Crypto’s October 10 plunge looks more like a stress test than a regime change, Matt Hougan, Bitwise’s chief investment officer, wrote in his October 14 note.
Hougan links the sale to a message released Friday evening by President Trump threatening 100% tax on Chinese goods; With stocks closing, he wrote, traders channeled their reactions to the still-open crypto market. As prices fell, he explained, highly leveraged positions were liquidated in sequence, accentuating the move.
By his count, about $20 billion in leverage was wiped out — the largest such unwind in crypto history — with bitcoin falling as much as 15% before rebounding near $115,000 on Monday. Some majors fell further during the day, including SOL, which he said briefly fell about 40%.
From there, Hougan focused on whether anything had broken. He wrote that channel checks with custodians and liquidity providers showed losses but no collapse among major players such as hedge funds or prominent market makers — one reason he believes the rebound was rapid.
He then assessed the “plumbing” of the market. According to the memo, decentralized sites including Uniswap, Hyperliquid and Aave reported normal operations despite the volatility, while some centralized platforms stumbled; Hougan said Binance later refunded traders nearly $400 million. Overall, he argued, crypto infrastructure performed as well, if not better, than traditional markets could have under similar pressure.
Investor behavior was the final indicator. Hougan wrote that his inbox remained unusually quiet; the media and social networks were lively, but institutional clients largely sat on their hands. He said this calm reduced the risks of a cascading outcome and helped the market reset quickly once the political tone cooled.
Because none of the foundations of crypto have changed – no security breaches, no core technological failures, 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 factors he’s been emphasizing all year: clearer rules, growing institutional allocations, the growing role of stablecoins in payments, and accelerated tokenization of traditional assets.
Year to date, he wrote, bitcoin is up 21% and the Bitwise 10 Large Cap Crypto Index is up 22%.
In the near term, he expects liquidity to diminish as market makers consolidate — conditions that can exaggerate moves in either direction — before attention returns to fundamentals.
