📉 Crypto market saw $3.2B in liquidations last week as inflation lifts rate concerns; Crypto.com launched Predict Pro

Quick Take

• Crypto liquidations hit US$3.2 billion last week following higher-than-expected inflation data.
• U.S. spot BTC ETFs recorded $229 million in net outflows last week, down from the $681 million in net outflows the week prior. U.S. spot ETH ETFs saw $320 million in net outflows, compared to $542 million in net outflows the week prior.
• U.S. equities experienced a rotation last week as capital fled AI hardware and semiconductor stocks, dragging the Nasdaq and S&P 500 into their worst week since June. Rather than broad-based capitulation, capital flowed heavily into defensive sectors, dividend-paying value equities, and energy. This rebalancing helped the Dow Jones Industrial Average to post a gain, while surging crude oil prices and hotter-than-expected inflation kept market volatility elevated.
• The S&P 500 dropped -1.95%, Nasdaq Composite fell -4.48%, and Dow Jones Industrial Average increased +0.67%.
• Key Market Drivers:
• Semiconductor and AI Tech Pullback: The PHLX Semiconductor Index plummeted 11.41% over the week (eight consecutive daily losses). Early selling was sparked by cautious AI valuation comments from Broadcom’s CEO, followed by downgraded growth forecasts for neocloud infrastructure providers.
• Hotter Inflation and Rate Volatility: September CPI registered at 3.7% year-over-year (2.6% core) on Wednesday, followed by a 1.3% month-over-month Producer Price Index (PPI) surge on Thursday. Despite the warm inflation prints, the 10-year Treasury yield peaked at 5.329% midweek before closing lower at 5.098% on Friday.  
• Crude Oil Spike: November WTI crude surged 10.41% to close at $101.41/barrel on Middle East tensions and Strait of Hormuz tanker disruptions.  
• Volatility Expansion: The Cboe Volatility Index (VIX) rose to 19.99, its highest close since late July.
• Sector and Style Dynamics:
• Aggressive Rotation into Defensives: Capital shifted from mega-cap growth to Consumer Staples and Healthcare. Consumer Staples (+5.02%) led all sectors, driven by sharp gains in Coca-Cola (+6.64%), Walmart (+6.70%), and Procter & Gamble (+5.37%).  
• Energy Strength: Energy (+4.86%) was the second-best performer, driven by surging crude oil and refining margins.
• Tech Underperformance: Information Technology fell 7.70%, weighed down by chipmakers and AI hardware leaders (Broadcom -9.07%, Tesla -7.31%, Nvidia -6.61%).  
• Value vs Growth Divergence: Dividend-focused value strategies (e.g., SCHD +3.96%) far outpaced growth benchmarks (e.g., QQQ -5.52%), signaling a preference for resilient cash flows over long-duration growth.

Research Dashboard

According to our research dashboard, price, volume, and volatility indices decreased -4.61%, -3.70%, and -51.69% respectively, last week.

Index token prices dropped across the board. Bitcoin (BTC) and Ether (ETH) prices declined -2.00% and -5.00%, respectively. ETH drove the volatility decline.

Chart of the Week

Hotter-than-expected U.S. inflation data jolted crypto markets last week. Daily realized volatility fell, but prices swung sharply intraday. September CPI rose to 3.7% year-over-year, with core at 2.6%, both slightly above forecasts. A day later, PPI jumped 6.3% year-over-year against a 5.3% consensus, its biggest monthly increase since March 2022. At the time of writing, CME FedWatch shows a 75.1% probability of the December Fed meeting ending with the target range at 4.00%–4.25%, implying a 25-basis-point increase from the current range.

BTC, which traded between $81,000 and $84,000 ahead of the data, briefly fell below $80,000 after the PPI release, marking its lowest level since mid-September. Prices then quickly settled back into the $81,000 to –$82,000 range. These short, sharp moves triggered $3.2 billion in crypto liquidations from October 12 to 18 (78% longs), peaking at $852 million on October 15. Ether was hit harder relative to its market size, logging $791 million in futures liquidations compared to BTC’s $673 million. Overall, the sell-off was driven primarily by forced deleveraging following the inflation data surprise rather than broad spot selling, though ongoing ETF outflows suggest soft institutional demand.

Weekly Performance

Top-cap tokens saw bearish price action last week. FIL (-14.9%) and NEAR(-14.9%) reversed prior-week gains and led the drop.

DeFi categories mostly dropped, except DEX (+1.9%) and Lending (+0.4%). RWA led the drop.

News Highlights

Company News

• Crypto.com launched Predict Pro for U.S. users, offering order-book depth, advanced order types, risk controls, and combinations of two to 20 event contracts. Connected to the CFTC-regulated OG.com Markets, the platform brings event trading closer to a professional derivatives venue while retaining jurisdictional and eligibility requirements.

Regulation

• The U.S. CFTC argued that CME Group lacks legal standing to challenge the agency’s policy allowing U.S. perpetual futures, citing no actual or imminent financial harm. The dispute centers on whether perpetual contracts should be regulated as futures or swaps, which could shape crypto perpetual classification and U.S. market competition.
• France’s National Assembly advanced a proposal to make certain crypto-to-stablecoin conversions taxable starting in 2027, exposing investors to capital gains tax without converting to fiat. Other proposals under consideration would extend exit taxes to certain unrealized crypto gains and require reporting for self-custodial wallets above specified thresholds, potentially increasing compliance obligations for French crypto holders.

Adoption

• JPMorgan is expanding JPM Coin to Ethereum for institutional clients. The token supports onchain payments, collateral posting, and trade settlement through approved access. Expanding beyond its Kinexys network and Base, the deployment broadens distribution while remaining a permissioned bank-deposit product rather than an open retail stablecoin.
• Charles Schwab completed its retail rollout of direct Bitcoin and Ether trading for eligible U.S. clients and initiated phased crypto transfers.
• Standard Chartered launched direct Bitcoin and Ether trading for professional or affluent UAE clients via existing bank accounts. Operating under Dubai VARA approval, its closed-loop custody and settlement model reduces wallet and exchange friction while restricting access to eligible investors.
• Deutsche Bank is preparing to launch regulated digital-asset custody in Germany, targeting Asian financial centers in 2027. The service plans to support Bitcoin, Ether, and select stablecoins under MiCA-related authorization, reflecting a focus on institutional custody over retail crypto trading.
• Mizuho, MUFG, and SMBC completed a joint yen-stablecoin pilot with Mitsubishi Corporation, testing issuance, transfer and redemption, including cross-border use cases. The successful proof of concept paves the way for a potential commercial rollout in Japan’s fiscal year 2026, pending operational and regulatory approvals.

Others

• Solana scheduled its Alpenglow consensus upgrade for October 21, targeting 150-millisecond transaction finality. The upgrade is intended to replace TowerBFT and remove validator votes from onchain transaction counts, improving settlement assurances while altering historical throughput comparisons and requiring validator software upgrades.

Catalyst Calendar

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