support adoption and ETF demand.

The 4 Phased Playbook

We think about the current setup through a four-phase framework, not as a forecast, but as a guide for how positioning and market behaviour tend to evolve through shocks like this.

Phase 1: Denial.
Markets treat headlines as noise. Dips get bought, flows remain supportive, and positioning leans toward “look through it.” We write about this in our Insider in early March. Oil was the variable

Phase 2: Realisation.
Energy risk feeds into inflation expectations, and the policy path adjusts. Rate cuts get pushed out, hike risk re-enters the distribution, and assets that had been trading on liquidity begin to reprice. Crypto, in this phase, behaves like risk rather than refuge.

Phase 3: Liquidation and opportunity.
This is where positioning resets. The opportunity is not in buying the first dip, but in waiting for leverage to clear. The sequence is typically forced selling and outflows, followed by stabilisation in funding and positioning, and then the return of flows, ideally without a headline catalyst.

Phase 4: Rebuild.
Once the shock is absorbed, the market re-centres around the new regime. In this case, that likely means a greater focus on energy security, inflation persistence, and policy constraints. For crypto, upside from here requires either a credible path to de-escalation that brings rates lower, or enough structural demand to offset a higher-for-longer backdrop.

Over the past week, the market moved from denial into realisation, with weekend price action suggesting that the transition into the next phase may already be underway.

Our take

Last week didn’t resolve anything, it clarified the regime.

Crypto showed it can lead on the way up, but it also reminded us it won’t ignore macro when stress is repriced higher. The shift from resilience to headline sensitivity is the key signal. From here, the path is less about direction and more about sequencing. If we are moving into a liquidation phase, the opportunity is not in reacting early, but in waiting for positioning to reset and flows to return without needing a catalyst.

Until that happens, the same variables dominate: oil, inflation, and rates.

The range in BTC reflects that uncertainty. It holds until something forces a break either a credible de-escalation that removes the war premium, or a further escalation that forces the market through the next phase.

The setup is forming, but the opportunity comes after the reset, not before it.

Share

Subscribe now

Crypto’s tell was resilience. Bitcoin traded back into the low‑$70k region and Ethereum reclaimed $2k, even as gold logged another weekly decline and markets pushed expectations for rate cuts further out. This is the first time in a while that “war + higher‑for‑longer risk” has co‑existed with a bid for BTC/ETH rather than a liquidation.

Crypto

Bitcoin’s recovery looked more like repair than mania: daily closes show BTC grinding higher through the week, and broader market coverage noted trading above $73k on Friday. The tone matters because it suggests demand was present across the week, not just concentrated in one squeeze candle.

Flows have started to validate price. Reporting on spot bitcoin products pointed to a solidly positive week, with roughly $763m of net inflows into ETF. Directionally, this is the important development: a return to accumulation in the face of a messy macro backdrop.

The cross‑asset wrinkle to watch is decoupling from software/growth proxies. Over the same window that bitcoin was recovering toward $70k+, the IGV software ETF stayed weak in daily data. One month will not de‑correlate a multi‑year tape, but it is the first clean hint in a while that bitcoin can trade as an “alternative asset” in an oil‑shock regime rather than purely as high‑beta tech.

Broader crypto also improved modestly. The “TOTAL3ES” series (crypto market cap excluding BTC, ETH and stablecoins) was up mid‑single digits on the week, consistent with a “risk appetite stabilising” narrative rather than a full‑blown alt season. The important nuance is that by excluding stablecoins, this series tries to isolate whether non‑stable risk capital is actually rotating into smaller assets.

Currently trading in 360-480B range, back to pre-election levels.

ETH and the return of yield

Ethereum gained a genuinely new leg this week: BlackRock launched the iShares Staked Ethereum Trust ETF (ETHB), designed to provide spot ether exposure while potentially generating income by staking a portion of the underlying. This is not just “another ETH ETF”; it brings native Ethereum yield into a conventional brokerage wrapper.

Two details matter. First, the product’s fee structure includes a temporary waiver (0.12% for the first 12 months on the first $2.5bn of assets, then 0.25% thereafter). Second, it is explicitly positioned as a way to participate in staking rewards without the operational burden of doing it directly. In plain terms: ETHB is trying to sell “carry + beta” in one ticker.

The longer‑term implication is narrative, not immediate price: once staking yield is normalised inside broker accounts, “holding ETH” becomes easier to frame as owning a yield‑bearing digital asset, rather than purely as a high‑beta tech proxy. Over time, that can change the marginal allocator’s willingness to hold through drawdowns particularly if the alternative is cash with a delayed path to policy easing.

Geopolitics and the oil shock

The macro mechanics are simple: if Hormuz is unsafe, the market carries an oil risk premium. Reporting this week described mine‑laying activity by Iran and multiple merchant‑ship incidents in and around the strait, with tanker traffic largely stopping. Even before you debate “how long”, the market must price “how bad” because reopening and re‑insuring the corridor is not instantaneous.

Scale is the point. Supply impacts measured in the high single‑digit millions of barrels per day and Hormuz represent roughly a fifth of global oil supply. That is why the tape has felt “option‑like”: violent repricing on each new headline, followed by fast mean‑reversion when participants are forced to re‑weight probabilities.

At the time of writing, markets have yet to react to a ton of new events, including US strikes on Kharg Island and President Trump's global call to militarily open the Strait of Hormuz. However the 24/7 market on Hyperliquid is indicating a price action over the weekend.

The policy response is now matching the magnitude. The International Energy Agency said more than 400 million barrels of strategic reserves will begin flowing soon, a record‑sized draw designed to combat price spikes. Reserves can buy time, but they do not clear a blocked chokepoint, meaning the oil path, and therefore the inflation path, still hinges on reopening the strait.

However, the shock goes beyond just oil. LNG, less fungible than oil, may transmit disruption faster; that diesel, jet fuel and fertilisers follow close behind; and that downstream products like plastics can create negative supply‑chain surprises. Refinery and chemical‑plant shutdowns are not like flicking a switch, restarts can take a week or more, which creates inertia in downstream shortages once facilities begin to go offline.

Macro

This week’s macro gate in the United States is the Federal Reserve meeting on 17–18 March, which is one of the meetings associated with a Summary of Economic Projections. The base case is a hold; the real information is in inflation messaging and in how the dots respond to an oil shock that is already reverberating across assets. Market‑implied probabilities for the March decision remain overwhelmingly skewed to “no change” (often quoted around ~99% depending on data vendor).

Rates markets have moved towards “higher for longer”. As of Friday, futures pricing implied slightly less than a standard 25bp cut by December, down from roughly two cuts before the conflict escalated. Major bank forecasts have followed the tape: Goldman Sachs now expects the first cut in September (and keeps December as a second), while Barclays has also delayed its first‑cut call and talks in terms of fewer total cuts.

A subtle but important shift is that “hike talk” has returned as a tail outcome. It remains a low‑probability scenario, but the mere discussion widens the distribution for real rates and crypto historically struggles when the market has to price that kind of asymmetry.

Liquidity and the plumbing

Even in a war tape, liquidity plumbing still matters, because it tells you whether volatility is likely to trigger forced selling. A widely used proxy for “system liquidity” is Fed net liquidity.

Fed Net Liquidity = Fed total assets minus the Treasury General Account (TGA) minus the overnight reverse repo facility (ON RRP).

The key message for this week: nothing here is flashing “liquidity accident”.

Fed total assets rose week‑on‑week to about $6.65tn in the latest available weekly data. The TGA weekly average was about $838bn. ON RRP continues to sit near effectively zero in size terms, removing what used to be a major “liquidity release valve” from the equation.

More supportive for risk is the higher‑frequency cash‑flow picture. U.S. Department of the Treasury daily data show large swings in the TGA balance (for example, a closing balance around $809bn on 12 March after an opening balance above $862bn on 11 March). When the TGA drains, it mechanically adds liquidity back into the private sector the “TGA coming into the market” effect referenced in risk commentary.

Our Take

The regime hasn’t changed: oil is still the macro variable. As long as Hormuz remains disrupted, energy prices continue to feed directly into inflation expectations and rate pricing.

What’s notable is crypto’s reaction. Despite the same macro backdrop, geopolitical stress and rate cuts pushed further out, BTC and ETH stabilised and moved higher. Improving ETF inflows and the introduction of staking-enabled ETH products are beginning to provide structural support, while liquidity conditions remain broadly stable as TGA flows add cash back into the system.

The next immediate gate is this week’s Fed meeting (17–18 March). A hold is fully expected; the real signal will be in how policymakers frame oil-driven inflation persistence.

Technically the levels are clear:

• BTC: reclaim and hold $72–74k to reopen upside; otherwise the market likely remains stuck in the $60–74k repair range.

• ETH: holding $2k keeps the structure stable, while $2.2–2.4k is the key reclaim zone.

If oil stabilises, crypto likely continues repairing. If the Hormuz shock intensifies, inflation and real rates will dominate again.

Share

Subscribe now

That caveat immediately became the base case. Instead of the usual “geopolitics shock → quick mean reversion,” the market got something else entirely: a multi-day energy shock that bled into rates, volatility, and ultimately the crypto risk complex through the inflation channel. Oil’s path mattered more than the first candle exactly as flagged. On the tape, BTC did what fragile ranges do in headline regimes: it tagged the reclaim zone intraday, but it did not hold it into the end of week.

BTC trading back above 74,000 on March 4, confirming the reclaim attempt. But by Friday’s risk-off close, Reuters had BTC back down near 68,141, while ETH was ~1,979 with oil simultaneously printing its biggest one-day spike in years.

The Energy Shock

The week’s core macro fact was not “risk sold off.” It was energy prices repricing higher, fast, in a way that pulls inflation back into the conversation and forces markets to stare at the central-bank reaction function again.

First, energy markets began pricing in disruption risk with the Strait of Hormuz effectively closed, and tanker transits collapsing (Vortexa data: four crude tankers transited on March 1 versus a 24/day average since January).

Then the “risk premium” moved from theory to settlement prices. On Friday, WTI settling at $90.90 (+12.21% on the day) and Brent at $92.69 (+8.52%), with WTI’s day move noted as its biggest one-day gain since 2020.

The reason this mattered globally is mechanical: the Strait is not a marginal route. The U.S. Energy Information Administration estimates that in 2024 oil flows through Hormuz averaged about 20 million b/d, roughly 20% of global petroleum liquids consumption OPEC+ did respond, but the scale mismatch was the story. OPEC+ agreed a 206,000 bpd April output increase, meaningful as a signal, not as an offset to severe transport disruption through a chokepoint.

As pointed out by Kobeissi: “…our models show US CPI inflation rising to 3.2% if current oil prices are sustained. A move to $110/barrel opens for 3.5% CPI, and $130/barrel opens for 3.9%.”

Not a great sign for risk on assets.

Macro

The phrase that best described cross-asset behaviour this week was: inflation risk re-entered the room, and suddenly the usual hedges stopped behaving like hedges.

As investors searched for safety, traditional refuges moved unpredictably: the dollar held up better than many alternatives, while sovereign bonds struggled to attract classic safe-haven flows because traders were pricing them primarily on the inflation outlook rather than defence properties.

Rates markets responded accordingly. Global government bond markets as suffering one of their worst weekly losses in months, driven by concerns that war-driven energy inflation could force less dovish central-bank paths. The pressure was especially notable in the front end (2-year sector) across the U.S., UK, and Germany.

Equity volatility followed energy higher. VIX closing at 29.49 on Friday, its highest close since late April, while the S&P 500 logged its biggest weekly percentage decline since mid-October (down 2.02%), and the Dow saw its biggest weekly loss since early April (down 3.01%).

The macro calendar did not help because it introduced a second, conflicting impulse: growth wobble signs. On Friday, U.S. nonfarm payrolls declined by 92,000 in February and the unemployment rate rose to 4.4%, while emphasising that weather and a healthcare strike contributed to noise, but that the combination of weaker labour data and rising oil prices puts the Fed in a difficult spot.

That brings us to the key macro gate for the coming week: CPI. The U.S. Bureau of Labor Statistics schedule shows February 2026 CPI is released March 11 at 08:30 ET. Market is expecting +0.2% m/m CPI for February, while also noting markets may discount a “tame” print because it largely predates the conflict-driven energy spike, yet an upside surprise would still be toxic for risk because it would compound inflation expectations. In terms of pricing, market is expecting no cut from Fed until Q3 2026.

Crypto

From a pure crypto-technical perspective, the week can be summarised in one sentence: the market attempted a reclaim and got rejected, which is exactly why reclaim levels matter more than bounces.

Last week’s note described 73–74k as the clean line in the sand, with the logic that reclaiming it would flip the late-February structure from lower highs into something that can sustain higher lows; failing to reclaim keeps the tape in “repair mode” rather than trend continuation.

This week delivered the “failure” branch of that decision tree:

• A reclaim attempt happened. BTC broke back above 73k on March 4

• The attempt did not survive the energy/rates reprise into Friday. BTC sold off to at ~68,141 on March 6 as oil spiked and equities sold off.

• The weekend did not repair it. BTC closing ~66,905 on March 8.

ETH remained in the “damage control” bucket. Last week’s note called it a defence phase, arguing that any bounce below 2,200 is still relief unless structure rebuilds. This weeks price action, consistent with that thesis: it is not reclaiming, it is stabilising below broken levels.

One important nuance: the market still tried to trade local crypto catalysts. The rally into March 4 coincided with renewed focus on the CLARITY Act and clearer “rules of the road” narratives. BTC surging toward $74k after Donald Trump endorsed the bill with short term tailwind for crypto equities.

But the crypto-policy impulse faded because the legislation itself re-entered the grinder. Talks hit a new impasse as banks rejected a White House-backed compromise, with the dispute centred on stablecoin-linked rewards/yield and deposit-flight risks. In other words: crypto tried to rally on idiosyncratic news, but macro (oil → inflation) still overpowered it.

Prediction Markets & Price Discovery

One of the most interesting developments this week came from crypto markets themselves. While traditional markets were closed, Hyperliquid’s oil market continued trading, briefly pricing crude above $110.

The conflict has been traded not only through crude futures and defence equities, but also through 24/7 crypto-native instruments:

Polymarket’s “US forces enter Iran by..?” contract shows total trading volume around $13.9m, illustrating that the geopolitical tape has been continuously priced during off-hours.

Hyperliquid has become a visible venue for weekend commodity price discovery via oil-linked perpetuals. Oil-linked perps on Hyperliquid surging after the initial strike news (late February), explicitly framing the venue as part of the market’s real-time reaction function. As market stays closed on the weekend, hyperliquid USOIL is indicating a potential opening price at 116.

Historically, crypto has often reacted first to macro shocks simply because it trades continuously. Now that synthetic commodities are trading on-chain, the signal could become even stronger. It will be worth watching how closely Sunday crypto pricing aligns with Monday commodity futures going forward.

If these markets begin anticipating macro moves consistently, they could become an important information source.

The Week Ahead

The baseline assumption remains uncomfortable but straightforward: the surface area of the conflict is expanding, which means headline risk cannot be treated as background noise. Markets are now operating in a regime where geopolitics can directly drive macro variables, and those macro variables then transmit into risk assets.

The tactical framework for the week ahead can still be reduced to a three-gate checklist, although one variable clearly dominates the others.

I. Oil is still the variable.
Shipping disruption through the Strait of Hormuz has been documented as severe, and oil has already repriced sharply higher. If oil stabilises, history suggests BTC is more likely to stabilise and mean-revert. If oil trends structurally higher, BTC’s recovery profile tends to flatten, because the trade becomes “inflation shock” rather than “geopolitics shock.”

II. BTC structure is still the gate.
73–74k remains the key level. This week proved why: the market reclaimed it intraday and then rejected it into the weekend. Until that zone is reclaimed and held, rallies are best treated as repair/short-covering rather than trend resumption.

III.CPI is the next macro catalyst, but it is a backward-looking print.
The U.S. Bureau of Labor Statistics release is March 11 (08:30 ET). Markets care less about “what February inflation was” and more about “what the oil shock means for March/April inflation expectations,” which is why even a benign print may not be enough to stabilise risk if oil keeps squeezing.

Ultimately, this remains a headline-driven tape. Energy and by extension crypto is not a purely technical market in this regime. Every strike report, convoy update, policy statement, and diplomatic signal can force discontinuous repricing and the existence of 24/7 crypto-native venues (perps + prediction markets) compresses reaction time further.

Share

Subscribe now

The key reclaim area remains 73–74k. That zone is the cleanest line in the sand for bulls because it would flip the late-February structure from lower highs to something that can sustain higher lows. Above that, the next supply to work through sits around the prior consolidation band in the low-90s into ~100k. Until 73–74k is reclaimed, rallies are still best understood as mean-reversion inside a larger drawdown.

With BTC in repair mode, ETH is still in damage control. This a defense phase, not a reclaim phase. Any bounce below 2,200 is still just relief unless ETH can start rebuilding structure

BTC is still trading like high-duration risk, and its path remains visually tethered to iShares Expanded Tech-Software Sector ETF (IGV) (software/tech risk appetite). This does not mean “BTC equals IGV”, but it reinforces that the marginal driver is still macro risk appetite, not a crypto-only catalyst.

Crypto fear & greed is back near the lows (10/100), and equities have slipped into clear fear territory as well (43/100), sentiment across risk assets is fragile. That kind of positioning can create reflex bounces, but it also means markets are sensitive to macro shocks.

From here, the key variables to monitor are WTI, the VIX, and the U.S. 10Y yield. If oil continues to grind higher, it risks feeding inflation expectations and pushing yields up, a headwind for duration assets like tech and crypto. A sustained move higher in the VIX would confirm broader de-risking. Conversely, if oil stabilises, the VIX fades, and the 10Y drifts lower, that combination would materially improve the odds of a BTC reclaim and broader risk stabilisation.

On the policy front, the CLARITY Act remains the most obvious potential “local catalyst” for sentiment. That kind of clarity matters most when macro risk is elevated, because it can tighten the dispersion between “institutionally acceptable” exposure and “headline-risk” exposure.

Sector performance

Despite how heavy everything feels in USD terms, OTHERS/BTC is actually up roughly 13% YTD. That’s an important signal. It tells you that, on aggregate, alts have held up better than BTC this year. This is not altseason, but it’s also not a pure BTC-dominance regime. Broad alt beta has quietly outperformed on a relative basis even while absolute prices look weak.

If you zoom out to top 200 vs BTC, the picture is similar but more nuanced. The dispersion is wide. Out of the top 200, 48% of digital assets have outperformed BTC over the last 90 days.

Some of the larger-cap alts have struggled, but the broader tail of the market has held up relatively better than BTC. That reinforces the idea that this is a selective rotation environment rather than a BTC-led melt-up or an across-the-board alt collapse. Leadership is rotating, not disappearing. Part of the explanation is also idiosyncratic triggers of short term outperformance as well as the illiquidity

Looking at sectors YTD in USD, the dashboard still shows widespread drawdowns. Most sectors are materially negative on the year. On an absolute basis, it’s been a risk-off tape. But that’s only half the story.

In USD terms, most sector still shows widespread drawdowns YTD; however, the more actionable framing is BTC-relative performance. When BTC is down materially YTD, “down less than BTC” in USD becomes “up versus BTC” mechanically, and that relative tape is what drives rotation inside crypto risk.

This lines up with the observation that OTHERS/BTC is up ~13% YTD: broad alt exposure has held up better than BTC on a relative basis, despite poor absolute performance.

Flows and positioning

Stablecoin flows are still constructive, but they’re not screaming upside. Net inflows remain positive, with the 14DMA sitting around ~$89m. That’s below the six-month average of ~$125m and still comfortably under the $200–300m/day zone that has historically aligned with cleaner, more sustained upside trends. The message here is simple: liquidity is present, but it isn’t accelerating. This is stabilisation flow, not expansion flow.

The more encouraging data point came from U.S. spot BTC ETFs. For the Feb 23–27 (ET) week, net inflows totalled roughly ~$787m, driven by three solid sessions mid-week. Importantly, this was the first green weekly print after a multi-week stretch of outflows, signalling a re-engagement of demand at lower levels.

In context, ~$0.8bn is supportive, but it’s not euphoric. It ranks as the second-strongest weekly inflow of 2026 so far, behind the early-January re-engagement phase that included a ~$697m single-day print. What stands out more than the headline number is the distribution: flows have moved back into the middle of the historical weekly range rather than printing an extreme tail event. That’s consistent with buyers stepping back in, but not chasing.

One important nuance: ETF “net inflow” data reflects primary-market creations minus redemptions at the fund level, not secondary-market trading volume. It doesn’t fully capture intraday sentiment shifts. That’s why pairing ETF flows with stablecoin flows and cross-asset risk indicators like IGV still provides the cleaner read on overall positioning.

Macro

Macro remains “fine, but not easing fast enough”. The week’s key inflation impulse was firmer producer pricing. January U.S. Bureau of Labor Statistics data showed an upside Producer Price Index print, with services components featuring prominently in commentary around the release.

On growth, the headline was weaker but noisy: the U.S. Bureau of Economic Analysis advance estimate for Q4 2025 real GDP came in at 1.4% SAAR, down sharply from Q3’s pace. This is soft enough to keep “late-cycle” narratives alive, but GDP prints are often dominated by composition, seasonal quirks, and revisions.

Labour market stress still isn’t apparent in weekly claims. U.S. Department of Labor reported seasonally adjusted initial claims of 212,000 for the week ending 21 Feb—low in historical context.

Confidence is subdued but not collapsing. February The Conference Board showed a modest uptick in headline confidence (91.2), while the University of Michigan final February sentiment index was 56.6.

Surveys have flashed “better” recently, notably Institute for Supply Management, where January manufacturing PMI rebounded to 52.6 with stronger new orders in Reuters’ recap. But it is difficult to put a lot of weight on one or two higher survey prints given how unreliable the signalling value has been over recent years.

This week’s macro gatekeepers are February ISM (released on the first business day) and February nonfarm payrolls. These matter because reclaiming 73–74k in BTC is much easier with a benign rates impulse and a risk-on equity session than via a purely crypto-native squeeze.

Geopolitics and the oil shock

The geopolitical story became the dominant macro risk heading into March. Reporting describes joint United States and Israel strikes on Iran, with immediate market focus on energy supply disruption risk.

Oil’s reaction explains why this matters for crypto. Reuters described a sharp jump (around 10%) and highlighted risk around the Strait of Hormuz, a key energy chokepoint through which roughly a fifth of global oil flows. If this shock translates into sustained higher energy prices (towards $90–$100), the second-order effect is more inflation sensitivity and, likely, a less dovish path from central banks.

Policy responses may help at the margin but do not remove the core risk. OPEC+ has been reported as agreeing a modest output increase of 206,000 bpd from April, but a meaningful transport disruption through Hormuz is a much larger shock than a small production adjustment can offset.

BTC after geopolitical shocks

To quantify the “buy the smoke of the cannon” idea, I ran a simple event study on BTC using daily data and a set of widely recognised geopolitical shock dates from 2019–2024. Forward returns are measured from the event-day close at 1 day, 1 week, 1 month, and 3 months.

Event Anchors Used

• September 2019 – Saudi Abqaiq/Khurais attack

• January 2020 – Soleimani strike

• August 2021 – Fall of Kabul

• February 2022 – Russia invades Ukraine

• September 2022 – Russia partial mobilisation

• October 2023 – Hamas attack on Israel

• April 2024 – Iran–Israel strike episode

Across the 2019–2024 sample, the pattern is broadly consistent with the heuristic:

• The 1D reaction is typically small and mixed — often just noise.

• The 1W and 1M forward returns skew positive in most cases.

• The 3M outcome is more dispersed, particularly in episodes where energy markets were directly involved.

In other words, BTC tends to stabilise quickly after geopolitical shocks, with better odds over the 1–4 week horizon. The exception is when the shock morphs into a persistent oil or inflation event that tightens financial conditions. That’s the key caveat.

The oil path matters more than the first candle.

Oil-Linked Shocks

(Abqaiq 2019, Ukraine 2022, Iran–Israel 2024)

• 1D: +2.29%

• 1W: -0.80%

• 1M: -0.17%

• 3M: +3.39%

Non-Oil Shocks

(Soleimani, Kabul, Mobilisation, Hamas)

• 1D: +0.03%

• 1W: +4.56%

• 1M: +12.50%

• 3M: +27.85%

The difference is clear:

• Non-oil shocks tend to follow the classic “buy the smoke” pattern.
  Weak/noisy 1D → strong 1W → stronger 1M and 3M follow-through.

• Oil-linked shocks are materially different.
  The 1W and 1M medians are flat to negative, and the 3M recovery is much weaker.

That reinforces the key variable in the current environment: It’s not the geopolitical headline. It’s whether oil becomes persistent inflation pressure.

If oil stabilizes → history favors rebound.
If oil trends structurally higher → BTC’s recovery profile flattens materially.

Looking Ahead

There are three tactical gates to watch:

1. Structure:
BTC reclaiming 73–74k flips the short-term regime from repair to rebuild. Failure there keeps the market in chop.

2. Macro impulse:
February ISM and Nonfarm Payrolls matter because rates and equity tone still drive marginal flows. A benign rates move + stabilizing IGV materially improves the probability of reclaim.

3. Oil / risk complex:
WTI behavior, VIX direction, and the U.S. 10Y yield are the transmission channels.
Oil stable + VIX fading + yields drifting lower = constructive.
Oil trending toward $90–100 = inflation sensitivity returns, recovery flattens.

Positioning is fragile. Sentiment is fearful. Liquidity is present but not aggressive. That combination tends to produce volatility first, clarity second. Unless oil becomes the story, history favors stabilization over collapse. But until 73–74k is reclaimed, the burden of proof remains on the bulls.

Share

Subscribe now

Despite strong U.S. jobs and cooling inflation that should have been bullish for risk assets, crypto spent the week grinding lower. Bitcoin consolidated around $69k unable to break resistance, Ethereum closed at $1,945 after failing to reclaim $2,200, and total crypto market cap slipped to $2.48 trillion after breaking critical support. The weakness wasn’t isolated to digital assets, it was part of a broader repricing of long-duration growth assets as concerns about AI capital expenditures and software business model disruption rippled through technology markets.

Crypto

Bitcoin remains trapped in a well-defined range after the violent flush to $60k on February 5-6 that produced $2 billion in liquidations and $8.7 billion in realised losses, the second-largest loss event since 3AC collapsed. Multiple attempts to break above $72k failed this week, with each rejection on declining volume.

The $75-78k zone needs reclaiming for any structural repair, while $85-90k represents clear overhead resistance. On the downside, $60-62k that held during the early February panic remains critical support. A sustained break below that level would open the door to the mid-$50s and potentially trigger another wave of forced liquidations.

Ethereum's technical damage is more severe. Down 7% for the week to $1,945, the prior support zone at $2,200-2,300 has now flipped to resistance. ETH fell roughly 26% peak-to-trough during the early February selloff, briefly trading below $1,800 before recovering.

The failure to reclaim $2,200 this week confirms continued underperformance versus Bitcoin and reflects Ethereum's higher sensitivity to tightening liquidity conditions. Relative strength continues to favor Bitcoin as capital rotates toward perceived safety within crypto.

The total crypto market cap breaking $2.45 trillion was the week's most critical technical event. This level had acted as medium-term support throughout late 2025. Once it failed decisively early in the week, selling cascaded with minimal bids until closer to $2.0 trillion.

The breakdown was broad-based: large caps, mid caps, and high-beta altcoins all sold off together with no rotation into defensive segments. Bitcoin dominance rose to 58-59% as capital fled everything else, confirming this was a liquidity-driven move rather than a narrative-based rotation.

The Software Correlation That Won’t Break

The most important structural development for crypto continues to be the deepening correlation with software equities. Bitcoin now trades with 0.73 correlation to IGV (iShares Tech-Software ETF), actually higher than its correlation to the broader Nasdaq. This isn’t random noise. It’s the market telling you exactly what Bitcoin has become: a leveraged bet on the same growth thesis that underpins software stocks.

IGV closed at $82.77, down 22.7% year-to-date and 29.75% from its September 2025 peak, officially in bear market territory.

The damage to individual names is severe (from peak):

• Microsoft -26%

• Oracle -56%

• Salesforce -28%.

January 2026 was IGV’s worst month since October 2008, and February isn’t providing any relief.

The selloff is being driven by mounting evidence that AI tools will disintermediate software margins faster than they create new revenue streams. Tools that can automate legal work, customer service, coding tasks, and enterprise workflows are forcing investors to question the entire SaaS business model built on per-seat licensing and predictable recurring revenue. As software multiples compressed throughout the week, Bitcoin followed almost tick-for-tick.

Meanwhile, one of the most dramatic sector rotations in modern market history continues to accelerate. The Magnificent 7 stocks are down 6.27% year-to-date while the Energy Select Sector SPDR (XLE) has surged approximately 23%, creating a roughly 25-percentage-point performance spread. This is the kind of violent rotation that only happens at major market inflection points.

The Nasdaq fell roughly 7% during the selloff period, driven primarily by forward guidance around AI capital expenditures rather than current fundamentals. Several large technology firms signalled meaningful increases in AI spending for 2026, raising concerns that costs are massively front-loaded while monetisation timelines remain uncertain. Markets responded by compressing multiples across software, cloud infrastructure, and AI-adjacent names. The sequence matters: equities repriced first, IGV followed, and crypto amplified the move as the highest-beta expression of the same trade.

Extreme Sentiment, Missing Buyers

The Crypto Fear & Greed Index hit an all-time record low of 5 on February 6, even worse than the FTX collapse, and remained in single digits through February 13 before creeping to 13. These are extreme capitulation-level readings that in past cycles have marked major bottoms.

But here’s the problem: capitulations only mark durable turning points if buyers actually show up. The ETF flow data suggests they haven’t.

Spot Bitcoin ETFs suffered their fourth consecutive week of net outflows, with roughly $360 million exiting just this week alone. Cumulative outflows since November have reached $6.8-8 billion. Most ETF investors are now sitting on losses, with average cost basis estimated around $84,000-90,000. These aren’t retail weak hands panic-selling, they’re the institutional buyers that everyone said would provide a structural bid under the market.

Macro

This week delivered a paradox that’s essential to understanding market behavior: strong economic data that should have supported risk assets instead triggered broad-based selling.

The January jobs report surprised to the upside. Nonfarm payrolls rose 130,000 versus consensus expectations of 55,000-70,000. The unemployment rate ticked down to 4.3% from 4.4%. Average hourly earnings came in at +0.4% month-over-month (+3.7% year-over-year), and real wages grew a healthy 1.2%.

But benchmark revisions told a much darker story lurking beneath the headline. 2025’s total job creation was slashed from a reported +584,000 down to just +181,000, meaning the U.S. economy averaged only 15,000 jobs per month last year instead of the previously reported 49,000. Healthcare and social assistance accounted for nearly all of January’s gains, while federal government employment fell 34,000 and financial activities shed 22,000.

Two days later, the CPI report came in cooler than expected. Headline inflation fell to 2.4% year-over-year (below the 2.5% forecast), while core CPI dropped to 2.5%, its lowest reading since March 2021. Shelter inflation decelerated to +3.0% annualised, energy fell 1.5% on the month, and core goods were flat.

So we got decent jobs growth and cooling inflation with the Fed on hold at 3.50-3.75%. In a normal environment, that’s Goldilocks and risk assets should rally. Instead, the S&P 500 fell 1.5% for the week while the Equal Weight S&P hit an all-time high. The dispersion between mega-cap tech and everything else is extraordinary.

The bond market is looking through current data points and betting on what AI means for the longer-term inflation and rate trajectory. Despite the strong jobs print, Treasuries rallied hard. The 10-year yield fell 18 basis points to 4.04%, its lowest level since November 2025. The 2-year dropped to 3.40%.

The market is starting to price in that AI will be structurally disinflationary: more output without proportional cost increases. Fed Vice Chair Philip Jefferson acknowledged this dynamic at Brookings, noting productivity gains could be disinflationary even while potentially raising the neutral rate. Post-CPI, fed funds futures repriced to show 61 basis points of expected cuts for 2026, with June emerging as the most likely window.

Alphabet’s Century Bond and AI Financing

This week brought the most symbolically loaded corporate debt deal since the dot-com era: Alphabet priced a $1 billion 100-year bond at 6.125%, the first technology company to issue a century bond since Motorola in 1997.

The historical parallel is uncomfortable. In 1997, Motorola was a top 25 market cap company and the #1 ranked corporate brand in America. Just one year later, Nokia overtook them. After the iPhone, Motorola fell from consumer relevance. Today: 232nd by market cap, $11 billion in sales. J.C. Penney’s 1997 century bond traded for pennies in bankruptcy.

The deal was part of a $31.5 billion offering that drew over $100 billion in orders, funding Alphabet’s $175-185 billion 2026 capex, double 2025.

Total hyperscaler commitments: $660-690 billion

• Amazon $200bn

• Alphabet $175-185bn

• Meta $115-135bn

• Microsoft $120bn

• Oracle $50bn)

Morgan Stanley projects tech will borrow $400 billion in 2026, 2.4x the $165 billion raised in 2025.

Tech companies have shifted $120 billion+ in AI data center debt into off-balance-sheet SPVs. Meta pays $6.5 billion extra in interest to keep $27 billion off its balance sheet. Oracle has accumulated $248 billion in lease obligations, up 2,239% year-over-year.

The Mag 7’s trailing free cash flow is turning negative as capex consumes operating cash. Big Five 2026 capex of $660-690 billion versus roughly $25 billion in AI services revenue equals a 4% payback ratio. Bank of America estimates AI capex could hit 94% of operating cash flows.

Nvidia’s circular financing deepens. Nvidia invested $2 billion in CoreWeave on January 26 while committing to buy $6.3 billion of CoreWeave capacity through 2032. The loop: Nvidia invests → CoreWeave buys Nvidia GPUs → CoreWeave leases to Microsoft/OpenAI → revenue supports payments → Nvidia books revenue and marks up its stake.

Moody’s notes Oracle’s data centers depend on OpenAI, which won’t be profitable until 2029. If AI monetization disappoints, bondholders may discover they hold claims on overleveraged SPVs whose assets don’t cover the debt.

Our Take

Short-term: oversold, due for relief. Extreme sentiment (Fear & Greed at 8-13, RSI 16.6 during the flush) typically marks washouts. Equal-weight S&P hitting highs while cap-weighted falls is healthy after years of dangerous concentration.

Medium-term: Bitcoin must decouple from the 0.73 IGV correlation or remain collateral damage in the software repricing. ETF outflows confirm institutional appetite is exhausted. Technically, BTC needs $75-78k, ETH needs $2,200, total market cap needs $2.45 trillion. Until these levels are reclaimed, rallies should be treated as tactical counter-trends rather than the resumption of a structural uptrend.

The AI financing dynamics, $120 billion off-balance-sheet, circular vendor deals, century bonds at potential peak, echo late-1990s telecom. That buildout eventually worked but required a brutal bust that wiped out most bondholders first. Central question: will $660-690 billion in 2026 AI capex generate returns to justify it? OpenAI expects losses through 2028. Someone will lose phenomenally.

For crypto: will Bitcoin be treated as a hedge against that potential unwind, or swept up in it as just another liquidity-sensitive growth asset? The 0.73 software correlation says the latter. We remain cautions on the medium term until we see more net liquidity in the system for investors to counter trade.

We believe market is getting closer to fair value on strong names in crypto, however not yet distressed levels.

Share

Subscribe now

BTC ultimately printed a low near $60,000, marking a 24% drawdown from the highs in a matter of days. The speed of the move is what mattered most. This was not orderly distribution but mechanical deleveraging, driven by futures liquidations, risk parity adjustments, and broader macro selling.

The most notable technical signal was momentum exhaustion. Bitcoin’s daily RSI collapsed to approximately 16.6, a level last observed during the March 2020 COVID panic. Historically, RSI readings below 20 have only occurred during periods of systemic stress rather than at cyclical tops. These moments tend to coincide with leverage capitulation rather than long-term trend exhaustion.

The subsequent rebound was consistent with this interpretation. BTC recovered sharply into the $70–72k area as forced sellers were cleared and short-term positioning reset. That said, structure has not yet been repaired. The $85–90k region is now clearly overhead resistance, while the $75–78k area represents the minimum reclaim required to stabilise price action. On the downside, the $60–62k zone has become critical support. A sustained failure there would materially increase downside risk.

For now, the bounce should be viewed as reflexive rather than confirmatory.

Ethereum underperformed Bitcoin throughout the move, both on the downside and during the rebound. ETH fell roughly 26% peak to trough, slicing through the $2,200 and $2,000 levels before briefly trading below $1,800.

While ETH also reached oversold momentum conditions, the structural damage is more pronounced. Prior range support in the $2,200–2,300 region has now flipped into resistance, and ETH remains well below its former value area. Relative weakness versus Bitcoin persists, reflecting ETH’s higher sensitivity to liquidity conditions and equity risk.

Total Market Cap

The clearest structural signal this week came from the total crypto market capitalisation. The $2.45 trillion level, which had acted as medium-term support throughout late 2025, failed decisively early in the week. Once lost, selling cascaded rapidly, dragging total market cap toward $2.0 trillion.

This was a broad-based liquidation. There was no meaningful rotation into defensives within crypto. Large caps, mid caps, and high-beta assets all sold off together, confirming that the move was driven by liquidity rather than narrative.

While total market cap recovered modestly into the weekend, it remains below prior value. From a structural standpoint, the market is still in repair mode. Reclaiming $2.45 trillion will be essential to re-establish bullish conditions.

Crypto = Software

One of the most important observations from this week is how tightly Bitcoin traded alongside software equities and the broader Nasdaq. Bitcoin’s price action mirrored the iShares Expanded Tech-Software ETF (IGV) almost tick-for-tick during the sell-off, while the Nasdaq itself fell roughly 7% on the week. This was not coincidence, and it was not noise.

Crypto did not sell off in isolation. It sold off as part of a broader repricing of long-duration growth assets.

The common denominator was software.

IGV is heavily weighted toward long-duration software and SaaS companies such as Microsoft, Salesforce, Oracle, Intuit, Adobe, and Palantir. These businesses benefited enormously from the prior regime of low rates, expanding multiples, and highly predictable cash flows. That framework is now being challenged simultaneously by higher discount rates and by AI-driven uncertainty around future margins, pricing power, and capital intensity.

As software equities rolled over, Bitcoin followed. This reinforces a point we’ve made repeatedly: Bitcoin like Tech continues to trade as a growth-sensitive, liquidity-dependent asset, rather than as a macro hedge or defensive store of value. Until that regime changes, equity market stress, particularly in technology and software, will continue to transmit directly into crypto.

The Nasdaq’s weakness this week provides important context. The move lower was driven less by macro data and more by earnings commentary and forward guidance, especially around AI-related capital expenditures. Several large technology firms signaled meaningful increases in AI spending, raising concerns that returns may lag investment. The market’s concern is not whether AI will be transformative, that is largely accepted, but whether the cost curve is becoming front-loaded while monetisation remains uncertain.

In response, markets compressed multiples across software, cloud, and AI-adjacent names. The Nasdaq absorbed that repricing first. IGV followed. Crypto followed last.

This sequence matters. Crypto did not lead this move; it reacted to it.

As long-duration assets with implied growth optionality, both software equities and crypto are highly sensitive to changes in discount rates and return expectations. When equity investors begin to question the durability of cash flows or the efficiency of capital deployment, those concerns propagate quickly across correlated assets. This week, equities were the transmission mechanism. Crypto was the amplifier.

The feedback loop does not stop at public markets.

A quieter but increasingly important development this week was the mounting stress in private credit, particularly among lenders exposed to software and SaaS businesses. During the low-rate era, private credit vehicles and Business Development Companies extended significant amounts of capital to software firms, underwriting stable cash flows, durable competitive moats, and predictable growth trajectories.

AI disruption complicates those assumptions.

As public software equities sold off, publicly traded BDCs followed, many now trading at significant discounts to net asset value. This reflects growing concern that loan defaults could rise, collateral values may decline, and liquidity mismatches could emerge if redemptions accelerate. In effect, the equity market is beginning to question the solvency assumptions embedded in private credit portfolios.

Private credit is not yet a systemic issue. However, it represents a latent fault line. Historically, stress in private credit markets tends to lag equity declines rather than lead them. When it does emerge, it can amplify liquidity tightening by forcing asset sales, restricting credit availability, and reinforcing risk-off behavior across markets.

This matters for crypto because liquidity is the connective tissue. A world in which software valuations compress, capital expenditure rises, and private credit tightens is a world with less marginal liquidity for speculative assets. In that environment, crypto behaves less like an alternative system and more like a downstream expression of financial conditions.

Taken together, the Nasdaq sell-off, the repricing of software equities, and emerging stress in private credit all point to the same conclusion: this was not a crypto-specific unwind. It was a growth-asset reset.

Until software stabilizes, crypto will struggle to decouple.

Macro

From a macro perspective, the week offered little relief. US economic data surprised to the upside, with ISM readings reinforcing the view that activity remains resilient.

While positive in isolation, this strength complicates the outlook for risk assets. Strong growth reduces the likelihood of near-term policy easing and keeps financial conditions tighter for longer, particularly at a time when valuations across equities and crypto remain sensitive to discount rates.

Layered on top of this is increasing focus on the potential policy stance of Kevin Warsh. Widely viewed as more hawkish and balance-sheet conservative, Warsh represents a Federal Reserve framework that is less tolerant of financial excess and more explicitly focused on inflation control, even at the expense of asset prices. For markets that have grown accustomed to policy backstops and liquidity support, this shift in expectations matters

For crypto, the implications are direct. The 2023–2025 rally was, at least in part, liquidity-supported. As Fed net liquidity expanded, financial conditions eased, allowing leverage to build, risk premia to compress, and valuations, particularly in higher-beta segments of crypto to expand.

That backdrop is now shifting. Fed net liquidity has rolled over, in the near term due to government shutdown, reducing tolerance for excess. In a regime defined by firmer growth, stickier inflation, and a more restrictive policy bias, markets demand lower leverage, more realistic valuation assumptions, and greater selectivity. The impact is most visible in the “OTHERS” market cap, where speculative assets are repricing first.

Japan adds another layer of complexity. It remains an underappreciated but critical macro variable in the global liquidity equation. Rising Japanese government bond yields, persistent yen volatility, and uncertainty around Bank of Japan policy introduce the risk of disruption to long-standing carry trade dynamics. Japan has historically been a major exporter of capital, and shifts in its rate and currency regime have outsized global implications.

Any disorderly adjustment, whether through sharper yen moves or further volatility in Japanese bond markets, has the potential to tighten global financial conditions and spill into equities and crypto alike. While this risk has not yet fully materialized, it remains unresolved and warrants close monitoring, particularly if global bond market volatility continues to rise.

Taken together, the macro backdrop is not outright hostile, but it is far less forgiving. Strong data, hawkish policy risk, and latent global liquidity pressures create an environment where excess is punished quickly. Crypto is adjusting to that reality.

Positioning, Sentiment, and the Path Forward

Sentiment reset sharply this week. Fear dominated flows, leverage was flushed, and defensive positioning increased meaningfully. Importantly, this was not a structural failure of crypto. It was a valuation and liquidity reset.

Oversold conditions are real, but they are not sufficient on their own to justify sustained upside. From here, markets will require confirmation through price repair, equity stabilisation, and macro clarity.

Bitcoin must reclaim the mid-$70k region to stabilise and ultimately retest higher levels. Ethereum must regain the $2,200 area to avoid prolonged underperformance. At the aggregate level, total market cap must reclaim $2.45 trillion to re-establish bullish structure.

Until then, rallies should be treated as tactical rather than structural.

Closing Thoughts

This week was painful, but it was also familiar. Crypto markets have always required periodic leverage resets to sustain long-term trends. What we saw was fast, mechanical, and unforgiving but not unprecedented.

The market is cleaner now. But it is not yet safe.

We are watching several things closely. Stabilisation in equities, particularly software and the Nasdaq will be important, as crypto continues to trade as a downstream expression of growth risk. Liquidity conditions, especially Fed net liquidity and global bond market volatility, remain critical inputs. Developments in Japan, where yield and currency dynamics have the potential to tighten global financial conditions, also bear close monitoring.

Patience, discipline, and respect for macro signals remain essential as we navigate the next phase.

Share

Subscribe now

This sell-off has left technical indicators flashing oversold – Bitcoin’s daily RSI and Stochastic oscillators dipped well into oversold territory, suggesting the downtrend may have been overdone in the short term. For now, $80,000 (the former floor) has become immediate overhead resistance, while the $77,000 zone, roughly corresponding to Bitcoin’s cost basis for large holders, is the new line in the sand that bulls are defending. A clear break of 77k, opens up for 74k/67/65k.

Broader market capitalisation is also teetering on a crucial threshold. The total crypto market cap has slipped below $3 trillion and is fast approaching a structural support trendline that has underpinned the market since 2024.

The 2.45T is key support, and would open up for further correction towards $2T mark.

Macro

Markets were rocked by a cocktail of geopolitical and monetary shocks. Over the weekend, rumors of a potential U.S. strike on Iran circulated across media outlets.

While the strike was never confirmed, the mere hint of escalating conflict in the Middle East sent crypto lower. The last time this occurred – during mid-2025 – a brief but violent risk-off episode followed, market were quick to reprice geopolitical risk into portfolios.

Adding to this volatility, President Trump’s nomination of former Fed governor Kevin Warsh as the next Fed Chair sent markets into a tailspin. Warsh is widely viewed as an inflation hawk with a history of skepticism toward QE and ultra-accommodative policy. Equities fell, the dollar surged, and gold and silver posted their largest one-day drop in decades. The market interpreted the nomination as a potential return to stricter monetary discipline – especially unwelcome in a week already marked by rising tensions and fragile liquidity.

That said, views on Warsh are evolving. Some analysts believe his prior hawkish stance may soften under political pressure and a shifting macro landscape. In 2025, Warsh aligned with the Trump administration’s push for lower rates. This dichotomy – between his legacy image and recent behavior – has created uncertainty about what kind of Fed he will lead. The consensus is that he may turn more pragmatic in the near term, even if structurally conservative in the long run. The initial market reaction may moderate if Warsh telegraphs dovish flexibility.

Meanwhile, net liquidity in the U.S. financial system continues to deteriorate. The Fed’s balance sheet runoff combined with increased Treasury cash balances reduced net liquidity from $5.8T (mid Jan) to $5.66T over the past two weeks. This contraction, driven by Treasury’s TGA rebuild, most likely ahead of government shutdown, is particularly negative for high-beta assets like crypto. Reduced liquidity removes a crucial tailwind that had supported price stability throughout 2026.

Institutional Rotation and Equity Crosswinds

Flows into institutional crypto products turned deeply negative. Bitcoin-focused ETFs saw $818 million in net outflows on Jan 29 alone – the largest single-day redemption on record. Ethereum ETFs followed suit, with $327 million in redemptions that same week.

This kind of exodus shows hedge funds and asset managers de-risking their exposure in response to Fed policy uncertainty and macro volatility.

Crypto-exposed equities weren’t spared. MicroStrategy, now rebranded as “Strategy,” saw its BTC position briefly turn red as BTC dipped below the firm’s ~$76,000 cost basis. Saylor reiterated there would be no forced selling, but MSTR shares still lagged.

Meanwhile, BitMine Immersion (BMNR), an ETH treasury play, was hit even harder. Holding over 4.2M ETH at an average cost above $2,500, the firm is sitting on an unrealized $6B loss. Their aggressive accumulation strategy is now under scrutiny, even though insiders say the firm remains committed.

Elsewhere in big tech, Microsoft posted strong earnings led by AI services. OpenAI-driven cloud usage boosted Azure revenue 39% YoY, but higher-than-expected capex spooked some investors, and the stock fell. That pressure spilled into Nasdaq and indirectly into crypto, which has increasingly traded as a macro-proxy for growth and innovation bets.

Global Watch: Japan’s Election and Risk Contagion

Japan’s snap election (Feb 8) is shaping up to be a major macro event. PM Sanae Takaichi is expected to win a stronger mandate, which would embolden her fiscal expansion plans.

Markets reacted by pushing Japanese yields to 25-year highs and whipsawing the yen. A bigger LDP majority could further steepen JGB curves and increase inflation risks.

Global bond markets are watching closely: rising Japanese yields may force Japanese capital back home, impacting U.S. Treasury demand and global rates. For now, volatility in Japanese assets is bleeding into FX and equities, adding another layer of risk to global positioning.

Sentiment & Outlook

Heading into the week of Feb 3, markets remain on edge. Equities are soft, crypto is oversold, and metals just experienced one of their worst sessions on record. Volatility is elevated, but not unmanageable. This suggests a sentiment reset may already be underway. Still, the macro picture remains messy: liquidity is tightening, central bank uncertainty is high, and geopolitical risk remains unresolved.

A tactical bounce is possible given the extent of the washout. But sustainable upside will likely require one of three things:
1) A dovish pivot from the Fed or incoming Chair,
2) Calming geopolitical news, or
3) A shift in liquidity policy (e.g. TGA Drawdown), depending on the US shutdown.

Until then, expect high volatility trading with intraday spikes and liquidations on both sides. The market remains fragile, but also full of opportunity for those with discipline and patience. This is not yet the beginning of a new bull leg, but it may be the middle of a correction that’s doing its job: flushing leverage, resetting sentiment, and clearing the way for healthier price discovery ahead.

Medium-Term Outlook: We see elevated risk for further downside in the weeks ahead. While crypto has corrected sharply, U.S. equities have yet to meaningfully pull back. If equity markets begin to reprice stretched valuations, particularly in growth sectors sensitive to rising rates and capex pressure (AI, cloud, tech) – it will likely drag risk assets lower across the board. With Japan's election adding to global bond volatility and the Fed’s direction still uncertain, crypto may not be out of the woods yet.

Share

Subscribe now

BTC needs to reclaim $90k decisively to signal renewed strength. A retest of $85k cannot be ruled out, and the asset is not yet oversold on most timeframes. Until we see decisive macro clarity, whether from Japan’s February 8 election or resolution to the US shutdown drama, crypto is trading as a high-beta expression of global liquidity conditions, nothing more.

The real story this week isn’t in crypto charts. It’s in cross-asset volatility, carry trade dynamics, and the return of fiscal policy as a market-moving force.

If there's one lesson from the past two weeks, it's this: macro drives everything. The Greenland narrative and weekend tariff announcements rattled traditional markets on Monday, but Bitcoin didn't react until 44 hours later, a full 1.5-day delay. That lag is the tell. When BTC used to lead or at least track equities in real-time, it signaled strong positioning and tight reflexivity. Now? The 1.5-day delay screams low participation. The marginal crypto buyer has left the building. Volumes are anemic. The market is reacting, not anticipating.

Then came the second shock: the Polymarket probability of a January 31 government shutdown spiked from 10% to 70% in a matter of days, and Bitcoin again reacted with a 45-hour lag (1d 21h). Same pattern.

The explanation is simple: participation is thin. Crypto volumes are well below their Q4 2025 peaks. Retail is sidelined. Institutional flows are muted. The marginal buyer and seller are both absent, which means BTC is trading as a passive beta play on macro liquidity rather than an active, narrative-driven asset.

This is a feature, not a bug, of the current regime. Until either:

1. Crypto-native catalysts return (ETF inflows, regulatory clarity, stablecoin net inflows), or

2. Macro conditions improve (Fed easing, Japan stability, shutdown resolution),

...expect BTC to remain a high-correlation, low-conviction trade.

Macro

Japan - A slow motion crisis

What Actually Happened This Week

Thursday’s Bank of Japan meeting was unremarkable, they held rates at 0.75%, one dissenter wanted a hike, markets barely moved. Standard central bank theater.

Friday was a different story. The yen suddenly strengthened hard. No clear catalyst, just violent price action that looked like either someone unwinding a massive position or actual intervention. Then at 11 a.m. New York time, right when global FX markets have peak liquidity, the Federal Reserve made an announcement: they were checking rates in the yen market.

This wasn’t Japan asking for help. This was the US making a move. When the Fed publicly checks FX rates, it’s essentially a policy declaration. It means either the US Treasury wants the yen stronger, or they’re coordinating something bigger with Japan (and possibly Korea, given recent comments from Treasury Secretary Bessent about Asian currency weakness).

The market got the message immediately. The yen rallied hard into the close, and suddenly everyone with yen-funded carry trades started getting nervous.

Why the Carry Trade Matters

For the past 18 months, one of the most crowded trades in global markets has been borrowing yen (cheap at 0.75% rates) and buying higher-yielding assets—US bonds, stocks, crypto, whatever. With leverage, it’s been essentially free money.

The problem: when the yen strengthens rapidly, this trade unwinds in a hurry. Positions get liquidated. Risk assets sell off. We saw this movie in August 2024, the yen spiked, and within 5 days global equities were down 5-12%, VIX hit 65, and crypto got crushed alongside everything else.

If the US is now actively pushing for a stronger yen, that same dynamic could replay. And unlike August 2024 (which was a surprise BOJ hike), this time there’s warning.

What Happens Next

There are a few ways this plays out:

If this was just a warning shot: Japan and the US jawbone markets for a few days but don’t follow through with real intervention. The yen steadies, carry trades calm down, and we move on. Risk assets probably bounce on relief.

If they’re serious about intervention: We see coordinated action Sunday night or Monday, traditionally when Japan likes to move. The yen strengthens another 3-5%, carry positions unwind aggressively, and risk assets (including crypto) sell off for 1-2 weeks before finding a bottom.

If something bigger is brewing: This could be the start of a coordinated US-Japan-Korea currency agreement (similar to the 1985 Plaza Accord but in reverse). Strengthen Asian currencies, those countries buy more Treasuries, and global capital flows shift for months. This would be the most structurally important outcome and the most disruptive to existing positioning.

The February 8 Inflection Point

Japan’s snap election on February 8 is the key event to watch. Prime Minister Takaichi called the election to secure a mandate for her “Sanaeconomics” fiscal expansion: a ¥21.3 trillion stimulus package, a 0% food sales tax, and massive infrastructure spending—all unfunded by revenues, financed entirely by bond issuance.

The BOJ is stuck. Inflation is running at 2.9%, well above target. Wage growth is 5.25%, the highest since 1991. The yen is weak, importing more inflation. By any orthodox measure, the BOJ should be hiking rates aggressively. But it can’t, because:

1. The JGB market is fragile (40-year yields hit 4.24%, highest in 30 years)

2. The government needs low rates to service >260% debt/GDP

3. Fiscal dominance is winning, the BOJ is prioritising government funding needs over its price stability mandate

If Takaichi wins big on February 8, expect more fiscal expansion, more JGB issuance, and more pressure on the yen. That increases the odds of a forced BOJ response (emergency hike) and a violent carry trade unwind.

US Government Shutdown

There's now an 78% probability that the US government shuts down by January 31. If that sounds dramatic, it's not, government shutdowns have become routine political theater in the last decade. But the market mechanics around them are predictable and worth understanding.

When Shutdowns Actually Hit Markets

The pattern is consistent across the last five shutdowns (2013, Jan 2018, Feb 2018, Dec 2018-Jan 2019, and Oct-Nov 2025):

Phase 1 (Days –40 to –10): The real repricing happens here
Markets move before the shutdown, not during it. This is when probabilities shift, negotiations fail, and uncertainty peaks. Equities drift lower, VIX grinds higher, and Treasuries catch a bid as investors position defensively. This is where we are now.

Phase 2 (Days –5 to +5): Peak headline risk, but often a local bottom
VIX spikes around the actual shutdown date, but equities frequently stabilize or bounce as the “worst case” becomes known. The shutdown itself is usually the end of uncertainty, not the beginning.

Phase 3 (Week 2+): Duration becomes the issue
If the shutdown drags into week 2 or 3, real economic damage starts to show: missed federal paychecks, delayed government contracts, disrupted data releases (CPI, GDP, jobs reports). This is when markets start treating it as a macro shock rather than a political sideshow.

Phase 4 (Resolution): Fast relief rally
Historically, shutdowns end with a sharp bounce in equities, a collapse in VIX, and a reversal of whatever defensive positioning accumulated during the event.

Currently market is pricing in 2-4 week shutdown.

The 2025 Template

The most recent shutdown ran from October 1 to November 12, 2025, 43 days, the longest in US history. The market impact was real but contained:

• S&P 500 sold off modestly into the shutdown, then rallied post-resolution

• VIX spiked from 15 to 22, then collapsed back to 14

• US 10Y yields fell 15-20 bps (flight to safety), then reversed

• Bitcoin tracked equities with a 12-24 hour lag

The key insight: shutdowns are volatility events, not structural crashes. Unless they overlap with a debt ceiling crisis (which is the real tail risk), they tend to be buyable dips rather than sell signals.

The TGA Factor

Here’s the under appreciated angle: the Treasury General Account (TGA), the government’s checking account at the Fed, is a key driver of financial system liquidity. During the 2025 shutdown, the TGA swung wildly as the government drew it down to pay essential services, then refilled it post-resolution. This directly impacts Fed net liquidity, which has been one of the most reliable leading indicators for risk assets over the past two years.

Net liquidity (Fed balance sheet – TGA – reverse repo) drives asset prices with a 4-8 week lag. If the TGA spikes higher (government hoards cash), liquidity tightens, and risk assets roll over 6-8 weeks later. If the TGA falls (government spends), liquidity expands, and assets rally with a lag.

A prolonged shutdown could see the TGA drawn down significantly, injecting liquidity into the system. Current status: Net liquidity has been slightly increasing since mid-December 2025, which explains the supporive price action in January 2026.

What to Watch This Week

1. USD/JPY action Monday afternoon: is the MOF intervention real?

2. January 31 shutdown deadline: does it happen, and how long does it last?

3. TGA movements: is the government drawing down cash?

4. BTC $85k test or $90k reclaim attempt: does it hold or fail?

5. VIX behaviour: is volatility peaking or just getting started?

Bottom line

Crypto is stuck in macro’s waiting room. Bitcoin’s $85-95k range reflects a market with no conviction, not oversold enough to panic, not strong enough to break out. The next meaningful move won’t come from crypto-native catalysts. It’ll come from Tokyo or Washington.

The three key events:

1. Fed meeting on January 29 - Powell’s tone on cuts, inflation, and financial conditions will set the narrative for Q1

2. Japan’s February 8 election - determines whether fiscal expansion accelerates (forcing BOJ action and carry trade unwind)

3. US shutdown resolution - determines TGA trajectory and near-term liquidity conditions

Until more information from these to reprice, expect continued rangebound chop with elevated volatility. The 1.5-day lag between macro headlines and BTC price action tells you everything about current market structure: thin participation, low conviction, purely reactive positioning.

Now currently in the waiting room. The next 10 days determine whether we’re building toward a relief rally or a deeper February correction.

Share

Subscribe now

Bitcoin was up ~5.4% on the week, trading near $95,500 at the time of writing. That move matters less for its magnitude than for where it occurred.

Last week we highlighted $92,000 as the key level that needed to hold to maintain bullish continuation. Price dipped into that zone early in the week, found demand quickly, and reversed higher with conviction. That successful defense has materially improved short-term structure.

The immediate technical roadmap is now clearer:

• $92k: Confirmed support

• $96k: Near-term resistance

• $98k: Acceptance level required for momentum expansion

• $101k: 365-day moving average and major structural threshold

A daily close above $98k would signal that the market is ready to transition from consolidation into trend continuation. Until then, Bitcoin remains constructive but not yet in breakout mode.

What stands out most is how Bitcoin moved higher. There was no obvious speculative blow-off, no surge in leverage-driven activity, and no signs of late-cycle euphoria. Instead, price advanced in a controlled manner, supported by improving liquidity and steady institutional demand.

That distinction matters, especially with macro volatility rising.

Macro

Over the weekend, President Trump announced a 10% tariff on imports from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, effective February 1, 2026. The tariff is set to increase to 25% on June 1 unless a deal is reached for the U.S. purchase of Greenland, which Trump framed as a national security necessity tied to a proposed “Golden Dome” defense system.

The EU’s response was swift. European officials signaled preparation of up to €93 billion in retaliatory tariffs and restrictions on U.S. companies should negotiations fail.

The question will be how market will digest the the news as a U.S. holiday today with equity markets closed. Price discovery will be muted, and a reprice of trade war risk is something that has been largely absent from the narrative since the 10th of October. Keep an eye out for the bond market to signal the next move.

Over the past two weeks, U.S. Treasury yields have been quietly pushing higher. This move is expected to continue higher following the tariff announcement, reflecting concerns about renewed inflationary pressure, fiscal instability, and global trade friction.

This matters because history is clear:
The Trump administration does not want rising yields.

During April 2025’s trade-related volatility, sustained upward pressure in Treasury yields forced a softening of rhetoric and policy. Higher yields tighten financial conditions, raise borrowing costs, pressure equity valuations, and undermine growth, all outcomes that conflict with Trump’s stated economic goals.

If yields continue to rise on the back of trade tensions, the bond market may once again act as the constraint on policy escalation.

It’s also worth noting that two of the largest drawdowns in crypto during 2025 were directly linked to tariff-related headlines. The April sell-off followed the initial escalation in U.S.–China trade rhetoric, while the October drawdown coincided with renewed tariff threats and retaliation risks. In both cases, total crypto market capitalization fell sharply as risk was repriced across assets, highlighting how sensitive the space remains to trade-driven macro shocks.

For crypto, this dynamic is critical. Rising yields are typically a headwind for risk assets, tightening financial conditions and pressuring valuations. But history shows the second-order effect can be very different. If higher yields begin to rise because of trade tensions, and those moves threaten broader financial stability, they can force policy reversal or de-escalation. In that scenario, the bond market doesn’t just transmit stress, it actively constrains it.

In other words, the bond market isn’t just reacting, it’s shaping the probable path forward.

At the same time, rate expectations remain deeply divided.

• Market is still pricing in roughly two rate cuts for 2025

• Several banks now expect no cuts at all this year

Speculation around the next Fed Chair continues to intensify, adding another layer of uncertainty after Trump hints Hassett won’t be named Fed Chair and Polymarket odds fell from 36% to 17%. A more politically aligned appointment could shift expectations rapidly, but for now, the Fed remains in wait-and-see mode.

This disconnect, a market positioned for easing versus policymakers forced to remain cautious, keeps volatility elevated across asset classes. It also reinforces a critical point for crypto markets: rate cuts themselves are no longer the primary signal. Instead, liquidity conditions and bond market reactions are doing the heavy lifting.

Liquidity

Despite the macro noise, Fed net liquidity has turned higher. Increasing 670B since the low in Nov 2025.

Fed Net Liquidity = Fed Balance Sheet - TGA - RRP

The primary driver has not been a policy pivot, but a sharp decline in usage of the Fed’s Reverse Repo Facility. Cash that had been parked risk-free at the Fed has flowed back into the financial system, increasing available liquidity without requiring explicit easing.

Historically, inflections higher in net liquidity tend to show up first in altcoins and broader market breadth. That pattern is beginning to re-emerge.

At the same time cryptos own liquidity measure, stablecoin net supply, has turned positive again and is now above its 180-day average. The 14DMA currently at $380M of inflows vs 180D average at $287M.

This is an important shift. Stablecoins represent deployable capital; when supply expands sustainably, it signals growing risk appetite rather than defensive positioning. This does not mean liquidity is abundant, far from it. But the direction of travel has improved meaningfully compared to Q4. Downside risk is being reduced, even if upside acceleration still requires confirmation.

ETF flows reinforced that message this week.

For the week of Jan 12–18:

• Bitcoin ETFs saw approximately $1.4B in net inflows

• Ethereum ETFs attracted roughly $480M

These were some of the strongest weekly inflows since October 2025 and played a clear role in supporting price action during periods of macro uncertainty.

Risk Appetite returning

Market breadth continued to heal.

Over the past 90 days, roughly 41% of the top 200 assets have outperformed Bitcoin. That’s a notable improvement from late 2025 and outperforming the top 100 sitting at 37%, though still below levels typically associated with full-fledged alt seasons.

The recovery has been led primarily by smaller-cap segments, particularly the 100–200 and 50–100 market cap ranges, which have begun to outperform Bitcoin on a rolling 90-day basis.

This shift is meaningful. Rather than capital concentrating further into the largest names, we are seeing risk appetite cautiously re-emerge at the margins. Investors are selectively rotating into smaller-cap assets that were disproportionately punished during 2025, signaling early-stage risk repricing rather than indiscriminate speculation.

Importantly, this is not yet a broad-based chase for illiquid tail risk. Performance dispersion remains wide, and flows appear focused on themes and structures with improving fundamentals or liquidity profiles.

At a category level, this rotation is also visible. Year-to-date performance shows leadership concentrated in higher-beta, narrative-driven segments, with Gaming, the Bitcoin ecosystem, Bridge infrastructure, Social, and AI among the strongest performers.

These categories tend to be the most responsive to improving liquidity conditions, suggesting capital is expressing risk through convex exposure rather than defensive positioning.

Putting it Together

This week wasn’t defined by a single catalyst, but by alignment.

Bitcoin held key levels and advanced in a controlled manner, supported by improving liquidity and steady institutional flows rather than leverage or sentiment extremes. The defense of $92k has reset the technical backdrop, even as price remains just below levels required for confirmed momentum expansion. We see increased probabilty of reaching the high 90, low 100 in the coming weeks.

At the same time, macro risk re-entered the narrative. Rising yields and renewed trade tensions highlight that conditions remain fragile, but the bond market also acts as a constraint on policy escalation. As seen in 2025, sustained yield pressure can force de-escalation, reshaping risk dynamics rather than simply tightening them.

Liquidity trends reinforce this shift. Fed net liquidity has turned higher without an explicit pivot, stablecoin supply has flipped positive, and ETF inflows have resumed. None of this suggests abundance, but it does argue that downside risk is being reduced.

Risk appetite is responding accordingly. Market breadth is improving, smaller caps are beginning to outperform, and category leadership is emerging in higher-beta segments. Capital is rotating selectively, not chasing.

The takeaway is straightforward: the market is becoming supported rather than stretched. Upside remains conditional, but structure, liquidity, and participation are moving in the right direction and for now, crypto is responding constructively to both macro pressure and improving internal conditions.

Share

Subscribe now

Bitcoin’s position remains largely unchanged from last week, but the context has improved. $90k remains the pivotal level. It capped price repeatedly throughout December and has now been reclaimed. As long as Bitcoin holds above this zone, the path of least resistance points toward a move into the mid-$90ks, where the upper end of the current range sits. A clean break and sustained acceptance above $92k would materially improve structure to move towards 95k and after likely bring $100k back into focus.

Failure to hold $90k would expose the market to another rotation into the against 88-88.5k support would open up for mid-$80ks, though downside momentum appears limited for now.

Ethereum remains more range-bound and continues to lack independent leadership. The $3,000–$3,100 zone has become key support, while resistance remains heavy in the $3,800–$4,100 region, where ETH repeatedly failed during 2025.

A move above $3,300 would improve short-term momentum, but ETH remains highly sensitive to broader liquidity conditions.

Stablecoins & Liquidity

Stablecoin net supply remains negative on a 14DMA basis, confirming that crypto-native capital is still behaving cautiously. However, flows have been improving since the start of the year, marking an important shift from persistent December outflows.

Liquidity conditions are improving at the margin, but have not yet flipped decisively positive. A sustained uptrend will require stabilisation, and eventually expansion, in stablecoin balances across exchanges and DeFi venues.

For now, the market is supported, not fuelled.

ETF flows continue to play an outsized role in near-term price action.

Late December and early January saw approximately $459m in net Bitcoin ETF inflows and $160m into Ethereum ETFs, helping stabilise prices and contributing to Bitcoin reclaiming $90k. However, last week saw renewed outflows, with BTC ETFs down roughly -$680m and ETH ETFs -$69m, largely driven by profit-taking following strong early-year demand.

The signal here is mixed but constructive: institutions are engaged, though not yet committing in size. Broader confirmation will require consistency rather than episodic inflows.

Breadth & Altcoins

Altcoins remain fragile.

Over the past 90 days, 45% of the top 200 assets have outperformed Bitcoin, reinforcing that BTC leadership remains intact. While this is an improvement from late 2025, it is not yet consistent with a broad-based altcoin recovery.

A big part of the recovery has come from top 10-20 and 20-50, indicating early appetite to get back into larger cap names, that was oversold going into 2026. For now, rotation remains selective and speculative rather than structural.

Macro

Another year, and the US soft landing continues.

Recent jobs data confirms that the labour market is producing jobs roughly at breakeven levels, while the unemployment rate continues to hover in the mid-4% range. This reflects a cooling but stable labour market, slower hiring, but no collapse.

The US trade deficit is narrowing, driven in part by shifting global trade flows.

China continues to set records for global exports, but those goods are increasingly being routed to destinations outside the US. The net effect has been modestly supportive for US growth without reigniting inflation pressures.

This week brings CPI and Retail Sales, with markets looking for continued disinflation alongside still-resilient consumption.

Trueflation point to meaningful disinflation, as the mild inflationary impact of tariffs fades and real-time housing price measures lose steam. Concerns around commodity and electricity-driven inflation have faded. Disinflationary forces appear to have regained the upper hand.

There is very little priced in for the Fed in 2026, reflecting the market’s view that the current setup is balanced: growth is slowing but stable, inflation is easing, and policy no longer needs to be reactive.

US 10-year yields spiked toward 4.6% post-Liberation Day before settling into a 3.9%–4.2% range. The 4.2% level has capped yields since early September, and recent soft inflation data raises the possibility that another medium-term top is forming.

Since the election, the US dollar has followed a familiar post-election pattern. As in 2016, the DXY initially rallied on expectations of policy change, fiscal impulse, and relative US outperformance. That strength faded as macro reality set in. Indexed to election day, the dollar peaked early and has since trended lower, reflecting a shift from policy optimism toward equilibrium.

The current cycle is tracking the 2016 playbook closely: an early bid followed by gradual depreciation as growth normalises, inflation pressures ease, and relative rate differentials stop widening. A softer dollar at this stage is consistent with improving global risk appetite and removes a meaningful headwind for risk assets, including crypto.

Fed net liquidity has turned higher, and with a typical ~45-day forward lag, this argues for improving risk conditions. Historically, turns in net liquidity have led inflection points in altcoins and broader alt breadth rather than spot BTC alone.

While this is not yet reflected in stablecoin expansion, the direction of travel is improving. If the recent rise in net liquidity persists, it increases the probability that consolidation resolves higher and that breadth begins to expand beyond Bitcoin and large caps.

Equities & Gold

Stocks continue to grind near highs.

Geopolitical noise has had little impact on markets. While historically significant, these events are unlikely to materially affect corporate capex decisions or earnings trajectories in 2026. Equity sentiment is broadly bullish, but that alone is not a bearish signal. Earnings season begins next week with bank reports, and there is little reason to expect anything other than continued strength in earnings, margins, and equities.

One area to watch is the NASDAQ, which has yet to make a new all-time high. Price remains compressed in a narrowing triangle bounded by 25,500–26,000. A break in either direction should resolve quickly. The BTC correlation to Nasdaq is trading around 0.

The BTC/Gold ratio has continued to trend lower since mid-2025, retracing a large portion of the post-halving outperformance. Bitcoin has underperformed gold meaningfully during the risk-off phases of Q4 and into year-end, reinforcing that BTC is still trading as a liquidity-sensitive risk asset, not a defensive one.

At current levels, the ratio is back near the lower end of its multi-year range, an area that has historically coincided with medium-term bottoms in relative performance. Stabilisation here would suggest that Bitcoin is beginning to reassert itself as liquidity conditions improve. A sustained turn higher in BTC/Gold would be an important confirmation signal that macro headwinds are easing and that Bitcoin is once again outperforming hard assets rather than merely keeping pace with them.

For now, gold continues to benefit from disinflation and real-yield stability, while Bitcoin requires incremental liquidity to regain leadership.

Looking Ahead

Bitcoin holding $90k remains the key near-term signal. As long as that level holds, the path of least resistance points higher toward the mid-$90ks, with a sustained break above $92k–$95k likely to improve structure and draw broader participation back into the market.

Liquidity is turning more supportive. Fed net liquidity has begun to rise, and with a typical ~45-day forward lead, this argues for improving risk conditions. While stablecoin balances have not yet expanded meaningfully, the direction of travel is improving, reducing downside risk and increasing the probability that consolidation resolves higher.

For now, leadership is likely to remain concentrated in Bitcoin and large caps. Broader alt participation will require confirmation through stablecoin expansion and on-chain activity, but the macro and liquidity setup is becoming less restrictive. Consolidation remains the base case, increasingly constructive, but still awaiting confirmation.

Share

Subscribe now

Bitcoin marked a local low on November 21 at ~$80.5k. Since then, price has spent more than a month consolidating in a broad $84k–$90k range, reflecting a market that has largely completed its deleveraging phase but lacks sufficient incremental liquidity to establish a new trend. That range is now being tested from above, with Bitcoin closing the week above $90k, an encouraging near-term development.

Ethereum followed a similar pattern. After spending much of December below $3,000, ETH closed the week above $3,100, reclaiming an important technical and psychological level.

Altcoins remain under pressure, but the pace of deterioration has slowed. While 2025 was defined by deep drawdowns across most sectors, recent price action suggests that forced selling is largely behind us and early signs of stabilisation are emerging.

Structure and Levels

For Bitcoin, $90k is the pivotal level. It capped price repeatedly throughout December and now needs to act as support. As long as Bitcoin holds above this zone, the path of least resistance points toward a move into the mid-$90ks, where the upper end of the current range sits. A clean break and sustained acceptance above $95k would materially improve structure and likely bring $100k back into focus.

Failure to hold $90k would expose the market to another rotation into the mid-$80ks, though downside momentum appears limited for now. Volatility has compressed meaningfully, and momentum indicators suggest the market is oversold but stabilising, a combination that often precedes directional expansion.

Ethereum remains more range-bound. The $3,000–$3,100 zone has become key support, while resistance remains heavy in the $3,800–$4,100 region, where ETH repeatedly failed during 2025. A move above $3,300 would improve short-term momentum, but ETH remains highly sensitive to broader liquidity conditions and has yet to show independent leadership.

Altcoins and Sector Performance

From a broader market perspective, 2025 was exceptionally difficult for alts. Most sectors, including smart contract platforms, DeFi, gaming, data, and AI, experienced severe drawdowns, often erasing multiple years of gains.

Median one-year performance across our tracked universe stands at –79.2%, with the average return at –67.1%.

The clear exception was privacy-focused assets. Privacy coins meaningfully outperformed the rest of the market and were among the only categories to post strong positive returns. This divergence appears driven by a renewed narrative around censorship resistance and financial privacy, combined with relatively small market capitalisations that amplified marginal inflows. These assets also demonstrated persistent relative strength during broader market weakness, attracting capital even as risk appetite elsewhere collapsed.

Outside of privacy, performance was largely idiosyncratic. Syrup stood out as a notable outlier on the upside, but such moves were isolated and did not reflect a broader sector rotation.

Looking at the total crypto market cap excluding the top ten assets, the picture remains one of consolidation rather than recovery. While downside momentum has slowed and long-term support has held, there is no evidence yet of a decisive breakout. This reinforces the view that the market requires net new liquidity, not merely rotation within the existing capital base, to sustain a broader recovery.

Historically, liquidity takes time to return after large deleveraging events. In 2022, it took roughly ten weeks for market makers and risk capital to meaningfully re-engage after major liquidity shocks. Ten weeks from the October 10 event brought us into mid December. Only now, moving into January, are we starting to see tentative signs that this process may be repeating.

ETF Flows and Stablecoins

One of the more constructive developments has been the return of ETF inflows. During the final week of December and the first days of January, Bitcoin ETFs recorded approximately $459m in net inflows, while Ethereum ETFs saw around $160m. This marks a clear shift from the persistent outflows observed earlier in Q4 and suggests that institutional allocators are beginning to re-enter at lower levels.

These inflows have helped stabilise price and likely contributed to Bitcoin reclaiming the $90k level. However, this positive signal is not yet confirmed by broader onchain liquidity.

Stablecoin net flows remain negative, indicating that crypto-native capital continues to behave cautiously. While institutional demand via ETFs has returned, retail and onchain participants have not yet followed. A sustained uptrend will likely require stabilisation, and eventually expansion, in stablecoin balances across exchanges and DeFi venues.

For now, liquidity conditions are improving at the margin but remain fragile. The market is supported, but not yet fuelled.

Macro Backdrop

Markets enter 2026 navigating a commodity-driven reflation / stagflation regime. Metals experienced strong year-end inflows, reflecting persistent inflation concerns and demand for real assets. At the same time, growth signals remain mixed.

Market is currently pricing in 2 cuts for 2026, with high uncertainty for Q1 and post new fed chair in Q2. The latest FOMC minutes reinforced a divided committee. Inflation risks remain elevated, downside risks to the labor market persist, and the pace of easing remains uncertain. For crypto, this macro backdrop matters primarily through its impact on liquidity. At present, macro conditions are neither a clear tailwind nor an immediate headwind, but they continue to cap risk appetite at the margin.

Bitcoin’s decoupling from U.S. equities has continued. Correlation with the Nasdaq has declined meaningfully, suggesting that Bitcoin is increasingly trading on crypto-specific drivers rather than broader risk sentiment. This is a structurally positive development, as it gives Bitcoin room to reprice independently if liquidity conditions improve. The current 20 day correlation is near 0.

At the same time, Bitcoin has not yet behaved like gold. While gold rallied strongly into year-end, Bitcoin corrected sharply. This divergence highlights that BTC remains liquidity-sensitive, rather than a pure defensive asset, in the short to medium term. Current 20 day correlation is currently at -0.25.

Nonetheless, the breakdown in correlation with equities is an important shift and one that could matter as macro uncertainty persists.

Seasonality and Positioning

Seasonality provides a modest tailwind. January has historically been one of Bitcoin’s stronger months, and the setup this year is notable. December was particularly weak, tax-loss harvesting likely concluded by year-end, and early January has already seen ETF flows turn positive.

While seasonality alone is not sufficient to drive a sustained rally, it improves the risk-reward profile at current levels and supports the case for a near-term recovery if liquidity continues to improve.

In absolute terms, derivatives positioning remains meaningfully lower than 2025 peaks. Aggregate open interest across major venues sits at $68B well below the mid-year and Q3 highs, when total OI briefly exceeded ~$110bn before the October liquidation event sharply reset positioning. Current levels are closer to the lower half of the past year’s range, despite price stabilising above key technical levels. This suggests that leverage has been materially flushed from the system and that any renewed upside would be building from a cleaner base rather than from crowded positioning.

Looking ahead

We believe the market is in the later stages of consolidation, though confirmation is still needed. Bitcoin holding the $90k level remains critical. As long as this support holds, a move toward $95k is achievable, particularly given oversold conditions and the recent improvement in flows. A sustained break and acceptance above that zone would materially improve market structure and likely draw broader participation back into the market.

Altcoins remain fragile, but selling pressure appears to be easing. Any recovery across the complex will require liquidity broadening beyond ETF inflows and into stablecoins and onchain activity.

In the near term, the market has shown enough strength to support a rebound, but conditions remain delicate. $85k–$90k is the most likely near-term range for Bitcoin, with $80k–$100k defining the broader trading range. A decisive close above or below this wider range will likely determine the next directional move.

Medium term, direction will be determined by whether recent inflows persist and broaden. We are closely monitoring equity markets into early 2026, macro data that could affect liquidity conditions, and confirmation that the early January bid extends beyond the first weeks of the year.

For now, the market appears to be stabilising, but without a broader improvement in liquidity, it is premature to conclude that consolidation has fully played out.

Share

Subscribe now

Not through a clean, euphoric bull market. Not through a broad-based altseason. Instead, 2025 unfolded as a year of structural adoption. Price action was selective and often frustrating, but beneath the surface, crypto’s core rails absorbed more volume, more users, and more real-world relevance than ever before.

The defining story of 2025 was not a single chain, token, or narrative. It was the steady migration of money, leverage, and behaviour onto onchain infrastructure. Stablecoins became global payment rails. DEXs and perps took durable market share. Lending quietly rebuilt DeFi’s balance sheet. RWAs and DATs pulled institutions and corporates onchain. Prediction markets crossed into consumer territory. And memes, improbably, emerged as one of the most effective distribution mechanisms crypto has ever produced.

This was not a hype cycle. It was a rails cycle.

Stablecoins Became the Global Dollar Rail

Stablecoins were the single most important product in crypto in 2025.

Supply climbed to new all-time high of $306B, but the real story wasn’t issuance, it was usage. Stablecoins transitioned from being primarily trading collateral to functioning as working capital for the internet. They became the default medium for moving value across borders, across platforms, and increasingly, across institutions.

Throughout the year, stablecoin transfer volumes accelerated relentlessly. By mid-2025, monthly onchain stablecoin transfers surpassed 2x the combined volumes of Visa, PayPal. By year-end, they were meaningfully larger.

This wasn’t driven by speculation. It was driven by cost, speed, and reliability. Stablecoins offered final settlement in minutes, global accessibility, and near-zero marginal cost. In a year marked by macro uncertainty and uneven risk appetite, the digital dollar was the least controversial and most useful asset crypto had to offer.

While transfer volumes told the story of usage, net supply flows told the story of conviction.

Stablecoin issuance in 2025 was anything but linear. Net supply oscillated meaningfully throughout the year, reflecting changing risk appetite, liquidity conditions, and capital deployment cycles across crypto markets. What stands out, however, is not the volatility, it’s the regime persistence.

As shown above, net stablecoin supply consistently oscillated around a positive long-term mean, with the 30-day moving average spending most of the year above the 1-year average. This indicates that, despite drawdowns and periods of deleveraging, stablecoins remained structurally in demand as balance sheet assets.

Conversely, short bursts of net outflows — particularly in late Q2 and early Q4 — coincided with broader risk-off episodes, where capital temporarily exited crypto rails rather than rotated within them.

RWAs: Yield Finally Met Product-Market Fit

If stablecoins were the monetary rail of 2025, real-world assets (RWAs) were the balance sheet.

RWA growth accelerated meaningfully throughout the year, expanding from roughly $5bn at the end of 2024 to nearly $18–19bn by December 2025. What made this growth different from prior attempts at tokenizing real-world finance was not experimentation, but composition and intent.

As the charts show, the expansion was overwhelmingly driven by US Treasury debt, which remained the dominant RWA category throughout the year. Treasury-backed RWAs grew steadily month-on-month, reflecting persistent demand for low-risk, yield-bearing onchain instruments. By year-end, Treasuries accounted for the clear majority of total RWA value, anchoring the sector in duration-light, highly liquid assets.

Alongside Treasuries, private credit emerged as the second key growth engine. Private credit RWAs expanded sharply through mid-to-late 2025, reflecting appetite for higher yielding, non-correlated returns. Unlike earlier DeFi-native lending cycles, these products were structured, cash-flow backed, and increasingly used by treasuries, DAOs, and institutional allocators rather than retail speculators.

Crucially, RWAs in 2025 were not positioned as exotic alternatives, they were positioned as yield infrastructure. Many Treasury and credit-backed products consistently offered 3–5% 7-day APY, with yield sourced directly from underlying cash flows rather than token incentives. In a year marked by volatile crypto prices and uneven risk appetite, that yield profile proved compelling.

In effect, RWAs transformed crypto finance from a closed-loop system into a hybrid balance sheet, where onchain capital could access real-world yield without exiting the ecosystem.

2025 did not mark the end-state for RWAs, but it clearly marked the year they stopped being a narrative and became a functional asset class.

DATs: Corporate Balance Sheets Absorb Crypto

One of the most structurally important developments of 2025 was the rise of Digital Asset Treasuries (DATs), public companies and listed vehicles embedding crypto directly into corporate balance sheets.

This trend was led by Bitcoin. Large, well-capitalised firms such as Strategy continued to expand BTC holdings throughout the year, using equity issuance and convertible debt to accumulate long-duration exposure. Alongside Strategy, a growing group of Bitcoin-focused treasury vehicles, including miners and dedicated holding companies,reinforced Bitcoin’s role as a corporate reserve asset. While significant in absolute terms, these holdings primarily functioned as supply absorbers, extending holding periods rather than driving short-term price action.

Ethereum followed a different trajectory. Although ETH treasuries were smaller in nominal size, their relative impact was greater. Public-market vehicles such as BitMine Immersion and SharpLink Gaming accumulated ETH as a strategic asset tied to settlement infrastructure rather than pure monetary exposure. With a meaningful portion of ETH already locked in staking, incremental balance-sheet ownership translated into a disproportionately large claim on liquid supply.

Solana adoption remained earlier but notable. A small number of corporates, led by Forward Industries, established SOL-centric treasury strategies, often pairing balance-sheet exposure with staking yield. While still a low single-digit share of circulating supply, these holdings signalled growing willingness to hold higher-beta network assets at the corporate level.

Across assets, the defining feature of DATs in 2025 was duration. These were not trading inventories or tactical allocations. Crypto exposure was embedded into equity structures, capital plans, and long-term strategy. Unlike ETFs, which can see rapid inflows and outflows, DATs locked assets into balance sheets designed to persist across cycles.

In a year where price action was selective and liquidity uneven, DATs quietly reshaped market structure. Crypto demand did not disappear it moved onto balance sheets, reducing float, extending ownership horizons, and reinforcing a broader shift from speculative flow to structural ownership.

DEXs vs CEXs: Market Share Becomes Structural

The most persistent structural shift in crypto market structure during 2025 was not price, but where trading activity settled.

Viewed over a multi-year horizon, spot trading volumes show a clear rebalancing. While centralized exchanges (CEXs) continue to dominate in absolute terms, DEX volumes have grown faster across cycles, lifting their share of total spot activity from low single digits in 2020 to the high-teens by 2025. Importantly, this gain was not confined to peak speculative periods. Even as overall volumes fluctuated, DEX participation remained elevated, indicating a durable change in trading behavior rather than a temporary substitution effect.

In absolute terms, 2025 closed with roughly $25T in total spot trading volume, of which close to $5T occurred on DEXs a over 100% yoy increase vs CEX 7%. While still smaller than CEXs, this represents a step-change from prior cycles, where decentralized venues struggled to retain share once volatility subsided.

The year-on-year view understates the shift. On a monthly basis, DEX-to-CEX ratios consistently operated in the mid-teens to low-20s throughout 2025, with several spikes materially higher. Notably, periods of market stress did not see a collapse in DEX share. Instead, decentralized venues increasingly functioned as parallel liquidity infrastructure, rather than merely spillover venues for long-tail assets.

The composition of that DEX activity also mattered. When benchmarked specifically against Binance, still the dominant centralized venue, the DEX/Binance ratio trended steadily higher through the second half of the year, ending 2025 near local highs. This suggests that DEX growth was not simply a function of declining offshore volume, but reflected genuine migration toward onchain execution.

The key takeaway from 2025 is not that DEXs replaced CEXs, they didn’t. It is that DEX market share stopped mean-reverting. Once decentralized trading reached scale, it held that scale across varying market regimes. In doing so, DEXs moved from being cyclical beneficiaries of volatility to becoming structural components of crypto market infrastructure.

Perpetuals Went Onchain at Scale

If spot trading marked adoption, perpetuals marked maturity.

In 2025, decentralized perpetual exchanges crossed an important threshold: they handled a meaningful share of global derivatives volume. The DEX-to-CEX futures ratio climbed toward the high teens, and in some periods approached 20%.

This mattered because leverage defines market structure. Perps are where liquidity concentrates, where hedging happens, and where sophisticated traders operate. Their migration onchain signaled that performance, liquidity, and reliability were no longer exclusive to centralized venues.

Competition intensified. Execution quality, latency, and liquidity incentives became differentiators. Onchain perps stopped being ideological products and became pure trading venues.

Lending Quietly Rebuilt DeFi’s Balance Sheet

While headlines focused on trading, lending did what it always does best: compound quietly.

DeFi lending markets expanded steadily through 2025. Active loans outstanding reached new all time high. Deposits grew alongside borrowing demand, particularly in stablecoin-denominated markets.

Lending benefited directly from other themes: stablecoin growth increased borrowing capacity, RWAs improved collateral quality, and DATs supplied patient capital. Together, they rebuilt DeFi’s financial core after years of contraction.

In many ways, lending was the proof that DeFi still worked, even without speculative excess.

Prediction Markets Became a Consumer Primitive

Prediction markets crossed an inflection point in 2025.

What began as election-driven curiosity matured into a broader consumer product. Platforms expanded beyond politics into sports, culture, macro, and finance. Engagement stabilized. Retention improved. Volumes normalized at levels far above prior years.

Prediction markets worked because they combined skin in the game with information discovery. They were legible, engaging, and inherently viral. In a fragmented media environment, markets became a way to express belief and be paid for accuracy. According to Polymarket data, Sports, Crypto and Politics are the three main areas of interest followed by Culture and Trump.

They didn’t replace trading. They complemented it.

Closing Thoughts

2025 will not be remembered for euphoric price discovery. It will be remembered as the year crypto’s infrastructure proved it could carry real economic weight.

Across the stack, activity shifted toward durability. Stablecoins became working capital. Trading, leverage, and lending increasingly lived onchain. Real-world yield entered crypto balance sheets, and corporates embedded digital assets into treasury strategy. Even consumer behaviour, from prediction markets to memes, pointed to new distribution rather than speculative excess.

What defined 2025 was not acceleration, but persistence. These systems held their ground through volatility and uneven liquidity. Market share didn’t mean-revert. Usage didn’t disappear when prices stalled. The rails kept deepening.

Crypto didn’t need a hype cycle to grow in 2025. It needed relevance.

As the industry moves into 2026, the question is no longer whether the rails work, but what gets built on top of them. The foundations are no longer theoretical. They’re in production.

That is what actually mattered in 2025.

Share

Subscribe now

We’ll break down each prediction, recap how H2 unfolded, and tally up how well our crystal ball fared. Here’s the scoring rubric we set: 1 point for a correct prediction, 0.5 for a partial/ongoing outcome, and 0 for a miss. Let’s dive in.

1. Bitcoin to $160,000

Prediction: “BTC will reach $160,000 in this cycle (2025).” We foresaw Bitcoin smashing through its previous highs and approaching six figures and beyond, driven by institutional inflows and the post-halving cycle dynamics.

What happened: Bitcoin did hit a new all-time high in 2025, but not quite $160K. In late Q3, BTC briefly traded around $123,080, riding a wave of ETF euphoria and macro optimism. However, H2 brought turbulence. By December, a combination of Fed policy flip-flops, profit-taking, and a Q4 leverage purge knocked Bitcoin back to the mid-$80Ks. Essentially, we got a bull run and a mini-bear all in one year. The midyear optimism (“institutions are here to stay”) proved true – spot ETF flows anchored a strong base of demand even during pullbacks, but the blow-off top didn’t materialize by New Year’s.

Cryptos own Q4 leverage purge was what got market off track, if not, would have probably continued higher into year end following equities.

On the bright side, Bitcoin’s fundamentals look intact. Institutions kept buying on dips, and BTC’s dominance hit ~65% at one point as investors sought safety. Standard Chartered’s analysts still project $175K–$250K by early 2026 if the cycle extends. So $160K isn’t off the table. it’s just taking a little longer to get there.

Score: 0.5 (Partial), We nailed the direction (new highs, institutional FOMO) and got ~75% of the target, but $160K itself will have to wait. Close, but not a full win.

2. $400B Stablecoin Market

Prediction: “Stablecoin market cap will explode to $400B+.” We expected massive growth in stablecoins as regulatory clarity improves and adoption spreads globally essentially, a “flight to trust” in tokenised dollars.

What happened: This one came half-true in a big way. 2025 was arguably the year of stablecoin legitimisation. In July, the U.S. passed the GENIUS Act (Guiding and Establishing National Innovation in U.S. Stablecoins),the first comprehensive federal stablecoin law This required full reserve backing and gave a green light to banks and fintechs to issue and use stablecoins under clear rules. The impact was immediate: institutions piled in. By December, stablecoin circulation hit ~$309B, a new all-time high (though short of our $400B goal).

Major payments players integrated stablecoins into their operations. Visa alone processed $3.5B in stablecoin payments over the year, and PayPal launched its own USD stablecoin. Even JPMorgan issued a deposit token on blockchain (using Ethereum’s Base network) for 24/7 settlements, a huge vote of confidence in crypto-dollar tech. Stablecoin issuers like Tether and Circle became mega holders of U.S. Treasuries (over $135B in T-bills combined), underscoring how these tokens are now a significant part of the traditional money markets.

Tether market share started at 67.8% at the beginning of the year did come down to 59% in the year, but never reached the 50% target.

The good news: the trajectory is up and to the right, with JPMorgan forecasting $600B+ by 2028. The stablecoin momentum and infrastructure (trust, compliance) we bet on are undeniably here.

Score: 0.5 (Partial). Tremendous progress, regulatory win and >50% market cap growth – but the absolute $400B mark wasn’t reached this year. We’ll take half credit and tip our hats to 2026.

3. Ethereum’s $7K Cycle

Prediction: “Ether will reach $7,000 in this bull cycle.” Our thesis: Ethereum would follow Bitcoin to new highs (~2x its previous ATH), fueled by the Shanghai upgrade (staking unlock), growing network use, and possibly an ETF catalyst.

What happened: Ethereum underperformed expectations for most of 2025. In the first half, ETH lagged Bitcoin’s rally, a pattern we’ve seen in early-cycle phases. By mid-year, ETH hadn’t even broken $5K while Bitcoin was hitting $100K+. That dynamic persisted.

On a positive note, Ethereum’s fundamentals improved under the hood in 2025: staking participation climbed, layer-2 adoption grew, and real-world assets started using Ethereum rails. These lay groundwork for future value. But $7K ETH remains elusive, likely a 2026 story if the cycle continues.

Score: 0. Ethereum did set a fresh all-time high this year (surpassing its old ~$4.8K peak), but it didn’t come close to $7K. The cycle isn’t over, yet from a 2025 vantage this forecast fell short.

4. ETF Explosion

Prediction: “2025 will see an explosion of crypto ETFs, not just a Bitcoin spot ETF, but a multitude of exchange-traded products fueling market access.” We expected the SEC (and global regulators) to finally open the doors to mainstream crypto investment vehicles, unleashing a wave of funds and ETFs.

What happened: Bullseye. If anything, we underestimated how quickly and broadly crypto ETFs would proliferate. The impact was enormous. U.S.-listed Bitcoin ETFs now hold a $117B in AUM by year-end, down from $162B in Oct peak. A bit lower than our prediction of $200B.

Then came the cascade: the SEC, under pressure, approved generic listing standards in September to streamline more commodity-based crypto ETFs. This set the stage for a wave of new products in Q4, we saw Ethereum staking ETFs green-lit, “staking yield” ETFs that hold and stake assets, and even basket and altcoin-specific ETFs. By December, you could buy an ETF for exposure to everything from Solana (As we predicted) to a DeFi index, all on regulated exchanges. Europe and Canada, already ahead, expanded their offerings too.

These ETFs have not only brought tens of billions in new capital, but also acted as a release valve for pent-up institutional demand. During 2H of 2025, the daily volume most days were well above the predicted $2.5B for BTC ETF alone It’s clear this ETF revolution was a game-changer, giving TradFi channels a way in.

Score: 1 (Achieved). Our prediction of an ETF boom came true in spades, fuelling much of 2025’s crypto rally and fundamentally changing market structure

5. ETH/BTC 0.05 Break

Prediction: “The ETH/BTC ratio will break the 0.05 level.” Admittedly, our wording was a bit unclear – the idea was that Ether would gain strongly vs Bitcoin at some point, implying a ratio move

What happened: No dice – ETH/BTC went the wrong way for our call. Rather than ETH gaining ground, Bitcoin extended its dominance. Through 2025, especially in H1, capital flowed into BTC at ETH’s expense. By mid-year the ratio was hovering around ~0.025 and drifting lower. In H2, this trend reversed until end of Aug due to Digital Asset Treasury inflows. By December the ETH/BTC ratio dipped to ~0.0338 – well below the 0.05 mark.

The narrative was clear: “investors are prioritizing Bitcoin’s liquidity and regulatory clarity over altcoins’ higher risk/reward” ETH, being the largest “alt,” was no exception. Even Ethereum’s own positive news (ETF approval, tech upgrades) didn’t translate into sustained outperformance. There was no meaningful rotation into ETH relative to BTC this year except around the time of Digital Asset Treasury Companies.

Score: 0 (Missed). ETH/BTC did not break upward as hoped, it actually broke down. Our call was off the mark, so this one gets a zero.

6. DEX/CEX Volume Peaks at 37%

Prediction: “We forecasted the DEX-to-CEX trading volume ratio would reach 20% at its mid-year peak, supported by institutional DeFi growth, reduced execution costs, and maturing infrastructure”

What happened: Hit – and even surpassed. In April, meme-coin mania and the rise of on-chain perps combined to send DEX volumes skyrocketing. By mid-2025, DEXs made up over 27% of total spot, exceeding our 20% target. We called that out in July as a win. Through H2, the DEX trend stayed strong before coming off and stablising at 20% for remaining part of 2025.

The peak DEX share in 2025 was around 35%, a new all-time high, and a clear validation of our prediction that DEXs would take a much bigger slice of the pie this cycle.

Score: 1 (Achieved). We predicted DEXs would hit ~20% market share, and they did – even pushing slightly beyond. This one goes in the win column.

7. Altseason – Broad Rally

Prediction: We forecasted a retracement in BTC dominance to 40–42%, with the OTHERS/BTC ratio rising toward 0.30, signalling a broad altcoin rotation driven by sector fundamentals and capital redeployment..

What happened: Despite a bullish market early in the year, we never saw the kind of broad-based altcoin melt-up that defines a true “alt season.” Instead, 2025’s gains were very selective. Bitcoin soaked up most of the spotlight, and when it faltered, money rotated only into specific themes: prediction markets, stablecoins and perpetual DEX was the main themes, with other local short-lived narratives. But these pumps were isolated and often short-lived.

By metrics: the Altcoin Season Index spent most of 2025 tilted towards “Bitcoin season” territory, with a short visit in Altcoin-season.

Currently sitting at 35/100 (100 = full altseason) Bitcoin’s dominance remained high (~55–65% range)

It appears the presence of institutional capital and stricter regs made this cycle more discerning. Liquidity flowed to quality (or to hot narratives), but the days of any token with a pulse mooning might be behind us – at least this cycle. Only targeted “micro-seasons” for certain sectors occurred, while the broader alt market lacked momentum

Score: 0 (Missed). We didn’t get the anticipated altseason. The crypto market in 2025 was Bitcoin-led and story-driven, not the rising tide for all alts we had forecast. This prediction sails wide of the mark.

8. DeFi Total Value Locked to $400B

Prediction: “DeFi TVL will reach $400 billion.” We believed the combination of a bull market and real-world asset (RWA) integration would push capital in DeFi to new heights, far surpassing the ~$180B peak from 2021.

What happened: DeFi made a comeback in 2025, reaching close to our vision. From a low base of around ~$243B at the start of the year, Total Value Locked climbed steadily, hitting about $373B by Sep 2025.

That’s impressive 53% growth in 9 months, DeFi clearly reentered the conversation. Key drivers were indeed Real-World Assets and Lending. By Q3, 34% of DeFi TVL was anchored by stablecoin-centric protocols and RWA yields showing that DeFi isn’t just about degen farming anymore, but real yield and real use cases.

However, $400B was a close call for 2025. The main things kept TVL below our target was the late-year market correction and lending contagion – falling crypto prices directly reduce USD TVL and withdrawal of funds from Lending markets. Many speculative farms saw capital exit in Q4;

Score: 0.5 (Partial). We almost got to our target, DeFi did grow substantially (roughly 50%) and regained momentum

9. Lending Efficiency Shift

Prediction: “Collateralized lending markets reach $60B in outstanding loans from $110B TVL, reflecting DeFi overcollateralization ratios of 125-200%. Market leadership consolidates around Aave, Morpho, Euler & Maple”

What happened: This was one of the quiet successes of 2025. While it didn’t dominate headlines, lending infrastructure scaled meaningfully and matured in exactly the direction we expected.

By late summer, total outstanding crypto loans peaked at ~$50B, nearly doubling from early-year levels. At the same time, total deposits reached ~$120B, reflecting a clear shift toward capital efficiency and balance-sheet depth rather than thin, reflexive leverage.

The loan-to-deposit ratio stabilized well below prior cycle extremes, signaling a healthier system overall.

We also saw some strong market share growth, in particular from Maple & Euler taking 3-4% market share each.

In short: lending didn’t just grow, it grew up. The system proved it can scale to $50B+ in loans and $120B in deposits while remaining functional, rate-efficient, and resilient under stress.

Score: 1 (Achieved).

10. SVM & MOVE Ecosystem Growth

Prediction: “SVM’s market share is projected to climb from 30% to 45%, fueled by superior scalability, institutional adoption, and ecosystem growth. Meanwhile, MOVE-compatible blockchains, led by Aptos and Sui, are set to capture 10%, leveraging innovative programming and expanding DeFi use cases. This shift reflects the growing diversity and competitiveness within the DEX landscape.

Monthly trading volumes are expected to peak at $500B, highlighting the sector's rapid growth and increasing adoption.

2025 drew a sharp line between execution-led ecosystems and theoretical ones.

Solana (SVM) was the clear DEX dominance leader in the first half of the year. Throughout Q1 and Q2, Solana-based DEXs consistently captured ~40–45% of weekly DEX volume, benefiting from memecoin-driven speculation, fast execution, and low fees. For a meaningful stretch, Solana wasn’t just competitive with Ethereum — it was the primary on-chain trading venue.

That dominance proved difficult to sustain. In Q3 and Q4, Solana’s share compressed materially as speculative activity cooled and liquidity rotated back toward Ethereum L2s and Base. While Solana remained a core execution layer, it transitioned from outright leader to one of several major venues, reflecting normalization rather than collapse.

Move VM chains (Sui, Aptos) never reached escape velocity. Outside of brief, isolated spikes of 10% on early Q1, Move-based ecosystems failed to capture durable DEX flow. The CETUS exploit marked a clear inflection point: post-hack, Sui’s DEX activity declined sharply and never meaningfully recovered. Across the year, Move VM chains averaged only ~3–5% of weekly DEX dominance, with liquidity remaining opportunistic rather than sticky.

Monthly volume managed to hit >$500B in both Jan and Oct, as predicted.

The contrast is clear in the data: Solana captured the cycle’s high-beta phase; Move never left the sidelines. In 2025, the market consistently favored depth, liquidity, and execution over architectural elegance.

Score: 0.5 ( Partly Achieved), SVM dominated in Q1 and Monthly Trading volume >$500B.

Final Scorecard & Wrap-Up

With all ten predictions now resolved, the final score comes in at 5.5 / 10, up slightly from the midyear 5/10 as several structural calls played out in H2.

Where we were right:
2025 rewarded structure over speculation. The ETF wave reshaped market access, DEXs meaningfully closed the gap with CEXs, lending scaled cleanly to new highs, and stablecoins crossed into core financial infrastructure. These were quiet but foundational wins that will define the next phase of crypto.

Where we missed:
We overestimated cycle breadth and speed. ETH never rotated meaningfully against BTC, a broad altseason failed to materialize, and price upside lagged structural progress. Capital stayed concentrated, selective, and institutionally anchored.

The takeaway:
2025 was not a classic bull market, it was a maturity year. Liquidity favoured depth, balance sheets, and execution quality. While the scorecard isn’t perfect, we were directionally right on where crypto is becoming real, and not excellent on price prediction.

The next cycle won’t be about spotting these trends.
It’ll be about scaling them.

Share

Subscribe now

At present, BTC remains locked in a clearly defined short-term range between roughly $88,000 and $92,000. On a broader timeframe, the larger consolidation range of $80,000 to $100,000 remains intact. Volatility has compressed meaningfully over the past several sessions, suggesting that the market is coiling rather than trending. These periods of compression tend to precede expansion, but direction will depend on whether key levels are reclaimed or lost.

On the upside, Bitcoin needs to recover $90,000 decisively and then break above the $92,000 area, which marks both prior acceptance and the descending trendline from recent highs. A successful break would likely open the door to a move toward $95,000, where prior supply and resistance remain heavy. Conversely, the downside remains well-defined. Immediate support sits at $88,000, followed by $86,000. A failure to hold these levels would likely invite a deeper test of the $80,000 region, which continues to act as the most important medium-term support zone. As long as that area holds, the broader market structure remains constructive.

Market Structure

Despite recent turbulence, Bitcoin’s behaviour over the past week has been notably orderly. Following the forced liquidation event earlier in December, price has stabilised, higher-timeframe structure has been preserved, and sellers have failed to press the market materially lower. This is typically what one would expect in a market that is correcting excess leverage rather than transitioning into a sustained downtrend.

Beneath the surface, market structure is quietly evolving. The total cryptocurrency market capitalisation excluding stablecoin currently stands at approximately $2.71 trillion. While this represents a modest pullback from recent highs, it remains elevated relative to mid-year levels. More importantly, Bitcoin dominance has declined to 59.17%, down from around 61% in early November. This shift is subtle but meaningful, as it signals rotation rather than outright risk-off behaviour.

Only around 35% of the top 200 cryptocurrencies have outperformed Bitcoin over the past 90 days, underscoring that BTC has remained the primary leader for much of the recent advance.

However, leadership is beginning to broaden. Earlier in the quarter, relative outperformance was heavily concentrated in large-cap altcoins, particularly within the top 10 and top 20. Over the past several weeks, that leadership has faded, and performance has begun rotating into mid-cap and smaller-cap assets.

A general sign of overall risk off across the board from large caps to small caps, and the relative outperformance with a mean-reversion behaviour as overall risk appetite reduces.

Stablecoin flows provide further context. Over the past week, net stablecoin flows have softened, with aggregate inflows turning mildly negative.

This reflects short-term profit-taking and caution rather than structural liquidity withdrawal. Importantly, overall stablecoin supply remains historically elevated, and exchange stablecoin balances are still high. Liquidity is not leaving the system; it is pausing. Currently the 14DMA is sitting at 155M, the average over the last year has been ~$295 M average

Periods where stablecoin flows flatten or turn slightly negative often coincide with consolidation phases in price, as capital waits for confirmation before redeploying. Should sentiment improve and key technical levels resolve to the upside, this sidelined liquidity has the potential to re-enter risk assets quickly.

Macro & Liquidity

Macro developments over the past week centred on liquidity, with the Federal Reserve cutting rates by 25bp and quietly initiating a policy shift that markets have labeled “QE not QE.” Beginning this week, the Fed started purchasing approximately $40 billion per month in short-dated Treasury bills. At the same time, mortgage-backed securities continue to roll off the balance sheet at a pace of roughly $20 billion per month. The net result is a balance sheet expansion of around $20 billion per month.

While modest in size, the directional shift is important. During the height of quantitative easing in 2020 and 2021, the Fed was expanding its balance sheet by roughly $120 billion per month. Today’s pace is approximately six times smaller. This is not a return to aggressive stimulus, but it does represent a move away from outright tightening.

Markets tend to respond more to changes in liquidity conditions than to absolute levels. The transition from balance sheet contraction toward modest expansion has already had a noticeable effect on risk sentiment. By looking at Fed Net liquidity as a 30 day forward indicator to risk this is indicating OTHERS (Total crypto market ex top 10) should bottom out for now.

It is also important to recognise that this shift is not occurring globally. Other major central banks remain in tightening mode. The European Central Bank and the Bank of England are both continuing to reduce their balance sheets, allowing assets to roll off and, in some cases, actively selling bonds.

As a result, global liquidity conditions remain mixed. This divergence helps explain why risk assets are grinding higher rather than breaking out aggressively.

Looking ahead into Q1 2026, liquidity dynamics become more nuanced. The Fed is expected to continue adding approximately $20 billion per month on a net basis. While supportive, this level of liquidity is unlikely to be sufficient on its own to override macro risks, particularly given elevated equity valuations and slowing global growth. However, fiscal dynamics may become increasingly relevant.

As the U.S. moves toward mid-term elections, the Treasury has significant scope to draw down the Treasury General Account. Historically, periods of TGA drawdown have injected liquidity directly into the economy and supported risk assets. If this occurs in Q1 or Q2, it could provide an additional liquidity tailwind, complementing the Fed’s modest balance sheet expansion. While this remains a potential rather than a certainty, it is an important variable to monitor as 2026 approaches.

Equities, Correlation, and Seasonality

Seasonality is beginning to turn supportive. Historically, early December tends to be a weak period for equities, with markets often finding a local low around the second or third week of the month. From that point onward, performance typically improves into year-end, driven by positioning, sentiment, and holiday-related flows.

This pattern is visible across major indices, including the Dow Jones Industrial Average, S&P 500, Nasdaq, Russell 1000, and Russell 2000. Small-cap equities, in particular, tend to outperform from mid-December into early January, a phenomenon often associated with the so-called Santa Rally.

Bitcoin’s relationship with equities has strengthened alongside these dynamics. The correlation between BTC and the Nasdaq has climbed back to approximately 0.52 reflecting the continued influence of liquidity and growth expectations on crypto markets.

As long as equities follow their typical seasonal path and avoid a sharp breakdown, Bitcoin is likely to remain supported, provided key technical levels continue to hold.

Our view

In the short term, the structural setup remains constructive. Bitcoin is consolidating rather than breaking down, volatility has compressed, and internal market rotation is healthy. Seasonality is turning supportive, and liquidity conditions are improving at the margin. As long as $88,000 holds, the path of least resistance remains sideways to higher, with a break above $92,000 acting as the trigger for a move toward $95,000.

The medium-term outlook into Q1 2026 is more fragile. Equity valuations are elevated, liquidity support remains limited relative to prior cycles, and macro risks have not disappeared. This environment favours selectivity over leverage and patience over aggression. We remain cautiously optimistic in the near future, with potential for further drawdown in Q1 unless macro and liquidity severely changes.

Share

Subscribe now

Technical indicators support the rebound, the daily RSI has snapped up from oversold, currently at 41 and market sentiment has noticeably improved. The Crypto Fear And Greed jumped into 20s, reflecting a shift from panic to cautious. In short, Bitcoin has reclaimed key support and momentum, closing above $91,200 opens up for short term targets of 94k/95k/100k.

Bitcoin ETF flows and liquidity dynamics have shifted. After a reported $1.2B of outflows between 17-23 Nov, the late-November rally coincided with renewed net inflows. This combination of a BTC price rebound and ETF demand hints stabilisation and slow momentum.

Meanwhile, onchain stablecoin flows remain subdued. The data shows that the 14-day moving average net inflow is currently about $80M (coming out of negative territory), far below the ~$286 M average over the past year.

In other words, current stablecoin dry powder is low, below the 1yr average, suggesting limited new buying pressure. Capital has not yet flooded back into crypto, implying market participants remain cautious. Overall, crypto markets staged a technical recovery this week, but without a return to exuberance, sentiment is far from bullish.

Macro

Global markets this week were driven by data and policy expectations. Fed policy expectations continues to rise, currently pricing in 87.4% probability for a 25bp cut, up from 71% a week ago. Fed officials reinforced this shift, New York Fed’s Williams and San Fransisco Fed’s Daly said recent data have weakened enough to warrant another 25bp cut.

At the same time, regulators finalised changes to the Enchanced SLR (eSLR) framework, more important than it sounds. The eSLR determines how much capital banks must hold against their safest assets, including U.S. Treasuries and cash-like repo exposures. Under the previous rules, Treasuries still consumed balance-sheet capacity, making it costly for banks to expand their holdings or to intermidate in repo markets.

The newly finalised adjustments reduce the capital penalty for holding Treasuries and engaging in repo. In practice, this means:

• Banks can hold more Treasuries with the same amount of capital, lowering the marginal cost of absorbing new government issuance.

• Banks can expand their repo activity, which greases the plumbing of the financial system and ensures dealers can finance inventory more easily.

• Treasury market liquidity improves, because there are now more balance-sheet “slots” available across major banks.

This is effectively a stealth liquidity injection, not through QE but through regulation.

Adding to the narrative, political chatter revived over Fed leadership

Reports suggest Trump’s team is eyeing former White House economist Kevin Hassett as a Fed Chair candidate. Hassett is known for favouring pro-growth policy, lower real rates, and a more accommodative stance toward employment-driven expansion. His appointment would signal a clear pivot toward a dovish, Treasury-aligned Fed.

In sum, Fed cut expectations have been repriced sharply, liquidity conditions are set to ease, and markets have rallied on the “Fed whisper” of future easing.

Current Outlook

Short-Term

The crypto bounce looks poised to continue unless fresh weakness emerges. Bitcoin has now reclaimed the low-$90s and is pushing into the $92K–95K resistance band. This is the first major supply zone to clear. A decisive break above would open the path toward the $95K–100K liquidity pocket, with $100K serving as the next clear psychological and structural target.

Momentum supports continuation: the RSI has fully recovered off oversold, still with ample room before overbought, and sentiment has improved materially — the Crypto Fear & Greed Index has risen back into the 20s after bottoming at 9 prev week. As long as BTC holds above the reclaimed $91K–92K support, the path of least resistance remains upward.

The complication now is December seasonality. When isolating the last six years of Bitcoin price action, a clearer pattern emerges: BTC often changes behaviour around mid-December, but the direction of that shift depends entirely on the prevailing liquidity regime.

In strong years, mid-month has marked the point where upside momentum accelerates; in weaker years, it has been where early-month weakness stabilises; and in mixed or fading environments, like 2024, it has been the point where the market rolls over. Crucially, this is not a reliable “Santa rally” dynamic as seen in equities, but rather a moment of inflection, where positioning, liquidity and risk appetite tend to recalibrate into year-end. In other words, December doesn’t impose a bullish or bearish bias on Bitcoin, it simply amplifies the trend the market is already in, with mid-month acting as the pivot.

Medium-Term

The medium-term outlook still comes down to one thing: liquidity. U.S. net liquidity, defined as the Fed’s balance sheet minus the Treasury General Account and the Reverse Repo facility, sits near $5.65 trillion, well below its 2021–2022 peak, and continues to grind lower.

The mechanical effect of this is simple: when net liquidity falls, financial conditions tighten, credit creation slows, and the marginal buyer of risk assets weakens. Crypto, which sits at the far end of the risk curve, is typically the first to feel that tightening. Even though QE is to be expected sooner rather than later the when not if is the big questions. In the short term we can see a move higher with TGE moving lower.

Equities are already showing signs of fatigue. Both the S&P 500 and Nasdaq have spent the past few weeks pinned against their 50-day moving averages, repeatedly testing but failing to build sustained momentum above them. That kind of behaviour usually signals stretched positioning and a lack of incremental buyers, a symptom of thinning liquidity and late-cycle complacency.

Valuations, particularly in tech, are now heavily reliant on the continuation of the AI capex boom, which powered markets through 2023–2025. But forward guidance from hyperscalers and cloud providers is starting to cool, and investors are increasingly questioning how much further multibillion-dollar GPU and data-centre spending can scale. If AI capex slows in 2026, the market loses one of its key demand engines, placing pressure on already elevated multiples. In that scenario, equities would be vulnerable to a broader repricing, and crypto, with its high beta to risk sentiment, would not be immune.

For Bitcoin, this linkage to equities is becoming even more important. The latest data show BTC’s 60-day beta to the Nasdaq has risen to 1.14, with the 1-month correlation now at 63%

Meaning Bitcoin is moving not just in the same direction as equities, but with amplified sensitivity. That’s still low enough for crypto to produce its own short-lived narrative cycles, but high enough that any meaningful equity drawdown reliably spills into BTC. In a liquidity-tight environment, that correlation acts like gravity: a 10–20% pullback in the Nasdaq would likely drag Bitcoin into the $65K–$75K structural support region.

The only periods where BTC has sustainably outperformed equities and where correlations briefly turned negative were during strong, self-reinforcing narrative build-ups (early 2021 institutional flows, the 2023 ETF front-run). But those episodes fade quickly unless backed by improving liquidity. Outside of them, crypto trades as a leveraged expression of global risk appetite, and without a new liquidity impulse, that dynamic is unlikely to change.

Long-Term Thesis

Despite near-term volatility, the long-term backdrop for crypto continues to strengthen. The key shift is that monetary power is no longer concentrated solely at the Federal Reserve. With the Fed now effectively done shrinking its balance sheet and the recent eSLR reforms giving banks more capacity to hold Treasuries, the centre of gravity is tilting toward the Treasury and the fiscal side of policy. In practice, this means U.S. liquidity will increasingly be determined by the government’s funding needs rather than by Fed balance-sheet decisions.

Those funding needs are enormous. TBAC projections show annual deficits rising above $2 trillion by 2027, implying a surge in Treasury issuance over the coming years. That issuance, by definition, injects liquidity into the financial system as the government spends more than it collects. And critically, parts of the crypto ecosystem are now structurally tied to this Treasury supply. The 2025 GENIUS Stablecoin Act, which requires USD stablecoins to be backed 100% by cash or short-term Treasuries, effectively turns stablecoin adoption into a continuous source of Treasury demand. As stablecoins grow, so does the government’s ability to finance deficits, creating a feedback loop where Treasury liquidity and crypto market depth increase together.

The policy environment is shifting alongside this. Congress is advancing a unified Digital Asset Market Structure framework (Clarity Act), providing long-sought regulatory certainty for institutional capital. Proposals like Senator Lummis’s Bitcoin Act, which would allow the Treasury to accumulate up to one million BTC over several years, reinforce the idea that digital assets are being pulled into the core of U.S. financial strategy. At the same time, retirement providers are opening the door for 401(k) allocations into digital assets, introducing long-horizon, recurring inflows from one of the largest pools of capital in the world.

Layered on top of this is the potential for additional fiscal support, including proposals such as the mid-2026 “tariff dividend” cash transfers to households. If enacted, this would add another wave of liquidity at a time when the structural drivers, Treasury issuance, stablecoin expansion, regulatory clarity, and retirement-system inflows are already turning decisively supportive.

Taken together, these developments point toward a future in which crypto becomes both more liquid and more institutionally embedded, benefiting directly from fiscal expansion, stablecoin adoption, and formal policy integration. The path will not be linear, political cycles, regulatory negotiations, and macro volatility will create setbacks, the long-term structure is unmistakably bullish.

Conclusion

In the near term, crypto trades on liquidity and positioning; in the medium term, it trades on equities and broader risk appetite; but in the long term, it will trade on structural demand, regulatory clarity, and fiscal integration. With those forces increasingly aligning, short-term volatility looks more like noise within a much larger, strengthening trend.

Position accordingly

Share

Subscribe now

Similarly, the total cryptocurrency market cap eroded from roughly $4.3 trillion at its early October high to about $2.9 trillion nowt, effectively wiping out one-third of crypto’s value in six weeks. Most of that drop occurred in November’s “crypto crash”: Bitcoin plunged from ~$107K on Nov 11 to ~$80K at this week’s low even breaching its year-opening price (erasing 2025 gains). This $20K slide in ten days came amid a cascade of liquidations and worsening sentiment, as bears seized control and bulls failed to defend key support levels

By late week, technical conditions reached extremely oversold levels. Bitcoin’s daily Relative Strength Index (RSI) collapsed to ~25, deep into “oversold” territory that historically precedes relief bounces. Indeed, over the weekend BTC finally saw a reflex rally: a modest bounce off ~$84K as seller exhaustion set in. Momentum gauges like RSI flashing “extreme oversold” suggest a short-term bottom may be forming. As we wrote about in The Insider 2 weeks ago.

To gauge the odds of a rebound, we revisited Bitcoin’s historical performance following RSI < 30 events. The study looked at all such signals since 2015 and measured subsequent 30-day returns:

• Hit ratio: 76 % of signals produced a positive 30-day return.

• Median return: +8.4 %

• Average return: +11.2 %

• Tail outcomes: roughly one in five instances delivered gains above +25 %, while fewer than one in ten posted losses greater than –10 %.

However, price structure remains fragile. BTC has been consistently setting lower highs since August, and it broke below its 50-day moving average last month, triggering a loss of uptrend support.

This week, the coin briefly dipped into the high-$70Ks on some exchanges, testing the upper end of a major support zone around $75K–$87K. Holding that zone is critical. In particular, $87,000 now looms as an important technical line in the sand, roughly aligning with Bitcoin’s weekly 100MA and prior range support. A weekly close above ~$87K would help reaffirm that level as support and keep the uptrend market structure intact going into December. By contrast, failure to reclaim $87K (and staying below mid-80s) could invite further downside.

Macro

Global markets saw shifting macro expectations over the past month, driven largely by evolving U.S. Federal Reserve outlook. In mid-October, market-implied odds of a December Fed rate cut were near-certain (~90% on Oct 28), but by late last week those odds collapsed to roughly 30–35% amid a prolonged government data blackout. The Labor Department’s failure to release October jobs figures (due to the shutdown) left the Fed “flying blind” on key data, causing investors to dramatically scale back rate-cut bets.

With limited hard data, markets whipsawed on Fed speaker commentary: for example, New York Fed President John Williams hinted a cut was still possible, whereas Dallas Fed’s Lorie Logan argued for holding steady. This mixed messaging, combined with uncertainty, fuelled volatility as traders parsed every remark. By late November, however, sentiment had partially rebounded, fresh signals (including a tick up in unemployment) saw rate-cut odds recover to around 65–70%, highlighting the market’s sensitivity to incremental news.

Broader market volatility remains elevated. With regular economic releases missing, markets reacted disproportionately to any fragment of information, leaving U.S. equities repeatedly whipsawing on shifting Fed expectations. Despite the rebound in rate-cut odds, equities continue to trade heavy. Nasdaq logged its third straight weekly loss, now roughly 7% below its October peak. Even a late-week bounce on renewed cut hopes failed to reverse the damage, with both the S&P 500 and Nasdaq ending the week down about 2%.

This sustained weakness reflects a mix of rich valuations, thinning liquidity, and a broader risk-off tone, underscoring that rate cuts alone are not a cure-all when growth concerns and geopolitical noise remain elevated. Crucially, this equity softness is spilling directly into crypto. Over the past month, BTC correlation with with the Nasdaq has increased, currently sitting at 90% over the last 90 day, behaving as a high-beta macro asset rather than a standalone risk class. This tightening correlation has amplified BTC’s volatility: each equity drawdown has translated into an outsized reaction in crypto.

The result is a more fragile macro backdrop for digital assets. Early-month optimism for an imminent Fed cut gave way to caution as the data blackout persisted, only stabilising recently as December cut probability recovered toward ~65%. Until the Fed’s path becomes clearer, and until equities find more stable footing, markets are likely to remain choppy, reactive, and headline-driven, with Fed communication and delayed data releases steering sentiment across both equities and crypto.

ETF Flows and Market Plumbing

A defining feature of this month’s correction has been the sharp reversal in ETF flows and the emergence of a consistent intraday sell pattern. U.S. spot Bitcoin ETFs saw record net outflows of over $3.7B in November, including a $900M day on Nov 20 and a single-day $523M outflow from BlackRock’s IBIT. IBIT alone has shed more than $2B this month.

With BTC ~30% off the highs and now below the $90–92K average ETF cost basis, many holders flipped from profit to loss, triggering redemptions, stop-outs, and systematic de-risking.

Yet ETF outflows don’t explain everything. A highly consistent 14:00 UTC sell window has emerged, visible in the chart below, where average 30-minute returns show the largest negative print of any hour:

This timing aligns with U.S. morning flows, ETF market-maker hedging, AP redemption adjustments, and macro desks positioning ahead of the equity open. But after the violent 10 October crash, traders are increasingly speculating that something deeper may be contributing: potential post-crash capitulation, exchanges selling to cover ADL losses, market-makers unwinding hidden risk, or entities caught offside slowly reducing exposure. Nothing is confirmed, but the consistency of the flow is difficult to dismiss.

Crypto history reminds us that losses often surface with a lag. Terra collapsed in May 2022; FTX failed in November, a full six months later, once the real balance sheet holes emerged. The current environment carries similar opacity: the damage from 10 October is understood, but where it sits is still unclear.

On-chain data supports the theme of distribution: one long-standing whale moved over $1.3B of BTC onto exchanges since October, adding supply into an already fragile market. Taken together, ETF redemptions, 14:00 UTC structural selling, on-chain distribution, and lingering post-crash uncertainty, the flow picture has shifted decisively from steady inflows earlier this year to clear institutional distribution today.

Forward Outlook

Looking ahead, the market still leans toward a short-term relief bounce, but the medium-term bias remains to the downside until macro conditions and flow dynamics turn. Our framework from last week remains intact:

• 60/40 in favour of a tactical bounce

• 70/30 that macro continues to cap medium-term upside

On the bullish side, BTC is deeply oversold, recent selling has come through thin liquidity and forced liquidations, and we’re already seeing early signs of seller exhaustion. If momentum carries, price could retest the $95K–$100K zone, which aligns with the mid-point of the Q4 range. Seasonality can also help: early December often attracts fresh inflows if macro data doesn’t deteriorate further.

But optimism needs tempering. The broader downtrend remains intact unless BTC can reclaim key levels, and macro headwinds are still very much present. Rate-cut expectations continue to swing on limited data, and a hawkish surprise or another setback in the macro narrative could easily drive risk assets lower. Institutional sentiment also needs to stabilise. November’s heavy ETF outflows showed that large allocators meaningfully reduced exposure, and it’s unclear when they return. This creates an overhang: any bounce risks being used by trapped longs to de-risk rather than re-risk.

In short, the near-term setup favours a bounce, but the medium-term still leans cautious. Bullish trend will want to see:

• BTC reclaim $100K and print a higher high

• Macro stabilisation or at least fewer negative surprises

• ETF outflows slowing or reversing

Without these, further downside targets in the $70Ks range remain on the table. The next few weeks will be pivotal: a reclaim of six figures could reset sentiment into year-end, while failure to do so keeps markets in capital-preservation mode, waiting for clearer macro alignment in early 2026. We believe medium term is skewed towards macro headwinds before liquidity re-enters the system. Volatility is likely to stay elevated, with oversold rallies on one side and macro-driven air-pockets on the other, as the market searches for a bottom and a catalyst strong enough to resume the larger trend.

Share

Subscribe now

RSI momentum is languishing near 30 on the daily, most oversold levels since March this year, and previously only seen broken a couple of times since FTX breakdown in in 2022.

In plain English: the technicals look broken. BTC is trading below all its key trend metrics. Overall sentiment is accordingly in the gutter, the Fear & Greed Index tanked to 10 (Extreme Fear), meaning investors haven’t been this scared since the last crypto crash.

Yet, if you’ve been around Bitcoin long enough, you know it loves to fake its own death. This thing has a habit of staging big comebacks right when it looks the worst.

Those prior death crosses in 2023–2025 all produced false alarms, with BTC bottoming and ripping higher afterwards. Will history rhyme again? That’s the million-bitcoin question. Oversold signals are everywhere, and extreme fear often precedes a bounce. But bulls have to actually show up this time, mere hope isn’t enough.

Price action was downright painful. BTC failed to hold the ~$100K support and sliced through ~$98K like butter, triggering a cascade of liquidations. By mid-week it wicked down to ~$94k, almost touching the $93.5K mark that represents the year’s opening price. For context, a drop below ~$93.5K would wipe out all of 2025’s gains, so that level is basically the last stand for bulls.

On the upside, the immediate hurdle is now the zone it just lost: roughly $98,400. What was support is now stiff resistance. Reclaiming ~$98.4K is absolutely critical it’s the line in the sand that needs to be retaken fast. A solid bounce that clears $98K would flip the script and could even spark a short squeeze

But if BTC can’t even muster a relief rally here, the downside risk grows, the market could start eyeing deeper support levels. In short, next week is make-or-break: either Bitcoin bounces hard or the breakdown could accelerate. The chart looks “broken” for now, but Bitcoin has made fools of doomers before, keep an eye on that ~$98.4K pivot for any signs of life.

Macro Clouds and Liquidity Squeeze

The macro backdrop isn’t doing Bitcoin any favours. The rosy dreams of a Fed rate cut in December just got a cold dose of reality. As recently as a month ago, markets were sure the Fed would deliver a year-end rate trim, now that bet has evaporated.

Data show essentially no cut priced in for Dec 2025, with odds of a cut collapsing to around 44.4% (down from >95% just weeks prior) In Fed speeches this week, officials spent the week pouring cold water on easing. Austan Goolsbee (President of the Chicago Fed) saying inflation is “still too high” and Lorie Logan (President of the Dallas Fed “hesitant” to cut again soon.

Translation: “higher for longer” is still the mantra. This hawkish turn has started to bite, bond yields ticked up again and the dollar held firm. So don’t expect any dovish Fed rescue for risk assets as we head into year-end; the policy backdrop remains a headwind, not a help.

Meanwhile, the liquidity environment tight. One big culprit: Treasury General Account (TGA). The U.S. Treasury has been stockpiling cash like there’s no tomorrow, thanks to heavy post-shutdown borrowing. The TGA surged to nearly $1 trillion levels, effectively sucking liquidity out of the financial system.

Every dollar the Treasury parks in the TGA is a dollar pulled out of circulation, but with the government now reopened, we might see the opposite. Instead of ramping issuance immediately, the Treasury could start drawing down its TGA balance to fund resumed operations and delayed spending. That would mean dollars flowing into the system rather than out, a short-term injection of liquidity into the pipes.

For Bitcoin and other risk assets, that could offer a modest tailwind after weeks of macro headwinds. Of course, once issuance resumes in full, that flow could reverse fast. But for now, with the TGA still elevated and spending picking back up, there’s a case to be made for a near-term liquidity drip and BTC tends to notice.

In the broader crypto market, fear and pessimism reigned, but there were a few notable developments. Bitcoin Spot ETFs saw major outflows during the panic.

Investors redeemed nearly $867 million out of U.S. Bitcoin ETFs in a single day (Nov 14) the second-largest daily withdrawal on record. Ethereum ETFs weren’t spared either, bleeding another ~$260M. On the contrary, SOL ETF, still new, added $46.4M last week with a current AUM of total $382M

Bottom line

Bitcoin may be battered, but it’s not out of the fight. Yes, the chart looks awful, oversold signals everywhere, a fresh dead cross, and key supports blown out. But this is exactly the kind of backdrop that has birthed some of Bitcoin’s nastiest bear-trap reversals. Sentiment is pinned at Extreme Fear, macro is muddy, and everyone is leaning bearish…which opens up for an attractive risk-reward to reverse.

A rebound in the coming days is still the first checkpoint. Recapturing ~$98,000 and holding above it would go a long way toward proving this latest breakdown was more theatre than trend. Clear that level, and the short side gets crowded fast, a setup where a 5–10% squeeze becomes increasingly plausible. Fail to reclaim it, and the bias flips toward another test of the low $90Ks with rising odds of a capitulation wick. Call it 60/40 in favour of a short-term bounce, but 70/30 that macro still suppresses any medium-term follow-through.

Because even if we do get the bounce, even if we get the squeeze, it’s still macro that dictates the tone from here. The Fed isn’t riding to the rescue anytime soon. Powell has made it clear he’ll be reactive rather than proactive, and this institution has a long history of arriving late to its own fires. With the December cut effectively off the table and growth slowing into year-end, traders will start shifting their attention to the broader committee, especially as we inch closer to the transition toward a new Fed chair in 2026. A divided FOMC means more noise, more mixed messages, and more episodes of “wait and see” rather than decisive easing.

Watch for the tactical bounce. A reclaim of $98.4K would put real pressure on shorts and offer some temporary relief. But the medium-term still lives and dies by liquidity, policy direction, and the Fed’s ability (or inability) to get ahead of the curve. Until that changes, every rally is a trade, not a trend.

Share

Subscribe now

Bitcoin (BTC) briefly dipped below the $100,000 threshold mid-week before recovering to about $102,000, down ~5% for the week. Technically, BTC is testing support at 99,800-96,800 zone with resistance near $110K, its 200-day EMA.

Ethereum tracked the move, sliding roughly 8% finishing the week at mid 3k range after breaking $3,400 support. ETH hit a low near $3,050 before stabilising; a close back above $3,400 would be needed to restore bullish structure.

Altcoins fared worse with OTHERS -15% max drawdown last week, but finished flat. Fear and Greed index hit 20. By looking at YTD performance of the top 200 by market cap, only a few have positive YTD performance with median sitting at -67%.

The overarching tone was one of risk-off consolidation, driven by both internal DeFi shocks and lingering macro uncertainty.

DeFi Liquidity Crisis

The week’s defining event was a cascade of stablecoin failures that exposed structural fragility in DeFi. The chain reaction began when Stream Finance disclosed a $93 million loss caused by a rogue fund manager. The platform halted withdrawals on Nov 3, and its “delta-neutral” stablecoin xUSD collapsed by nearly 90%, trading as low as $0.10.

The contagion spread to Elixir’s deUSD, which was heavily collateralized by xUSD. deUSD plunged about 98%—briefly rebounding before settling near $0.03.

In total, more than $10 billion in supposed stablecoin value evaporated within days, marking the largest such loss since TerraUSD in 2022.

Other algorithmic tokens, including USDX, also depegged. By digging deeper, many of these assets were improperly collateralised yield schemes, marketed as stable instruments but lacking quality reserves. The collapse revealed that several DeFi protocols had hard-coded these coins’ value at $1 in their smart contracts, a fatal assumption once market prices broke down.

As collateral values cratered, DeFi lending markets experienced a classic bank-run dynamic. Borrowers rushed to withdraw or arbitrage remaining liquidity; utilisation rates on major pools spiked to 100%, freezing withdrawals. Compound Finance suspended several stablecoin markets, including USDC and USDT, to contain risk, while Aave reported similar stress. Risk-manager Gauntlet intervened to pause vulnerable pools after the deUSD collapse left some markets under-collateralized.

The shock rippled across Euler, Morpho, Gearbox, Silo, and other credit platforms that had accepted xUSD or deUSD as collateral. Yield aggregators such as Beefy Finance faced indirect losses through layered vault exposure.

DeFi’s Total Value Locked (TVL) plunged from about $323 billion in October to roughly $248 billion, a $75 billion contraction (≈ 23%) in one month, driven by asset markdowns and capital flight to safety.

This event underscored the risks of composability without transparency. Funds flowed through multiple layers, Stream minting xUSD, Elixir minting deUSD backed by xUSD, those tokens deployed into lending vaults, which magnified contagion once a single link failed.

Despite the disruption, the episode may prove constructive long-term. Protocols are now prioritising risk transparency and collateral quality, steps essential for institutional participation in DeFi credit markets.

Lending Markets and TVL

The DeFi lending sector has transitioned into a clear deleveraging phase in the wake of the stablecoin depeg episode. Across the major money markets, total active loans fell by roughly 23% between October 9 and November 9, 2025, as users reduced leverage and rotated toward platforms perceived as safer.

The reduction was widespread but not uniform. Aave, which continues to anchor the sector, saw its loan book shrink from $26.7 billion to $21.5 billion, a 19.7% decline that nonetheless left it commanding more than half of all active DeFi loans. This stability underlines Aave’s role as the ecosystem’s de facto liquidity hub, even during periods of systemic stress. Morpho and Maple stood out for their resilience. Morpho’s loan base slipped only slightly, from $4.19 billion to $3.98 billion, while Maple grew from $1.94 billion to $2.15 billion

The contraction was accompanied by a modest reshuffling of market share rather than a structural collapse. Aave’s share slipped from 59.8 percent to 58.6 percent, while Morpho and Maple each gained roughly one and a half percentage points, rising to 10.9 percent and 5.9 percent respectively. Smaller lenders such as Spark, Kamino, and Euler lost incremental share as liquidity consolidated into a handful of dominant venues. The shift highlights a clear flight to quality: users moved from high-yield, high-risk protocols to those emphasizing collateral integrity and governance.

Taken together, these trends depict a lending ecosystem that, while clearly contracting, remains structurally functional. The roughly twenty-three percent fall in total active loans represents a meaningful tightening of on-chain credit but not a breakdown. The capital outflows appear proportional across platforms, with minimal signs of contagion or liquidity freezes beyond the short-term disruptions in stablecoin-backed pools.

The fact that platforms like Maple were able to grow during a sector-wide drawdown underscores the maturation of DeFi credit: investors are distinguishing between speculative yield platforms and those offering genuine, institutionally underwritten lending services. As the market stabilises, this differentiation is likely to deepen, paving the way for a more sustainable base of capital that values transparency over leverage.

Macro

Beyond crypto-specific turmoil, the macro backdrop is turning more supportive. Several liquidity indicators point to easing financial conditions after nearly two years of monetary tightening.

I. Federal Reserve Policy Shift

The Federal Reserve ended its tightening cycle and, in late October, cut rates by 25 bps, setting the funds target at 3.75–4.00%. Slowing inflation and weaker growth data prompted the move. The Secured Overnight Financing Rate (SOFR) has since declined to ~3.87%, down from 4.4% earlier this year, indicating cheaper short-term funding. Historically, such easing supports risk assets, including digital markets, with a short lag.

II. Treasury and Liquidity Flows

Two major drains on liquidity, the Treasury General Account (TGA) and the Reverse Repo Facility (RRP), have reversed direction.

The TGA, which peaked near $1 trillion in late October following heavy bill issuance, fell to about $942 billion in early November, injecting roughly $41 billion back into markets.

Meanwhile, RRP balances have collapsed from $52 billion late October to about $5 billion, releasing substantial liquidity as money-market funds deploy cash into higher-yielding assets.

This combination effectively ends the net liquidity drain that characterised 2023–2024. Analysts argue that quantitative tightening may soon conclude, removing a persistent headwind for risk assets.

III. Fiscal Resolution

U.S. lawmakers signaled progress toward ending the 40-day government shutdown as of Nov 9. Its resolution should restore fiscal normalcy and reduce uncertainty around federal funding and Treasury issuance schedules.

Together, these shifts easier monetary policy, stable fiscal operations, and receding liquidity drains, suggest that macro conditions may soon turn net-positive for crypto markets.

Technical and Sentiment Setup

Momentum and positioning are beginning to tell a familiar story. Across both technical and market indicators, crypto is showing signs of exhaustion at the downside, the kind of setup that historically precedes meaningful reversals.

Bitcoin’s daily RSI is hovering near 30, the textbook definition of oversold. The last comparable reading in March 2025 marked the final leg of that drawdown before BTC began a multi-month rally to new highs.

To gauge the odds of a rebound, we revisited Bitcoin’s historical performance following RSI < 30 events. The study looked at all such signals since 2015 and measured subsequent 30-day returns:

• Hit ratio: 76 % of signals produced a positive 30-day return.

• Median return: +8.4 %

• Average return: +11.2 %

• Tail outcomes: roughly one in five instances delivered gains above +25 %, while fewer than one in ten posted losses greater than –10 %.

The return distribution is right-skewed, shown below, most outcomes cluster around modest positive gains, but the right tail contains a handful of powerful relief rallies. In other words, when Bitcoin gets this oversold, the balance of probability tilts toward upside follow-through rather than extended decline.

From a macro perspective, net liquidity is no longer tightening. The Fed’s reverse-repo balances have collapsed to near zero, the TGA has likely peaked, and SOFR continues to trend lower all subtle but important indicators that dollar funding stress is easing. If these trends persist and the Fed maintains a dovish posture, the setup for a relief rally into year-end is increasingly credible.

Still, durability will depend on macro follow-through. A renewed Treasury cash buildup or a surprise inflation uptick could quickly reverse the easing and cap risk appetite.

Key levels to watch:

• BTC: reclaiming $110 000 (200-day EMA) would mark the first structural reversal since September.

• ETH: holding $3,400 – $3,450 on daily closes would confirm early recovery momentum.

Conclusion: Cautious Optimism Ahead

After one of the sharpest deleveraging phases since 2022, crypto appears to be stabilising. The forced unwind across DeFi has flushed out leverage, restored collateral discipline, and revealed which protocols can endure genuine stress. With macro liquidity turning less restrictive. SOFR drifting lower, RRP near zero, and the TGA easing, conditions are aligning for a relief rally into year-end.

Still, conviction will hinge on macro follow-through. Sustained liquidity support from the Fed and Treasury is essential to extend any recovery; renewed issuance or an inflation surprise could stall it just as quickly. For now, crypto sits at an inflection point: technically oversold, fundamentally cleaner, and macro-dependent once again. If the easing trend holds, the next leg higher may begin not from euphoria—but from exhaustion.

Our View: The next few weeks will likely define the tone for early 2026. Liquidity is improving, positioning is light, and technicals favour a bounce. We expect a short-term relief rally, but sustainable momentum will require confirmation from macro, particularly Fed balance sheet trends and TGA drawdowns. In short, crypto has room to breathe again, but it’s still dancing to the Fed’s rhythm.

Share

Subscribe now

Crypto

Bitcoin closed out October in an indecisive range, ending the month slightly red and breaking a five-year streak of green “Uptober” performances. After tagging a local low of $104.8K mid-month in a liquidation-driven move, BTC rebounded and has since been carving out a sideways structure between $105K and $115K. Repeated attempts to reclaim $117K were absorbed, suggesting persistent supply overhead. BTC dominance remains high but is beginning to soften, which could imply early-stage rotation.

Ethereum mirrors BTC’s indecision but with a more defined coiling structure. ETH continues to consolidate in a tightening symmetrical triangle, bound between $3,750 and $4,250.

Volume is compressing, and volatility is declining, a precursor to resolution. Notably, the market shrugged off the recent ETHZilla treasury sale, hinting at healthy demand below $3,800. A decisive break above $4,250 would confirm bullish continuation, while any weakness below $3,750 opens up the $3,300–$3,500 zone.

Alts have continued their bifurcated behavior. SOL’s price action was the standout as it rallied aggressively into its ETF launch, pushing toward the $185 region.

The bigger concern lies in structural flows, particularly the threat of treasury unwind via DATs, which could cap upside on both majors and top-tier alts if it accelerates.

Solana ETF

The BSOL ETF launch marked a milestone in altcoin institutional adoption. With $69M in day-one inflows and over $58M in volume, it was one of the strongest ETF debuts in 2025. What made BSOL uniquely appealing was its structure: staking ~82% of the SOL treasury to generate ~7% yield. This yield-plus-beta design filled a gap for institutional players wanting more than just directional exposure.

Solana’s float is already tight due to high staking participation, currently at 67%. With ETF inflows now pulling even more supply off the market, price responsiveness is exaggerated. The ETF’s success validated a broader trend, institutions want programmable yield, not just token beta. If other products like ETH staking ETFs follow suit, Ethereum could be the next beneficiary.

Another important point is how these products shape investor behavior. Inflows into BSOL are not just buying spot SOL, they’re buying yield-bearing locked SOL. Over the first 4 days it has scooped up 0.043% of total SOL supply. This reduces liquid supply and effectively introduces passive demand pressure. It’s a similar mechanism to how ETH staking reduced float post-Merge. If SOL ETF flows sustain and additional wrapped or yield-enhanced products proliferate, the reflexivity of price vs. liquidity becomes pronounced. SOL ETF + DAT (Digital Asset Treasury) companies own 2.543% of total Solana Supply.

This shift also reinforces the need to track not just price, but ownership concentration and float liquidity metrics. If ETF inflows become the marginal buyer, price floors may become structurally higher than previous cycles.

The DAT Dilemma: When Treasuries Sell

One of the week’s biggest red flags came from ETHZilla, a publicly traded Digital Asset Trust holding over 100,000 ETH. They sold $40M worth of ETH to fund a stock buyback, aimed at closing a 30% discount to NAV. This marked the first meaningful treasury unwind we’ve seen in months. That they chose to liquidate ETH rather than raise external capital or wait out the discount suggests growing pressure within the DAT space.

Sequans followed with a large BTC transfer to Coinbase Prime, raising speculation about more impending sells. While the market digested ETHZilla’s sale cleanly, it surfaced a deeper vulnerability. The structure of DATs is inherently fragile: low float, high NAV sensitivity, and limited liquidity. If redemptions, buybacks, or NAV gaps continue to force asset liquidations, this could become a persistent headwind, particularly for ETH.

It’s also worth noting how this could compound reflexively. DATs attracted capital during bullish periods by offering easy exposure to BTC or ETH via equities. Now, with some trading at steep NAV discounts, they may be incentivized to unwind. If those NAV discounts remain wide, boards may approve further selloffs to fund buybacks, reinforcing the selling pressure. This introduces a latent overhang that could weigh on rallies unless resolved.

Macro

Fed Delivers, But With Caveats

As expected, the Federal Reserve cut rates by 25bps, taking the Fed funds target to 3.75–4.00%. Markets got the cut but not the dovish messaging they were hoping for. Powell made it clear in the press conference that a December cut was not guaranteed, describing it as “not a foregone conclusion.” One FOMC member dissented, and others voiced concern about premature easing.

Pre-meeting, the market priced in a 90% chance of another cut in December. Post-meeting, that collapsed to 69%. Market is now only pricing in 1 more cut between now and end of April 2026.

The Fed’s concerns are valid. Inflation remains sticky, particularly in services, and the labor market is cooling but not collapsing. Powell mentioned the lack of reliable data due to the government shutdown as an additional reason for caution. Financial conditions, meanwhile, have been easing ahead of the Fed’s liking. The combination makes further cuts conditional on continued benign inflation prints and no reacceleration in wage growth.

More quietly, the Fed also announced QT would end early, on December 1. This is significant. Ending balance sheet runoff one month early means net liquidity should stop declining. Combined with lower RRP balances, this could support marginal risk-on flows. Still, with the Treasury rebuilding its TGA and sucking cash from the system, the picture is far from clean.

One side effect of this cautious easing is that asset markets, including crypto, may experience increased volatility as traders reprice macro expectations week to week. What was once a linear path to dovishness is now conditional and data-dependent. This adds weight to every CPI and jobs report and ensures macro will remain a primary driver into year-end.

Net Liquidity and Repo Signals

Liquidity conditions beneath the surface remain tight. At month-end, the Standing Repo Facility hit a record $50.35B. This signals banks are seeking cash as reserves tighten. RRP balances, while falling, still absorb hundreds of billions in idle capital.

Net liquidity, the sum of Fed assets minus RRP and TGA, is a useful indicator here. Its correlation to crypto remains strong. As long as net liquidity trends higher, OTHERS (altcoins) tend to find support. But should the Treasury over-issue or the TGA rebuild faster than expected, that could reverse.

Expect this battle to continue through Q4. The end of QT is a tailwind, but heavy Treasury supply and uncertain Fed signalling could offset it. It’s a delicate equilibrium, and crypto sits on the edge of it.

This also sets up an interesting divergence between perceived and actual liquidity. Nominally, the Fed is cutting and QT is ending. But functionally, if Treasury supply continues to overwhelm markets, the net liquidity backdrop may still deteriorate. That’s a key risk for alts.

BTC and Gold – Delayed Companions

Another macro signal worth watching is gold. Historically, Bitcoin has followed gold’s macro bid with a 60–90 day lag. This year, that pattern has mostly held. Gold’s rally to $4000/oz in Q3 hinted at BTC’s Q4 breakout.

Yet in recent weeks, divergence has appeared. Gold rallied during October’s liquidation, while BTC dropped. Some of that can be attributed to positioning. BTC remains leveraged, gold does not. Still, if gold continues to hold highs, and especially if real yields peak, BTC could re-couple into December.

This gold-BTC relationship matters more in a world where inflation tail risks persist. If markets begin rotating into hard assets broadly, Bitcoin will benefit as part of the same asset class rotation. But for now, gold remains the preferred inflation hedge, with BTC acting more like high beta tech.

November Setup

We enter November at a key inflection. BTC sits just above its range midpoint at $110K. ETH is compressing beneath $4K. SOL just printed a breakout. But momentum is fragile. Structural flows, Fed ambiguity, and liquidity shifts are now in control.

The bullish path sees BTC reclaim $112K, push through $117K, and target $125K+ on ETF and macro tailwinds. ETH breaks above $4,250 and makes a run at $4,800–$5,000. SOL extends toward $200 if BSOL inflows persist. Liquidity remains net-positive, and the Fed signals December easing.

The bearish path has the Fed holding in December, inflation re-accelerating, or funding markets freezing. DAT selling accelerates. BTC breaks $105K, ETH loses $3,750, and alts see rotation into majors or stablecoins.

Our base case remains cautiously bullish. Flows are improving, ETF momentum is real, and the Fed is unlikely to turn overtly hawkish again without a clear inflation impulse. But position sizing matters. The path to year-end will likely be volatile, and investors need to remain adaptable.

Share

Subscribe now