Macro update

Crypto markets saw downside pressure intensifying at the start of last week, with BTC slipping below the $85k level by the middle of the week and ETH dropping below $3k. As a result, liquidations increased again, with ~$600m of liquidations on Monday and another ~$400m each day on Wednesday and Thursday, as the market turned very choppy with strength being sold very quickly. Later in the week, the market became quieter, with BTC grinding up slowly back to $90k.

As we head into the holiday period, market structure continues to narrow. Bitcoin dominance pushed higher again, reinforcing the trend that has defined much of the second half of the year. Altcoins continue to underperform, weighed down by heavy supply overhangs and a busy token unlock schedule, keeping pressure on the long tail.

Looking at our internal flow data, we see that in aggregate there’s buying pressure again for the majors. This has been true for BTC for longer, but more recently it is now also the case for ETH. Institutional flow has remained a consistent source of buying since the summer, but the more notable shift over the past couple of weeks is retail also rotating out of altcoins back into majors. That rotation fits the growing consensus that BTC needs to lead first before risk appetite can sustainably move down the curve, and it increasingly looks like retail is now aligned with that view.

While spot buyers are providing a steadier base in majors, price discovery is still happening at the margin via derivatives. This allows net buying in BTC and ETH to coexist with sharp intraday air pockets when crowded leverage is forced out. 

That dynamic is reflected in positioning metrics. Funding and basis across majors remained relatively compressed through the sell-off options markets continue to price a wide range of outcomes, with implied volatility elevated and positioning split between expectations of further downside toward the mid-$80k region and a recovery back toward recent highs.

Looking beyond near-term price action, crypto-specific headlines continue to point to strong adoption across institutions, corporates, and consumers. Recent developments suggest that traditional financial players are steadily entering the space despite recent market volatility. While these participants aren’t first movers, their involvement tends to be more deliberate and durable, and once established, capital and activity are typically sticky. This ongoing integration should be supportive for prices over the medium term, even if it does not immediately translate into upside momentum.

Our take:

“The market continues to trade choppy as liquidity continues to be thin and discretionary desks winding down into year end."

The past week reinforced the idea that crypto is consolidating. Downside moves remain abrupt, but they are increasingly self-contained as leverage is flushed quickly and capital retrenches into the most liquid assets. BTC and ETH continue to act as the primary risk absorbers, while the broader market struggles under supply pressure and limited risk appetite.

Into year-end and the holiday period, we expect activity to remain lighter, with range-bound price action and continued selectivity. In the absence of a clear macro or policy catalyst, markets will continue to be driven by positioning rather than conviction.