The crypto crash on October 10 looks more like a stress test than a regime change, Bitwise chief investment officer Matt Hougan wrote in his October 14 memo.
Hougan links the sell-off to a Friday night post by President Trump threatening 100% tariffs on Chinese goods; With stocks closed, he wrote, traders channeled the reaction into the always-open crypto market. As prices fell, he said, highly leveraged positions were liquidated in sequence, deepening the move.
By his count, roughly $20 billion in leverage was wiped out (the largest such reduction in cryptocurrency history) and bitcoin fell as much as 15% before recovering near $115,000 on Monday. Some major companies fell further during the day, including SOL, which he said briefly fell around 40%.
From there, Hougan focused on whether something had broken. He wrote that channel checks between custodians and liquidity providers showed losses but no collapses in major players such as hedge funds or prominent market makers, one of the reasons he believes the rally was rapid.
He then evaluated the “plumbing” of the market. According to the memo, decentralized venues including Uniswap, Hyperliquid, and Aave reported normal operations through volatility, while some centralized platforms stumbled; Hougan said Binance later refunded traders nearly $400 million. Taken together, he argued, cryptocurrency infrastructure performed as well (if not better) than traditional markets under similar pressure.
Investor behavior was the latest signal. Hougan wrote that his inbox remained unusually quiet; The media and social media were abuzz, but institutional clients largely stood by. In his view, that calm reduced the chances of a cascading easing and helped the market quickly reset once the policy tone cooled.
Because none of the fundamentals of cryptocurrencies changed (no security breach, no core technological flaw, and no deterioration in the regulatory environment), Hougan concludes that the episode does not alter the long-term path.
He points to the same structural drivers he has emphasized all year: clearer rules, growing institutional allocations, the growing role of stablecoins in payments, and the acceleration of tokenization of traditional assets.
So far this year, he wrote, bitcoin is up 21% and the Bitwise 10 Large Cap Crypto Index is up 22%.
In the near term, expect tighter liquidity as market makers regroup (conditions that can exaggerate moves in either direction) before attention returns to fundamentals.
