Stabilization After the Shakeout: Liquidity Improves as Positioning Resets

Weekly Market News — Macro, Policy, and Liquidity Conditions

The latest September CPI print of 3.0% YoY came below market expectations, alleviating concerns that U.S. fiscal disruptions would reintroduce upward inflation pressure. The data reinforces the narrative that inflation continues to decelerate gradually, allowing the Federal Reserve room to adjust policy.

Current futures pricing suggests the market anticipates two 25bp interest rate cuts — on 29 October and 10 December, respectively. In parallel, discussions are emerging on whether the Fed may pause Quantitative Tightening (QT) as soon as December, which would slow balance sheet reduction and improve system liquidity.

Following the large liquidation event on 10 October, positioning in crypto derivative markets is now relatively clean, which typically supports more stable upward momentum in the near term, particularly in BTC and ETH.

Key Market Review — Flows, Positioning, and Institutional Behavior

Looking at the overall market behavior, the market remains liquid and directional. However, the narrow breadth of participation introduces short-term fragility should there be any sentiment shift. This shift can be interpreted in a different spectrum, including the price reaction of commodities, crypto and treasury.

Gold vs. Bitcoin — Different Supply Dynamics, Different Pricing Logic

Despite both assets serving as macro hedges and store-of-value assets, their supply behavior differs significantly:

For gold, central banks and ETF flows now represent ~60% of aggregate market demand, reinforcing structural accumulation behavior. For Bitcoin, ETF flows and institutional treasury allocations play a similar role, but price sensitivity to flow velocity is higher. Digital Asset Treasury (DAT) Positioning

• Bitcoin (BTC): While the BTC remains attractive on a long-term risk-adjusted basis, large corporate treasuries have not meaningfully increased exposure in the current price range. Buying interest appears more opportunistic than strategic.

• Ether (ETH): Net accumulation continues, yet the activity is heavily concentrated among a small subset of sophisticated buyers — notably by Bitmine Immersion Technologies (BMNR)

Capital Rotation Pattern

Source: https://www.cryptometer.io/volume-flow

• Rotation favors BTC → ETH → SOL (high-liquidity large-caps).

• Small-cap/long-tail altcoins continue to exhibit weak bid depth, indicating risk appetite is not broad-based yet.

Notable Institutional Developments

• Federal Reserve is exploring DLT settlement access using the “skinny master account” concept — this would represent the first formal bridging of digital ledgers with core U.S. banking rails.

• An over $1B XRP treasury SPAC transaction aims to allocate capital toward on-chain yield strategies, highlighting a renewed institutional interest in tokenized credit markets.

• 
  ChinaAMC Solana ETF (03460) will begin trading on the Hong Kong Stock Exchange today, on October 27, 2025, offering HKD / CNY / USD share classes and a 0.99% management fee, expanding regulated access to non-BTC/ETH majors.

• 
  UK retail ETP approval (FCA ban lifted) enables ISA and brokerage access to physical BTC & ETH products, broadening the European investment base.

DeFi Overview — TVL Dynamics & Protocol Rotation

Top Protocols by TVL (7D change):

Source: https://defillama.com/chains

Source: https://dune.com/entropy_advisors/ethena-usde

USDe temporarily fell to $0.65 during the $19B market liquidation on October 10, despite overcollateralization. As a result, capital rotated from higher-yield structured liquidity products into lower-risk staking and lending protocols, lifting Aave, Lido, and ether.fi.However, despite the recent contraction in USDe supply, the medium-term growth outlook for USDe and USDtb remains strong, supported by four key catalysts:

• Whitelabel Stablecoin Layer: USDe/USDtb can serve as base collateral for new ecosystem-issued stablecoins. Early adopters include Sui, Jupiter, and MegaETH, expanding USDe from a standalone asset to cross-chain liquidity infrastructure.

• Ethereal Perps DEX: USDe is used as yield-bearing collateral for leveraged trading. Even in a limited alpha, the Ethereal chain has already attracted >$3M in USDe, signaling early high-intent demand.

• Converge L2 Gas Support: USDe and USDtb will be usable as gas tokens, increasing transactional usage beyond passive yield and strengthening on-chain velocity.

• Institutional Access via iUSDe: Ethena's roadmap includes regulated wrappers (iUSDe) to enable asset managers and credit funds to access sUSDe yield through compliant TradFi channels, bridging DeFi into institutional portfolios.

Funding Rate Snapshot — Leverage Rebuilding

Source: https://www.coinglass.com/FundingRate

Takeaway:

Leverage is returning faster than spot inflows, which tends to increase short-term volatility, making position sizing and risk controls important.

Outlook for Next Week (November 3-7)

Positioning Recommendation:

Maintain exposure to high-liquidity large-cap assets (BTC / ETH / SOL) while avoiding overextension in small-cap tokens until leverage and breadth indicators improve.