Bitwise CIO: October 10 Crypto Sell-Off Shows Resilience, No Lasting Damage
Bitwise Chief Investment Officer Matt Hougan described the October 10 crypto market drop as a stress test rather than a structural shift in his October 14 memo. Approximately $20 billion in leveraged positions were liquidated, but core infrastructure remained intact, and no major firms failed.
Hougan linked the sell-off to a late-Friday post from President Trump threatening 100% tariffs on Chinese goods. With U.S. equities markets closed, traders funneled reactions into crypto, which never sleeps. Highly leveraged positions were sequentially liquidated, amplifying the sell-off. Bitcoin briefly fell 15% before rebounding near $115,000, while Solana (SOL) plunged nearly 40% intraday.
Investigating the aftermath, Hougan found no systemic breakdowns. Custodians and liquidity providers reported losses but no collapses among major hedge funds or market makers, which helped the market recover quickly.
Crypto infrastructure largely held up. Decentralized platforms such as Uniswap, Hyperliquid, and Aave operated normally, while some centralized exchanges faced issues—Binance refunded nearly $400 million to affected traders. Hougan argued that, overall, crypto’s infrastructure performed as well as, or better than, traditional markets might under similar stress.
Investor behavior also contributed to stability. Institutional clients mostly stayed on the sidelines, limiting the risk of cascading liquidations, while media and social chatter created the illusion of broader panic.
Hougan concluded that none of crypto’s fundamentals changed: security, technology, and regulatory conditions remain intact. Structural drivers—clearer rules, rising institutional adoption, growing stablecoin usage, and tokenization of traditional assets—remain supportive.
Year-to-date, bitcoin is up 21%, and the Bitwise 10 Large Cap Crypto Index has gained 22%. In the near term, thinner liquidity may amplify short-term price swings as market makers recalibrate, but fundamentals are expected to dominate once volatility subsides.
