On the surface, US equities posted modest gains on Friday, buoyed by strong forward-looking statements from two major technology companies. The S&P 500 rose 0.3 per cent, the Nasdaq climbed 0.6 per cent, and the Dow Jones added 0.1 per cent. These moves occurred despite a broader backdrop of tightening financial conditions, as the US Federal Reserve signalled increasing reluctance to cut interest rates in the near term. This hesitation has kept risk sentiment muted across global markets, even as equity index futures point to further upside at the open this week.
Bond markets responded with a slight retreat in yields. The two-year Treasury yield fell by 3.5 basis points to 3.574 per cent, while the benchmark 10-year yield declined by 1.9 basis points to 4.077 per cent. Lower yields typically reflect expectations of slower growth or less aggressive monetary tightening, but in this case, the move appears more technical than fundamental, given the Fed’s recent tone.
Meanwhile, the US Dollar Index strengthened by 0.3 per cent to 99.80, its highest level since August, underscoring the greenback’s role as a safe haven amid uncertainty. In commodities, gold pulled back 0.5 per cent to US$4,003 per ounce, as investors took profits following a strong year-to-date rally. Brent crude oil edged up just 0.1 per cent to US$65.07 per barrel, though gains were pared after former President Donald Trump denied reports of an imminent military strike on Venezuela, removing a geopolitical premium from prices.
Asian equities initially mirrored Friday’s losses but rebounded in early Monday trading, suggesting some stabilisation. Attention now turns to a critical week ahead. More than 1,650 US firms, including 133 S&P 500 constituents, will report third-quarter earnings. These results will offer a crucial test of corporate resilience amid elevated rates and slowing global demand. Additionally, the Bank of England is set to announce its monetary policy decision on Thursday. According to Bloomberg surveys, the overwhelming consensus expects the BOE to hold rates steady in November, continuing its pause amid persistent but moderating inflation pressures in the UK.
Against this macro backdrop, the cryptocurrency market tells a markedly different story, one of retrenchment, risk aversion, and structural fragility. Over the past 24 hours, the total crypto market cap declined by 2.06 per cent, extending a seven-day slide of 6.36 per cent. Market sentiment, as measured by the Fear & Greed Index, sits at 36, firmly in “Fear” territory. This anxiety stems not from macro drivers alone but from a confluence of three interrelated stress points: a sharp altcoin selloff, emerging exchange solvency concerns, and a technical breakdown in market structure.
The first and most visible pressure point is the collapse in altcoin performance. The CoinMarketCap Altcoin Season Index plummeted 10 per cent in 24 hours, falling to a reading of 26, the lowest level since April 2025. High-beta assets bore the brunt of the selling. BSquared Network dropped 10.7 per cent, SUI fell 4.8 per cent, and UXLINK suffered a catastrophic 74 per cent decline. This broad-based weakness reflects a pronounced flight to safety within crypto itself, with capital rotating aggressively into Bitcoin. Bitcoin dominance rose by 0.32 percentage points to 59.5 per cent, nearing the psychologically significant 60 per cent threshold. Historically, such dominance levels have coincided with prolonged altcoin underperformance, as risk capital retreats from speculative narratives.
This rotation follows a familiar pattern: the “sell-the-news” reaction after October’s brief surge in optimism around potential HBAR and SOL ETF approvals. That rally attracted leveraged long positions, which are now being unwound. Perpetual futures funding rates across major altcoins rose by 45 per cent in 24 hours, indicating that long-side leverage is being squeezed en masse. Should Bitcoin dominance breach 60 per cent, the outflow from altcoins could accelerate further, triggering additional liquidations in an already fragile ecosystem.
Compounding this dynamic is a renewed fear of centralised exchange risk, centred on MEXC. Users have reported approximately US$40 million in withdrawal freezes, sparking panic amid the platform’s offering of a 600 per cent annual percentage yield on USDT staking, a rate so anomalously high it defies sustainable yield generation in current market conditions. Such yields often signal hidden leverage, unsustainable tokenomics, or outright insolvency. In response, MEXC’s 24-hour trading volume collapsed by 23 per cent, as traders migrated to perceived safer venues like Binance and Coinbase. Stablecoin outflows from the exchange spiked by 37 per cent over the same period, a classic sign of depositor flight.
This episode evokes painful memories of the 2022 collapses of Celsius and BlockFi, where unsustainable yields preceded catastrophic failures. The psychological trauma from that era, what some traders now call “crypto PTSD,” is amplifying selling pressure beyond what fundamentals alone would justify. The fear is not just about MEXC’s solvency but about potential contagion. If a mid-tier exchange like MEXC faces liquidity constraints, could larger platforms with similar opaque practices be next? This question looms large as trust remains the scarcest commodity in crypto.
From a technical perspective, the market structure has also deteriorated. The total crypto market capitalisation has broken below its 30-day simple moving average of US$3.78 trillion, a key support level watched by algorithmic and institutional traders alike. The Relative Strength Index (RSI) sits at 42.75, below the neutral 50 mark but not yet in oversold territory, suggesting room for further downside. Compounding the bearish signal is a negative MACD divergence, where price makes lower lows while momentum indicators fail to confirm the move, often a precursor to accelerated selling.
Despite the price decline, open interest in derivatives rose by 4.6 per cent in 24 hours. This counterintuitive move indicates that algorithmic traders are actively shorting the breakdown, betting on continued weakness. Such behaviour can create a feedback loop: price drops trigger stop-losses, which fuel further declines, prompting more short entries. In this environment, even modest negative news can spark outsized moves.
The critical question now is whether Bitcoin can hold its US$109,000 support level. While the asset has shown relative resilience, its dominance rising as altcoins bleed, it remains tethered to broader liquidity conditions. A break below US$109,000 could signal a loss of confidence in the entire crypto ecosystem, potentially triggering a broader liquidity crunch. Unlike in 2022, when macro tightening was the primary driver of crypto’s collapse, today’s risks are more endogenous: leverage, exchange opacity, and speculative excess within the asset class itself.
The current selloff is not merely a reaction to Fed policy or dollar strength. It is a stress test of crypto’s internal architecture. The combination of altcoin deleveraging, exchange solvency fears, and technical breakdowns has created a perfect storm of bearish momentum. While traditional markets inch higher on tech strength and earnings hopes, crypto remains mired in a crisis of confidence. Traders must watch not only price levels but also on-chain flows, exchange reserves, and funding rates for signs of stabilisation or further unraveling. Until then, caution remains the only rational stance.
Source: https://e27.co/is-crypto-entering-a-self-inflicted-crisis-inside-the-leverage-and-solvency-spiral-20251103/
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
