Macro update

Risk appetite deteriorated sharply this week as the AI-led equity momentum finally gave way. Nvidia’s earnings, one of the most anticipated prints of the year, delivered another exceptional beat, however the rally was short-lived before the market sold into the bounce. That reaction marked a clear shift in market behaviour: investors used strength to de-risk, signalling that the AI trade is losing incremental buyers. With U.S. tech rolling over, pressure spilled directly into crypto, pulling total market cap back below $3T for the first time since April.

Macro data added to the fragility. NFP beat at +119K, unemployment rose to 4.4%, and December rate-cut odds fell toward ~30%. Japan added another stress point with JGB bear-steepening and yen weakness raising questions around its ability to keep absorbing U.S. Treasuries. Europe and Asia were similarly soft, China saw AI profit-taking and renewed property pressure, and UK inflation eased into an already thin liquidity backdrop heading into U.S. Thanksgiving.

As a result, the risk-off rotation extended into digital assets. Crypto was the worst-performing major asset class for the third straight week, with broad selling and long-unwinds pushing alts to the bottom of the pack as the macro-led derisking continued.

While the macro picture remains shaky, the internal structure of the crypto market seems to be improving. For the first time since late October, when BTC traded near $115K, funding rates have turned negative and stayed negative for the longest stretch since 26 October. Leverage has been leaning into the downside, effectively chasing a falling knife, while flows have rotated back toward spot, where volumes have held up surprisingly well despite the shortened holiday week. This mix, negative funding, cleaner positioning, and firm spot activity, suggests the market has moved through a full reset and is better positioned for stabilisation once macro pressure eases.

Within the top 100 tokens, correlation is heavily concentrated in the top 10, which are also putting in the worst performance. This highlights how the largest assets are trading as a single macro bloc, fully tied to broader risk sentiment. Further down the curve, the top 50–100 show milder drawdowns and early signs of decoupling, trading more on idiosyncratic catalysts. That matches what we see on the ground: narrow narratives (agents, privacy, DePIN) are still producing short bursts of outperformance even as the broader market softens. Meanwhile, BTC volatility keeps grinding higher, with 7-day RV back near 50.

Sector performance was uniformly weak, with the selloff hitting higher-beta areas hardest. L2s (-14.9%), Gaming (-12.0%), DePIN (-11.4%), and AI (-10.5%) led the declines, while mid and small caps also lagged. Core L1s (-7.0%) and the GMCI-30 (-7.2%) held up relatively better, but the move was broadly indiscriminate, a clear reflection of macro-led derisking across all verticals.

The exhibit above rolls Monday-Monday, hence discrepancy vs first exhibit

Our take:

“While digital assets have been caught squarely in the macro unwind, the market now sits at a point where consolidation finally looks plausible.

While digital assets have been dragged through a macro-driven unwind, first as the AI melt-up stalled, then as the Fed reset expectations, the internal structure of the market now looks materially healthier. Majors are showing clearer relative strength, sentiment has fully washed out, and the leverage overhang has largely dissipated. Total perpetual open interest has fallen from ~$230B in early October to roughly ~$135B today, driven mostly by long-tail deleveraging and systematic flows stepping back. That shift has pushed activity back into spot, where depth and liquidity have held up better than expected for a holiday-thinned week.

This matters: when leverage is this reduced and spot is carrying the flow, recoveries tend to be far more orderly than the mechanically-driven squeezes of earlier in the year. Negative funding and net-short perps also lower the risk of further forced unwinds, giving the market more breathing room if macro stabilises. It’s still a fragile tape, and with liquidity patchy and catalysts ahead, the next few sessions should set the tone for how we enter the final month of the year, but after weeks of macro-driven pressure, the conditions for consolidation are finally in place.