📈 Altcoins faced profit-taking as the exchange deposit spiked; Morgan Stanley established a Digital Asset Lab to test stablecoins and DeFi

Quick Take

• Altcoins exchange deposits spiked prior to a crypto market pullback.
• U.S. spot BTC ETFs recorded US$241 million in net inflows last week, down sharply from $2.4 billion in net inflows the week prior. U.S. spot ETH ETFs saw $138 million in net outflows, reversing the $690 million in net inflows the week prior.
• U.S. equities delivered mixed results across major benchmarks at the turn of October. Stock indices traded under pressure most of the week on rate-hike concerns, energy cost fluctuations, and cautious corporate earnings projections. However, markets rallied Friday as softer than expected U.S. nonfarm payrolls and employment data cooled fears of an immediate Fed rate hike. Friday’s rebound lifted the tech-heavy Nasdaq Composite to a modest weekly gain, while the S&P 500 and Dow Jones Industrial Average closed slightly lower.
• The Nasdaq Composite rose +0.5% week-over-week, S&P 500 fell -0.3%, and Dow Jones Industrial Average decreased -1.3%.
• Key Market Drivers:
• Cooling Labor Market and Rate Expectations: September nonfarm payroll growth missed consensus estimates, dialing back expectations for an October Fed rate hike and sparking a Friday rally in growth and rate-sensitive assets.
• Corporate Guidance and Earnings Disappointments: Company-specific earnings updates weighed heavily on traditional blue-chip indices. Nike fell significantly on cautious revenue projections, while tech storage and legacy consumer names faced early selling pressure.  
• Bond Yield and Oil Price Moderation: Treasury yields pulled back from recent multi-year highs late in the week following labor data, easing pressure on interest-rate-sensitive equity valuations.
• Sector and Style Dynamics:
• Growth Outperformance: Large-cap technology and semiconductor equities outpaced the market, driven by renewed buying in AI hardware providers and mega-cap tech (Nvidia, Tesla, Micron, and Broadcom).
• Defensive and Industrial Drag: Blue-chip industrials, consumer discretionary retailers, and healthcare components within the Dow Jones Industrial Average dragged down value and traditional industrial investment styles.

Research Dashboard

According to our research dashboard, the price index increased +0.41%, while volume and volatility indices dropped -19.02% and -64.2%, respectively, last week.

Index tokens saw mixed performance. Bitcoin (BTC) and Ether (ETH) prices rose +2.42% and +1.43%, respectively. BTC led overall price gains, while DOGE drove the drop in trading volume. BTC was the main driver of the volatility decline.

Chart of the Week

On September 30, the seven-day rolling count of altcoin exchange deposit transactions reached 78,181, a 146% surge from roughly 31,720 on September 16. This marked its highest level since October 2025, signaling potential sell-side pressure. Over the same two-week period, the number of unique addresses depositing altcoins nearly tripled, growing from around 17,300 to 50,000.

The spike followed early signs of altcoin outperformance relative to Bitcoin, potentially signaling rising profit-taking or distribution risk among altcoin holders. Altcoins subsequently pulled back late in the week amid elevated Treasury yields, renewed inflation concerns, and broader profit-taking.

Weekly Performance

Top-cap tokens saw mixed performance last week. BTC (+2.4%) led price growth, while OP (-10.1%) led the drop.

DeFi categories diverged, with Lending leading the growth and DEX leading the drop.

News Highlights

Regulation

• The U.S. CFTC proposed defining event contracts as swaps to separate them from gambling products. The proposal conflicts with certain state laws and court decisions, prolonging regulatory uncertainty for prediction markets.
• The U.S. SEC proposed a 760-page crypto custody rule for investment advisers and funds, covering audits, disclosures, and eligible custodians. Adviser self-custody would be limited to exceptional cases.
• The New York State Department of Financial Services (NYDFS) and the Wyoming Division of Banking signed an MOU for joint crypto oversight. The pact enables information sharing, joint examinations, and expedited reviews for qualifying firms to streamline multi-state compliance.
• The UK Financial Conduct Authority (FCA) opened applications for its new crypto regime. Existing AML registrations will not automatically convert, requiring operating firms to apply by February 28, 2027, ahead of the October 2027 implementation.
• South Korea’s Financial Services Commission (FSC) advanced tokenized securities rules covering stocks, bonds, and funds. Issuers managing customer accounts must meet capital and staffing requirements, while retail investors face a 100 million-won annual purchase limit per OTC exchange.

Adoption

• Morgan Stanley established a Digital Asset Lab to test stablecoins and DeFi. The controlled internal environment will examine tokenized deposits, central bank digital currencies, tokenized money-market funds, and DeFi vaults before connecting to core banking systems.

Others

• Ethereum scheduled the Glamsterdam upgrade for Sepolia testnet on October 6. Planned changes include protocol-level proposer-builder separation, block-level access lists, and revised gas pricing. Hoodi testnet and mainnet dates remain unset.
• Bitwise launched the first U.S. spot NEAR ETF on the NYSE Arca, with ticker NRR. With a 0.75% management fee, the ETF holds NEAR directly and may stake a significant portion of its assets. The launch follows a surge in NEAR Intents activity and a sharp rise in token price.
• MetaMask exited affected Ethereum validators after a staking-security incident diverted approximately 0.36 ETH in block-production payments. MetaMask reported no immediate threat to user wallets. While a researcher estimated roughly 17,000 validators (523,000 ETH) were being exited, MetaMask has not confirmed these figures. Lido warned that withdrawing and restaking ETH could take up to 45 days due to Ethereum’s entry queue, during which validators will miss rewards.
• NEAR Intents paused cross-chain services after $3.8 million exploit tied to its Omni deposit/withdrawal infrastructure and smart contract. Services were temporarily restricted across several networks. On October 2, NEAR Intents said it recovered all stolen funds after identifying the attacker.

Catalyst Calendar

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