Crypto’s Oct. 10 plunge looks more like a stress test than a regime change, Bitwise Chief Investment Officer Matt Hougan wrote in his Oct. 14 memo.
Hougan links the sell-off to a late-Friday post from President Trump threatening 100% tariffs on Chinese goods; with equities shut, he wrote, traders funneled reaction into the always-open crypto market. As prices slid, he said, highly leveraged positions were liquidated in sequence, deepening the move.
By his tally, roughly $20 billion in leverage was wiped out—the largest such unwind in crypto’s history — with bitcoin down as much as 15% before rebounding near $115,000 by Monday. Some majors fell further intraday, including SOL, which he said briefly dropped about 40%.
From there, Hougan focused on whether anything broke. He wrote that channel checks across custodians and liquidity providers showed losses but no collapses at major players such as hedge funds or prominent market makers — one reason he thinks the rebound was swift.
He then assessed the market’s “plumbing.” According to the memo, decentralized venues including Uniswap, Hyperliquid, and Aave reported normal operations through the volatility, while some centralized platforms stumbled; Hougan said Binance later refunded traders by nearly $400 million. Taken together, he argued, crypto’s infrastructure performed as well as — if not better than — traditional markets might have under similar strain.
Investor behavior was the final tell. Hougan wrote that his inbox stayed unusually quiet; media and social feeds were lively, but institutional clients largely sat on their hands. In his view, that calm reduced the odds of a cascading unwind and helped the market reset quickly once the policy tone cooled.
Because none of crypto’s foundations changed — no breach in security, no core technology failure, and no deterioration in the regulatory backdrop — Hougan concludes the episode does not alter the long-term path.
He points to the same structural drivers he has emphasized all year: clearer rules, rising institutional allocations, stablecoins’ growing role in payments and accelerating tokenization of traditional assets.
Year to date, he wrote, bitcoin is up 21% and the Bitwise 10 Large Cap Crypto Index is up 22%.
Near term, he expects thinner liquidity as market makers regroup — conditions that can exaggerate moves in either direction — before attention returns to fundamentals.
