Bid Returns, Caution Remains

GM Anon!

Crypto pushed higher this week, and the tone feels cautious but hopeful. The macro backdrop is improving at the margins, liquidity is functional, and desks are finding bids without chasing. Positioning is still tight and headlines remain noisy, yet momentum is building as the market anticipates rate cuts in December. Let’s dive in!

TLDR

• Stocks eye a red month as futures steady; US 10Y near 14-month lows, PPI in-line, December cut odds rise.

• Silver hits ATH; ECB warns of tech-bubble FOMO; policy tone pro-growth (US backs AI, Japan $135B stimulus, China slump).

• Crypto stable but tracking for record monthly outflow; BTC dominance slips on rotation.

• BTC ETFs post record volumes with net inflows Friday; ETH ETFs log three straight inflow days.

• Positioning is two-way: ~8% of BTC moved in a week; BTC below 50-week MA for two weeks; Sharpe near zero.

• ETH lifts block gas limit to 60M ahead of Fusaka; BitMine buys more ETH and signals a small dividend.

• SOL proposes doubling its deflation rate; HYPE volatile into unlock; MON up 2x off post-ICO low.

• Treasuries active: Strategy 6x covered at $74K BTC; Texas starts BTC reserve ($5M IBIT); Metaplanet draws $130M to buy BTC.

• DeFi and infra mixed: USDe TVL halved on yield compression; Aerodrome/Velodrome front ends compromised; MegaETH snags; Wormhole to bridge MON.

• Regulation and risk tighten: Australia licensing, UAE adds DeFi/web3, Spain tax talk, Korea crackdown; S&P cuts Tether score to “weak”; Japan hack reserves; Lazarus tied to $32M Upbit hack.

Market Update

Macro ended the week with a cautiously supportive tone. Equities are still on track for a red month even as futures hold steady after a late rally, and tech leadership is choppy with Nvidia lower while Google gained on a Meta chip headline. The rates backdrop eased as the US 10-year slipped toward 14-month lows, September PPI printed in line, and Powell’s allies signaled a December cut is likely. 

Silver printing an all-time high and the ECB warning that FOMO is feeding a US tech bubble underline lingering fragility, while policy headlines skew pro-growth with White House support for AI, Japan approving a $135B cost-of-living package, China confronting an unprecedented investment slump, and talk of income-tax cuts tied to tariffs.

Crypto traded steadier but the flow picture remains mixed. The asset class is still tracking toward its largest monthly outflow even as BTC ETFs posted record volumes with net inflows on Friday and ETH ETFs logged three straight days of buys. Positioning is two-sided: roughly 8% of BTC moved in the past week, BTC has now spent two weeks below its 50-week moving average and the Sharpe ratio is near zero, while dominance continues to slip as capital rotates.

ETH lifted its block gas limit to 60M ahead of Fusaka and BitMine added another $44M of ETH, reiterating accumulation alongside a small dividend plan. SOL floated a proposal to double its deflation rate. Binance-linked headlines were split, with the wallet adding support for on-chain stocks even as the firm faces a lawsuit alleging facilitation of payments to Hamas.

Institutional demand and treasuries stayed active. Strategy remains six-times covered on its debt at $74K BTC and was framed as a hedge for the crypto market, Texas opened a BTC reserve with a $5M IBIT purchase, and Japan’s Metaplanet drew $130M to buy more BTC. 

XRP ETFs saw $60M-plus of inflows, and product breadth widened with DOGE and XRP ETFs launching at Grayscale, a filing for the first Zcash ETF and a quick OKX listing that saw ZEC rebound to 600, plus a new 3x BTC and 3x ETH ETF from LeverageShares. Pro-crypto Kevin Hassett emerging as frontrunner for Fed chair adds a policy tailwind at the margin.

DeFi and sectors reflected stress and experimentation. Yield compression halved USDe TVL, while front ends at Aerodrome and Velodrome were compromised. MegaETH’s USDm pre-deposit launch ran into issues; Wormhole is set to bridge MON to Solana and MON has doubled from its post-ICO low. HYPE was volatile into its unlock, briefly slipping below $30 amid a squeeze and vesting overhang. 

Regulation was busy on both clarity and enforcement. Australia will require licenses for crypto platforms, the UAE added DeFi and web3 to its regulatory scope, Spain is weighing higher crypto taxes, Korea flagged a crackdown on exchanges, and Switzerland delayed sharing crypto tax information. 

In markets infrastructure, the CFTC approved Polymarket for the US while Kalshi was blocked for sports betting in Nevada and Robinhood is preparing a prediction market; Commissioner Pham is recruiting CEOs for an innovation council. Security and stability concerns persisted with Lazarus Group suspected in a $32M Upbit hack, Japan moving to require exchanges to hold reserves against hacks, and S&P cutting Tether’s stability score to “weak.”

Market Data Points

Over the last 7 days, flows skewed toward Hyperliquid and Ethereum, with Polygon PoS, Base, and Starknet also printing solid net inflows. Smaller positives showed up on Berachain, Sei, OP Mainnet, and Sui. On the other side, outflows were led by Arbitrum (by far the largest), followed by edgeX, Avalanche C-Chain, Unichain, BNB Chain, Linea, Solana, and Bitcoin.

Over the past 30 days — from the Oct 10 flush to this wee’s tentative bounce — the revenue winners were stablecoin issuers (Tether ~$701.8M, Circle ~$235.7M), derivatives venues (Hyperliquid ~$97.5M, edgeX ~$49.1M, Lighter ~$26.8M, Jupiter ~$19.3M, Axiom Pro ~$20.5M), and steady money infrastructure (Tron ~$30.8M, Phantom ~$13.5M, Aerodrome ~$13.6M, PancakeSwap ~$9.2M, Sky CDP ~$13.9M, Aave ~$10.9M, ORE ~$9.8M). In short: dollars and perps drove usage in the drawdown; core DeFi kept earning; and if risk keeps thawing, DEX and long-tail app revenues should be next to re-accelerate.

Stablecoin rails have gone mainstream. Over the last 12 months, on-chain transfer volume topped $50T, led by Ethereum ~$16.7T and a surprisingly strong Base ~$14.7T, with Tron ~$7.6T, Solana ~$7.1T, and Avalanche ~$0.83T rounding out the top five. The split tells a clear story: Ethereum remains the anchor, Base is scaling real payments at speed, Tron keeps its remittance niche, and Solana is gaining share. With volumes this large, stablecoin velocity matters more than headline supply and it continues to underwrite liquidity across CEX, DEX, and OTC flows.

More than 8% of the entire BTC supply changed hands in the last seven days. You rarely see that kind of churn outside of true stress moments — think late-2018 and March-2020. It’s the footprint of forced de-risking and large-scale redistribution: weak or levered holders puking into deep pockets, UTXO age bands resetting, and price discovering new, stickier owners.

Events like this don’t call the bottom by themselves, but they often coincide with the end of a leg rather than the start of one. After these shocks, markets usually transition from disorderly selling to two-sided trade as realized losses are absorbed and volatility starts to compress. The next tells are straightforward: do ETF/spot flows stabilize, does funding normalize, do short-term holders stop bleeding coins to long-term cohorts, and does realized profit/loss flip back to net positive? If those line up, this week’s turnover reads less like a breakdown and more like the clearing event a new base can build on.

DeFi has reclaimed the lead in collateralized lending: lending apps now hold 55.7% share (+588 bps QoQ), while CeFi is at 33.1% (-36 bps) and crypto-collateralized CDP stables have fallen to 11.2% (-547 bps). Grouping CDPs with lenders puts on-chain credit at 66.9% dominance, essentially back to its late-2024 peak. The shift reflects borrowers favoring flexible, transparent, and instantly liquidatable on-chain markets over CeFi accounts and mint-and-hold CDP debt.

Majors & Memes

Majors put in a strong week, with the broader market leaning decisively risk-on. BTC climbed roughly 8% over the past seven days, continuing its steady push higher and setting a firmer tone after the recent chop. ETH outperformed with an 11.6% gain, showing the cleanest trend among large-caps and attracting renewed momentum. 

SOL added about 9.5% despite some mid-week volatility, while BNB advanced 6.6%. XRP was the standout large-cap mover, up 13.7% with one of the strongest weekly curves. TRX stayed muted at just under 2%, and DOGE matched the broader rotation with a 9.9% rise.

The top performers came from a mix of mid-caps and narrative-driven names. RAIN led with a ~99% surge, while KAS posted another heavy week at +54%. QNT, XMR, ENA, AAVE, FLR, MNT, WLFI, HBAR, OKB, CRO, SUI, PEPE, and SHIB all delivered double-digit gains, reflecting a broad rotation rather than a single catalyst. Within the secondary list, TOMI, FARTCOIN, BAT, SPX, VSN, BORG, TOSHI, KMNO, and PENDLE extended that momentum, keeping mid-cap flows firmly in the green.

Weakness remained isolated to the speculative end. M fell about 35% as liquidity rotated out, while ZEC dropped 14%. SOON, STRK, ZZ, APEPE, ICP, UNI, APT, TEL, ZEN, and DASH registered lighter losses in a -2% to -16% band. These moves looked more like targeted unwinds than broad risk aversion, with majors and mid-caps absorbing most of the week’s positive flows.

Taken together, the backdrop was constructive: large-caps pushed higher, mid-caps broadened out with strong absorption, and the laggards were contained to lower-conviction names. It’s the kind of rotation that typically appears when sentiment stabilises and ETF-driven liquidity supports a more risk-on posture.

Smart Money Accumulation

Smart money flows this week were thin and defensive, with most lines showing either mild trims or small, maintenance-level adds. Compared with prior weeks where a few names attracted strong conviction, this batch reflects a market that’s waiting rather than deploying.

Starting with the Solana ecosystem, the most notable outlier was SOLO, which posted a sharp increase of roughly +956%. The jump comes from a small starting base, but it’s still the only line where smart money clearly sized up rather than just rebalancing. 

Outside of that, adds were modest. Tokabu saw a single-digit lift in balances, consistent with wallets keeping it active but not building it into a larger position. KLED also edged higher with a fractional uptick while still holding one of the larger dollar allocations (~$676K), reinforcing its role as an established core line rather than a fresh directional bet.

The trimming side was more telling. URANUS took the heaviest reduction at about -23%, a clear sign of de-emphasis. GP (-27%) and Fartcoin (-12%) also saw meaningful cuts, indicating these higher-beta or less-conviction lines were the first to be shaved as the tape softened. BELIEVE and SURGE, both previous leaders, slipped by mid-single digits — not a capitulation, but enough to show reduced appetite for scaling size in names that had been momentum-driven in prior weeks.

Positioning on the EVM side stayed muted, with most lines barely moving and only one or two names showing real adjustment. This is the same low-velocity pattern as last week: wallets are maintaining exposure but not meaningfully expanding risk.

The clearest accumulation was SPX, which posted the strongest increase on the page at roughly +23%. That’s a material add relative to the rest of the set and signals selective willingness to scale into a name that still holds a decent dollar allocation (~$259K). It stands out as the only line where smart money expressed fresh conviction rather than just tuning an existing position.

There were a couple of smaller positive nudges. SERV picked up about +5%, consistent with incremental adds rather than a directional bet. BOOE saw a modest +4% lift, again too small to suggest real rotation but enough to show it remains an active hold.

Most other names were left unchanged. CULT, AP, and WOJAK sat at 0% for the week. That flat profile typically signals a “wait and watch” stance — these are positions being kept open while the market provides clearer signals. Notably, TRWA still holds one of the larger balances on the page (~$824K) and was trimmed slightly, indicating smart money is comfortable keeping it as a core allocation but is not adding into current conditions.

On the reduction side, cuts were mild. BITCOIN (-3.5%) and TRWA (-3.6%) saw the largest downward adjustments, and APU slipped just under -1%. These aren’t exits — they’re controlled trims, reflecting a cautious environment rather than outright risk aversion.

Overall, EVM flows mirror Solana: capital preservation over expansion. Wallets are keeping their established lines intact, trimming around the edges, and only scaling one or two names with clearer momentum (in this case, SPX). It’s a defensive tape, consistent with a market waiting for stronger macro or ETH-led confirmation before deploying size again.

Checking in on Nansen data, a few more additional small caps did attract fresh attention. YB and TROLL saw the largest 7D smart-money inflows on the page (around $60–70K each), with 67 and ZIPSTREAM-PHP also picking up meaningful but smaller bids. On the other side, ADS stood out as the only clear negative flow, showing net outflows over the week. Beyond these names, flows were scattered and shallow, reinforcing that smart money is only probing selectively rather than rotating in size.

That wraps up this post—we hope you found the insights valuable. See you next week, anon! 🚀