Macro update

As the U.S. government seems to be headed towards a partial shutdown, equities continued to grind higher, with Russell 2000, Nasdaq, and S&P 500 all extending gains. Bond yields pressed higher after Fed speakers reinforced the higher-for-longer narrative, tempering some of the optimism into month-end. 

The U.S. dollar softened, while gold surged to fresh record highs above $3,700/oz, supported by central bank reserve diversification and strong ETF inflows, underscoring the shift away from Treasuries and the dollar amid rising debt burdens. Base metals also pushed higher and oil firmed, leaving a cautious but supportive backdrop for commodities even as rates remain elevated. Meanwhile, digital assets traded relatively flat near the $4T market cap level, with Ethereum underperforming among the majors.

On a broad level, digital assets consolidated after a volatile stretch of liquidations earlier in the month, with nearly $3B in leveraged longs flushed out. Sentiment has improved gradually from “extreme fear” while structural support for majors like BTC remains intact. Importantly, on 26 September a record $23B in BTC and ETH options expired, adding to the volatility and pinning spot near key strike levels. At the same time, BTC dominance declined to 55%, last seen around the Beeple “Everydays” $69M Christie’s auction in March 2021, though still far from the ~40% lows reached at the peak of the last cycle (2H21-1H22).

Narrowing in, Ethereum lagged peers, breaking below $3.9k during the week before stabilising, leaving it the underperformer among the majors relative to BTC’s rebound back toward $112k. Solana briefly slipped under $200 in the liquidation cascade but clawed back alongside other large caps, while select narrative-driven tokens like ASTER bounced sharply, showing that conviction capital still seeks opportunities even in stressed conditions. With implied vols resetting lower post-expiry and positioning cleaner, the setup into October reflects cautious optimism, with the familiar “Uptober” narrative back in focus… followed by “Moonvember” and “Bullcember.”

On an index performance, the size factor showed little impact, with both large caps (-1.24%) and small caps (flat) proving more resilient than mid caps (-2.50%). Layer 2s (+2.24%) led gains on MNT strength, alongside gaming (+1.26%), while most other sectors, including Meme (-3.48%) and L1s (-2.93%), lagged. The majors ended the week lower, with BTC (-0.73%) and ETH (-1.95%) both in decline.

Our take:

“Post end-of-quarter reset, positioning looks healthier. For the supportive backdrop to hold, BTC likely needs to grind closer to prior ATHs and macro headlines must remain constructive.

The market continues to trade in a range-bound but cleaner setup, with leverage partially flushed, implied vols reset, and positioning less stretched. BTC remains structurally supported by inflows, while ETH continues to lag, leaving rotation risk elevated. Alt L1s and narrative-driven tokens still attract opportunistic capital, but flows remain futures-led, meaning spot liquidity is thin and leverage cycles continue to dictate price action. Heading into October, the path of least resistance appears higher, though macro risks, higher-for-longer rates, fiscal uncertainty, and dollar volatility, keep the tape fragile.

Notable headlines

• Plasma, a new blockchain purpose-built for stablecoins, launched its mainnet beta and held its TGE, debuting directly with notable partnerships including an integration with Aave to seed early adoption.
• Tether is reportedly seeking to raise $20B at a $500B valuation, effectively selling 3% of the company as it positions itself among the most valuable firms in global finance.
• The CFTC is moving to allow stablecoins to be used as collateral in U.S. derivatives markets, a first-of-its-kind step that deepens the integration of DeFi and digital assets into traditional finance.
• Morgan Stanley plans to begin offering Bitcoin and crypto trading in the first half of 2026, reinforcing the steady march of institutional players into digital asset markets.
• Vanguard, the world’s second-largest asset manager, is exploring access to Bitcoin and crypto ETFs for U.S. brokerage clients, signaling a major shift in stance from a firm long seen as resistant to digital assets.
• FTX is set to distribute $1.6B in fiat this week, marking one of the largest creditor repayments to date as the estate continues winding down through its distribution partner Bitgo and Kraken.