Bitwise CIO’s three-question analysis indicates resilience in markets after the October 10 crypto crash.

Bitwise CIO: October 10 Crypto Crash a Stress Test, No Lasting Harm

Bitwise Chief Investment Officer Matt Hougan described the October 10 crypto sell-off as a stress test rather than a market regime shift in an October 14 memo, noting roughly $20 billion in leveraged positions were liquidated but no major firms failed and core infrastructure remained stable.

Hougan attributed the sudden volatility to a late-Friday post from President Trump threatening 100% tariffs on Chinese goods. With traditional equity markets closed, traders reportedly shifted reactions into the always-open crypto markets. The resulting liquidation cascade deepened price declines: bitcoin fell as much as 15% before rebounding near $115,000 by Monday, while Solana (SOL) briefly dropped nearly 40% intraday.

Checking the aftermath, Hougan found no systemic breakdowns. Custodians and liquidity providers reported losses but no collapses among major players, including hedge funds and market makers, helping the market recover quickly.

Crypto infrastructure largely held up. Decentralized platforms such as Uniswap, Hyperliquid, and Aave operated normally, while some centralized exchanges faced disruptions—Binance refunded traders nearly $400 million. Hougan argued that, overall, crypto’s plumbing performed as well or better than traditional markets might under similar stress.

Investor behavior further stabilized the market. Institutional clients largely remained on the sidelines, limiting the risk of cascading liquidations.

Hougan concluded that the episode does not alter crypto’s long-term trajectory. Security, core technology, and the regulatory landscape remain intact. Key structural drivers—clearer rules, rising institutional allocations, expanding stablecoin adoption, and tokenization of traditional assets—continue to support growth.

Year-to-date, bitcoin has gained 21%, and the Bitwise 10 Large Cap Crypto Index is up 22%. Short-term, thinner liquidity may amplify swings as market makers recalibrate, but fundamentals are expected to regain focus.

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