This report is for professional investors and information purposes only. Persons without professional investment experience should not rely on it. Not investment advice or a personal recommendation. Cryptoassets are high risk and volatile and you may lose all capital invested. See full risk information at the end of this document.
- Performance: Cryptoassets underperformed the major traditional asset classes last week as the record $6.3 bn Binance hack pushed Bitcoin to a six-week low near $76k, while the AI trade continued to lose steam across US and Chinese equities. With Binance absorbing the losses, sentiment already bearish and some indicators may be implying seller exhaustion again, downside risks remain elevated near term but the absolute downside could be rather limited.
- Cryptoasset Sentiment Index: Our inhouse Cryptoasset Sentiment Index has declined significantly in the wake of the Binance hack but has not yet technically triggered a clean oversold signal.
- Chart-of-the-Week: Our Seller Exhaustion Constant implies that selling in Bitcoin already appears to be exhausted again following the Binance hack, which - together with bearish sentiment and the washout of leveraged longs - suggests that the absolute downside from current levels could be rather limited despite elevated near-term volatility.
Chart of the Week
Performance
Cryptoassets came under renewed pressure last week and - unlike in previous weeks - Bitcoin and Ethereum underperformed the major traditional asset classes. The S&P 500 lost around -0.6%, its third consecutive weekly decline, and the Nasdaq shed around -2%, while Bitcoin fell by roughly -4% and Ethereum by around -5%.
Government bonds were the clear relative winner as US 10-year yields fell back to around 4.9% from 5.0% on a flight to safety, notwithstanding a hawkish Fed hold with two dissents in favour of a hike. Oil was broadly flat to slightly higher, with Brent at its highest close since April, while gold slid almost -3% to a one-year low.
The key reason for Bitcoin's underperformance was idiosyncratic rather than macro: the record hack of Binance late on Thursday reversed the relative resilience Bitcoin had displayed throughout October, triggered a wave of forced liquidations of leveraged longs and pushed the price to a six-week low of around $76k.
As outlined in our ad hoc research note on Friday, the incident is the largest crypto theft on record by a wide margin: Binance estimates the impact at around $6.3 bn, with the $1.5 bn Bybit hack of 2025 the closest comparison. Initial findings point to a compromised DevOps engineer's laptop rather than a private-key leak, and on-chain analytics firms have attributed the attack to North Korea's TraderTraitor unit, which was also behind Bybit.
Issuers froze roughly $2.7–2.8 bn in stablecoins within hours, but the attackers raced the freezes and converted part of the proceeds into non-freezable ETH, leaving around $2.9 bn - mostly BTC and ETH - still movable. Binance has committed to covering all losses from its SAFU and company funds, and client assets across Bitwise solutions - ETPs & ETFs, private funds and curated vaults - are unaffected.
The market reaction was sharp but orderly: Bitcoin fell as much as -5.0% and Ethereum -6.1% from pre-hack levels, yet realised investor losses remained modest - resilience rather than capitulation.
Since then, the situation has stabilised. After the FBI formally attributed the theft to North Korea, Binance began a phased resumption of withdrawals on Sunday, processing several billion dollars within hours. According to its latest updates on X, around 95% of the impacted assets have been replenished, all major balances are fully backed, and co-CEO Richard Teng reiterated that Binance - not its users - will absorb the loss. A root-cause report is still pending.
Bitcoin's weakness also coincided with renewed jitters in traditional markets, where the AI trade we have been flagging for months continued to lose steam. Alphabet suffered its worst day on record on Thursday, shedding more than -12% and around $500 bn in market value after another quarter of negative free cash flow and guidance for even higher AI capex. Intel followed with its worst day since 1974, falling close to -30% on a weak PC outlook as AI-driven memory price inflation weighs on demand.
The sell-off was not confined to the US: Chinese blue-chips posted a 12th consecutive weekly loss and their steepest monthly decline since 2016, with the tech-focused STAR 50 index down roughly -40% from its summer peak despite Beijing's reported ETF purchases of around $19 bn.
This is further confirmation that the AI build-out risks becoming one of the larger capital misallocation episodes of the modern era - and that its loss of momentum is spilling over into risk assets broadly, including cryptoassets. Notably, US 2-year yields fell to their lowest level in over six weeks as bond markets look through the Fed's hawkish rhetoric to the growth risks of an AI unwind - ultimately supportive for Bitcoin via looser financial conditions, albeit with a lag.
Looking ahead, near-term downside risks remain elevated: the Binance situation is still evolving and the AI consolidation has not run its course. That said, the absolute downside from here could be rather limited as selling already appears to be exhausted again based on the Seller Exhaustion Constant (Chart-of-the-week).
Besides, sentiment is already relatively bearish and leveraged longs have been washed out. Bitcoin has also traded into - and so far defended - the $73k - $78k support zone formed by the 200-day moving average, Short-Term Holder Cost Basis and True Market Mean.
- Our base case therefore remains a stop-and-go environment: elevated volatility near term, but potentially contained absolute drawdown risk.
Bottom Line: Cryptoassets underperformed the major traditional asset classes last week as the record $6.3 bn Binance hack pushed Bitcoin to a six-week low near $76k, while the AI trade continued to lose steam across US and Chinese equities. With Binance absorbing the losses, sentiment already bearish and some indicators implying seller exhaustion again, downside risks remain elevated near term but the absolute downside could be rather limited.
Sentiment
Our in-house “Cryptoasset Sentiment Index” [1] ranged between neutral and negative sentiment, recording -0.83 the day after the Binance hack. It now sits at the bottom of the neutral zone, at -0.19, after withdrawals have been enabled and full function has resumed.
At the moment, 5 out of 15 indicators remain above their short-term trend.
The most notable change was BTC Long Futures Liquidation Dominance and BTC Exchange Inflows which flipped from negative to positive implying that there was an increased propensity for investors to sell their coins on exchange, despite the Binance hack, but likely on others such as Kraken or Bybit. Further, any attempt for Bitcoin to move upwards was hamstrung by long liquidations.
The Crypto Fear & Greed Index decreased over the past week, transitioning from the “Neutral” zone to the “Fear” zone.
Performance dispersion decreased slightly in line with our broader Sentiment indices, and a rotation of net spot ETP flows from Alts into Bitcoin.
Altcoin outperformance vis-à-vis Bitcoin remained flat at 40% of the altcoins tracked in our index. A major contributor was Hyperliquid which benefited from a partnership announcement between Trade.XYZ, the largest perpetual futures deployer of TradFi assets on Hyperliquid, announced a partnership with ICE, the world's second largest exchange operator.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has decreased slightly from -0.33 to -0.35 over the past week, although peaking at -0.38 midweek. This signals risk appetite has further declined within TradFi as the macro backdrop worsens for riskier assets.
The CME Bitcoin Commercials Net Positioning metric captures the difference between long and short CME Bitcoin futures contracts. The reading has decreased from –12.79% to –13.67% of open interest, suggesting traders have slightly increased their short leverage driven by fears surrounding the Binance hack and the worsening macro backdrop.
Bottom Line: Crypto and TradFi sentiment remain poor, with the former holding up well until the Binance Hack on Thursday last week. Now that much of this uncertainty has been rectified by ongoing communications and withdrawals resuming, this overhang should clear. However, the macro backdrop continues to worsen with positioning increasingly centred around this driver. Short leverage has increased, whilst net ETP fund flows rotated out of Alts and into BTC. Altcoins may struggle until this backdrop reverses and a narrative takes hold.
Fund Flows
Global crypto ETPs experienced around -751.5 mn USD in net outflows last week, across all types of cryptoassets, after +50.7 mn USD in net inflows the previous week.
Global Bitcoin ETPs experienced net outflows of -251 mn USD last week, of which -206.8 mn USD in net outflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows of -15.6 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -1.4 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +1.4 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net outflows of -53.3 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net inflows of around +176.9 mn USD last week.
Meanwhile, global Ethereum ETPs experienced -425.6 mn USD in net outflows last week, of which US spot Ethereum ETFs recorded net outflows of around -396.7 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net outflows of -37 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net outflows of -391.1 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced no net inflows or outflows last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded net outflows of -0.7 mn USD, whilst the Bitwise Ethereum Staking ETP (ET32) saw no net inflows or outflows.
Altcoin ETPs ex Ethereum also saw net outflows of -64.8 mn USD last week.
Thematic & basket crypto ETPs posted net outflows of -10.2 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) recorded net inflows of +0.5 mn USD last week.
Bottom Line: Risk appetite soured markedly last week, with global crypto ETP flows swinging from modest inflows to more than -750 mn USD in net outflows. Ethereum products bore the brunt for a second consecutive week, as outflows nearly doubled week on week. Bitcoin ETPs also reversed course. The deterioration coincided with a sharp drop in our Cryptoasset Sentiment Index to -0.83 on 30 October, whilst Cross Asset Risk Appetite remained firmly negative, pointing to a cautious macro backdrop.
On-Chain Data
Bitcoin has broken below its recent $80k-$85k range following the Binance hack, the largest digital asset hack on record. Price fell to a low of roughly $76k during the initial sell-off before stabilising around $78k, with selling pressure moderating after the first wave of volatility. For a full breakdown of the hack, market reaction and investor behaviour, read our deep dive here.
Bitcoin has now moved into the $72k-$78k transition range we have highlighted for several weeks, finding support around the True Market Mean near $78k and Short-Term Holder Cost Basis around $76k. Retests of these investor cost bases are not unusual during bull-market advances and have historically provided an important test of whether underlying demand remains strong enough to defend the broader risk-on structure. The market’s ability to absorb the recent decline around these levels can be considered constructive, with successful retests helping to reinforce the transition towards a more established bull-market regime.
This resilience is particularly notable given the build-up of volatility conditions we have highlighted over recent weeks. Despite the Binance hack, persistent geopolitical tensions and a broader sell-off across AI-related equities and risk assets, Bitcoin has experienced a comparatively contained drawdown.
While the price decline has remained relatively contained, the impact on investor profitability has been meaningful. Over a single day, around 5.5% of Bitcoin supply moved from profit into loss, with only 2.8% of trading days producing a larger deterioration. This highlights the sensitivity of investor profitability around current price levels, with relatively modest price moves capable of materially shifting the distribution of supply held in profit.
Importantly, the investor reaction function has remained far more restrained. Losses realised on-chain remain extremely modest and well below those observed during recent drawdown events, suggesting that investors have generally avoided capitulating into weakness.
Where losses have been realised, they have been concentrated among older cohorts. More than 40% of realised losses originated from coins aged between six months and two years, many of which were likely acquired during the topping formation earlier in the cycle.
On balance, the market remains profit-driven, with realised profits exceeding realised losses by roughly $147mn. This remains an encouraging signpost, suggesting that the broader bull-market structure is still intact despite the recent volatility.
However, both profit-taking and loss-taking remaining exceptionally small, the Sell-Side Risk Ratio remains compressed, sitting around the 6th percentile of the past three years. This indicates that economic flows (profit and loss taking) remain rather inactive at prevailing prices. Historically, similarly compressed conditions have often preceded an expansion in realised volatility and a widening of the trading range as price moves far enough to unlock latent supply and liquidity.
Taken together, Bitcoin continues to demonstrate notable resilience despite an increasingly challenging backdrop. Geopolitical tensions, weakness across the AI trade and broader equity markets, and the largest digital asset hack on record have all placed pressure on risk assets, yet Bitcoin has continued to impressively defend the key structural levels highlighted over recent weeks. Notably, the True Market Mean and Short-Term Holder Cost Basis have so far provided support, leaving the broader bull-market structure intact. Importantly, the volatility build-up we have been monitoring has still not been fully released leaving the market increasingly coiled and potentially charged for a larger move.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest increased by around 17.1k BTC, or approximately 3.9%, rising to roughly 461.9k BTC. This extends the rebuilding observed over recent weeks and leaves perpetual open interest around 32k BTC higher than two weeks ago. Leverage is therefore returning more clearly to perpetual markets, although positioning does not yet appear unusually stretched in isolation.
By contrast, CME futures open interest declined by around 3.8k BTC over the same period, reversing part of last week’s increase. The three-month rolling futures basis remains broadly stable at approximately 5.1%. Futures positioning has therefore diverged this week, with leverage continuing to build in perpetual markets while CME exposure has contracted.
Liquidations increased to approximately $2.8bn in combined long and short liquidations, up from around $2.35bn previously. Forced deleveraging therefore remains sizeable and has increased again following last week’s moderation.
Perpetual funding rates have also risen further. Measured on a seven-day moving average, annualised funding ended the week at approximately 8.3%, up from around 6.2% previously. Funding therefore points to a progressively firmer long bias alongside the continued increase in open interest.
Across options markets, BTC open interest declined by around 100.4k BTC over the past week, or approximately 21.5%, falling from roughly 466.4k BTC to 366.0k BTC. However, the contraction was heavily concentrated around 30 October, when open interest fell by approximately 128.1k BTC in a single day, consistent with a substantial monthly expiry reset. The weekly decline should therefore be interpreted primarily through the expiry cycle rather than as evidence of a broad withdrawal from options markets.
The put-to-call open interest ratio across major crypto-native exchanges increased materially to approximately 0.68 from 0.60. Across IBIT options, the ratio remains extremely elevated at around 0.77, only marginally below last week’s 0.78 and still among the highest readings observed to date. Both markets therefore show a greater relative concentration of put positioning, with the ETF options complex continuing to exhibit the more defensive composition.
The 25-delta skew curve also continues to price a substantial premium for downside protection.
| Tenor | Current | 7-Day Change | 3-Year Percentile |
|---|---|---|---|
| 1w | +0.1323 | +0.0311 | 88th |
| 1m | +0.1324 | -0.0017 | 88th |
| 3m | +0.1133 | +0.0209 | 85th |
| 6m | +0.0820 | +0.0211 | 80th |
One-week skew has risen from approximately +0.10 to +0.13, while one-month skew remains elevated at a similar level. More importantly, the premium for puts has continued to broaden further out the curve, with three- and six-month skew both increasing materially and moving into the upper portion of their three-year distributions.
Aggregate gamma remains positive, but the stabilising cushion has weakened materially over the past week. Total gamma exposure has fallen from around +$4.2bn to approximately +$1.7bn, leaving positioning considerably closer to neutral than it was previously.
The strike-level distribution is also more complex around the prevailing market price near $77.5k. The $78k and $78.5k strikes each carry approximately -$1.1bn of gamma, creating a sizeable negative concentration immediately above spot. These exposures are then offset by larger positive concentrations around $80k and $82k at approximately +$2.8bn and +$1.5bn respectively. Dealer hedging could therefore reinforce price movement if Bitcoin moves through the $78k region, while the larger positive-gamma concentrations around $80k-$82k could instead help dampen price swings as those strikes become more relevant.
On balance, derivatives positioning has become more asymmetric over the past week. Perpetual open interest and funding have both risen further, providing clearer evidence that leveraged long exposure is rebuilding, while CME positioning has contracted and liquidation activity remains sizeable. Options open interest has fallen sharply, although the move appears largely expiry-driven. More importantly, put concentration and elevated skew continue to reflect a strong preference for downside protection. Aggregate gamma remains positive, but the stabilising cushion has weakened materially, with negative exposure now concentrated close to spot and potentially increasing the sensitivity of price around the $78k region.
Bottom Line
- Performance: Cryptoassets underperformed the major traditional asset classes last week as the record $6.3 bn Binance hack pushed Bitcoin to a six-week low near $76k, while the AI trade continued to lose steam across US and Chinese equities. With Binance absorbing the losses, sentiment already bearish and some indicators implying seller exhaustion again, downside risks remain elevated near term but the absolute downside could be rather limited.
- Cryptoasset Sentiment Index: Our inhouse Cryptoasset Sentiment Index has declined significantly in the wake of the Binance hack but has not yet technically triggered a clean oversold signal.
- Chart-of-the-Week: Our Seller Exhaustion Constant implies that selling in Bitcoin already appears to be exhausted again following the Binance hack, which - together with bearish sentiment and the washout of leveraged longs - suggests that the absolute downside from current levels could be rather limited despite elevated near-term volatility.
Appendix
except MSBT launched on the 08/04/2026
Data subject to change
*MSBT flows since 08/04/2026; all others since 11/01/2024
Data as of 30-10-2026
Combined positioning = futures and options in % of OI
Dispersion = (1 - Average Altcoin Correlation with Bitcoin)
Notes
[1] The Cryptoasset Sentiment Index is a composite indicator consisting of 15 different sub-indicators covering sentiment, on-chain, derivatives, flows developments as well as sentiment in traditional financial markets. A 90-day rolling z-score is used to standardise and aggregate these sub-indicators.
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