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Why crypto is crashing: DeFi hacks, Bitcoin cycle fears, and the Fed’s data blackout

Why crypto is crashing: DeFi hacks, Bitcoin cycle fears, and the Fed’s data blackout

The global macro environment has entered a delicate and highly sensitive phase, defined by the intersection of three structural forces: exuberance around artificial intelligence-driven corporate activity, pronounced ambiguity in monetary policy direction, and growing fragility within the digital asset ecosystem. Recent AI-related strategic partnerships and investments have temporarily buoyed risk appetite, particularly in select segments of the equity market. This rally rests on thin foundations.

Beneath the surface, investor confidence remains fragile, undermined by inconsistent messaging from Federal Reserve officials regarding the future path of interest rates. This uncertainty is further exacerbated by an ongoing US government shutdown, which has suspended the publication of key economic indicators, from inflation prints to labour market reports, that are essential for informed policy decisions and market pricing. In the absence of reliable data, market participants are forced to navigate by sentiment alone, heightening the risk of dislocations, exaggerated volatility, and asset mispricing across both traditional and digital financial markets.

The Reserve Bank of Australia’s decision to hold its cash rate target steady at 3.6 per cent on November 4 aligns with broad market expectations and reflects a global central banking posture of cautious inertia. Without fresh data from the United States, the world’s largest economy, other central banks are reluctant to make bold moves.

Meanwhile, US Treasury yields edged higher, with the two-year yield closing at 3.602 per cent and the 10-year at 4.107 per cent, both rising by 2.9 basis points. This subtle steepening of the yield curve suggests that traders are pricing in a slightly more hawkish near-term stance from the Fed, despite recent rhetoric hinting at potential cuts. The US Dollar Index mirrored this sentiment, climbing modestly to 99.88.

In commodities, gold retreated for a second consecutive day, settling near US$4,000 per ounce. This decline coincided with news that China would end its tax rebate program for certain retailers, a policy shift that could dampen consumer demand and, by extension, reduce safe-haven appetite for the yellow metal. Simultaneously, Brent crude oil held steady at US$64.89 per barrel, as traders digested OPEC+’s decision to pause its planned output increases in the first quarter of 2026. The group’s move reflects growing concern that global demand will soften in the coming months, potentially pushing the market into oversupply territory.

Against this macro backdrop, the cryptocurrency market experienced a sharp contraction, shedding 3.56 per cent in 24 hours to fall from US$3.55 trillion to US$3.42 trillion in total valuation. This decline extends a broader weekly slide of 7.7 per cent, with the Fear & Greed Index plunging to 27, a clear signal of prevailing pessimism. Three interlocking forces drove this selloff: a major DeFi exploit, mounting concerns about Bitcoin’s market cycle, and a renewed correlation with weakening tech equities.

The most immediate catalyst was the US$128 million exploit targeting Balancer V2 pools on November 3. The attack leveraged a flaw in vault access controls, draining assets across multiple chains including Ethereum and Arbitrum. Despite prior audits by reputable firms like OpenZeppelin and Trail of Bits, the protocol’s architecture proved vulnerable to a sophisticated cross-chain manipulation.

In response, Venus Protocol froze BAL collateral, underscoring the systemic risk that one protocol’s failure can pose to the broader DeFi ecosystem. This event shattered the illusion of self-regulation within DeFi, a narrative that had gained traction as the sector matured. With DeFi’s total value locked already down from US$157.5 billion to US$149.6 billion in the week leading up to the hack, institutional investors are likely to adopt a more cautious stance, delaying capital allocation until clearer security standards and regulatory guardrails emerge.

Compounding this technical vulnerability is a growing fear that Bitcoin’s current bull cycle may have already peaked. The asset briefly dipped to US$105,000 on November 4, a level that represents a 16 per cent drawdown from its all-time high. More critically, Bitcoin now trades below its 200-day simple moving average of US$109,882, a key technical threshold that often signals a shift in long-term momentum.

Analysts point to cyclical timing as further evidence of exhaustion: it has been 1,078 days since the November 2022 low, which corresponds to 101 per cent of the typical historical cycle length. With only 45 days remaining in the historical 518 to 580 day window for cycle peaks, the absence of a decisive breakout above US$113,000 suggests that buying pressure is waning. This view is reinforced by outflows from US spot Bitcoin ETFs, which saw assets under management drop by US$13.4 billion month-over-month to US$147.55 billion, indicating that even institutional demand is cooling.

Perhaps most concerning for crypto bulls is the reassertion of a strong correlation with the Nasdaq-100. Over the past 24 hours, the correlation coefficient between Bitcoin and the QQQ ETF reached 0.73, as the tech-heavy index fell 0.8 per cent. This linkage demonstrates that, despite narratives about crypto’s independence, it remains tethered to the fortunes of growth-oriented equities.

While AI-driven deals lifted select stocks, such as Amazon, the broader market remains red, with over 300 S&P 500 constituents in negative territory. This narrow leadership is unsustainable and increases the risk of a broader tech selloff, which would inevitably drag crypto lower. Further eroding Bitcoin’s unique value proposition is its declining correlation with gold, which turned negative at -0.47 over the past 30 days, undermining its status as an inflation hedge.

In summary, the current market environment reflects a perfect storm of technical, cyclical, and systemic pressures. The Balancer exploit exposed foundational weaknesses in DeFi’s infrastructure, shaking investor confidence at a time when Bitcoin’s price action suggests the bull cycle may be running on fumes.

Meanwhile, the rekindled correlation with tech equities ties crypto’s fate to a sector that is itself vulnerable to shifting monetary policy and earnings disappointments. While the Bitcoin RSI has dipped to an oversold 22.63, suggesting a potential short-term bounce, any sustained recovery will require a credible catalyst, most likely a clear dovish pivot from the Federal Reserve.

Until then, traders should closely monitor Bitcoin’s US$105,000 support level and the QQQ’s 630 mark as critical barometers of market direction. In the absence of fresh economic data due to the government shutdown, these technical levels may be the only reliable guides through an increasingly foggy macro landscape.

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”.

www.anndy.com
j j j

Fed cuts rates but warns against complacency: Bitcoin and altcoins react sharply

Fed cuts rates but warns against complacency: Bitcoin and altcoins react sharply

The recent Federal Reserve policy decision has injected a fresh wave of caution into global financial markets, and the cryptocurrency sector has not been spared. On the surface, the Fed delivered exactly what many had anticipated: a 25 basis point rate cut, accompanied by the early termination of quantitative tightening. Beneath that veneer of predictability lies a more complex and nuanced message, one that has unsettled investors across asset classes.

Chair Jerome Powell’s explicit pushback against the market’s assumption of another rate cut in December has recalibrated expectations, triggering a repricing of risk and a retreat from speculative positioning. This recalibration is now rippling through equities, bonds, commodities, and digital assets alike, underscoring just how tightly crypto remains tethered to macroeconomic sentiment despite its purported independence.

Powell’s assertion that further easing is not a foregone conclusion marked a clear departure from the dovish momentum that had built over recent weeks. Until this week, markets had priced in near certainty of a December rate cut, with implied probabilities hovering close to 100 per cent. That confidence has now evaporated, with the odds collapsing to roughly 60 per cent. The shift has immediate consequences.

Treasury yields responded sharply, with the two-year US note jumping 11 basis points to 3.6 per cent, while the benchmark 10-year yield climbed 9 basis points to 4.07 per cent. Even the long-end 30-year yield rose, advancing 7 basis points to 4.61 per cent. Higher yields increase the opportunity cost of holding non-yielding assets like Bitcoin and gold, both of which retreated in the wake of the announcement. Spot gold fell 0.6 per cent to close at US$3,929.36 per ounce, while the crypto market as a whole shed 1.22 per cent over the past 24 hours.

Equity markets also reflected this growing unease. Although the Nasdaq managed a modest 0.6 per cent gain, the broader S&P 500 ended flat, and the Dow Jones Industrial Average slipped 0.2 per cent. More telling than the headline moves was the underlying volatility sparked by signs of internal division within the Federal Open Market Committee. When central bank consensus fractures, markets lose their anchor.

This uncertainty manifests not just in price swings but in a broader retreat from risk, which explains why crypto, despite its unique technological underpinnings, continues to trade in close correlation with tech-heavy equities like the Nasdaq 100. Over the past 24 hours, Bitcoin’s price action showed a 0.61 correlation with QQQ, reinforcing the idea that macro drivers, not on-chain fundamentals, are currently setting the tone.

Within the crypto ecosystem, the reaction unfolded across three distinct but interconnected layers: macro policy impact, derivatives behaviour, and altcoin-specific dynamics. In the first layer, the Fed’s hawkish tilt acted as the primary catalyst. By tempering expectations for further easing, Powell effectively removed a key tailwind that had supported risk assets throughout the latter half of the year.

Traders who had positioned for a dovish December were forced to unwind those bets, leading to a broad-based pullback. Bitcoin’s seven-day Relative Strength Index now sits at 55.36, indicating neutral momentum, but market psychology tells a different story. The Fear & Greed Index has dipped to 34, signalling that fear, not greed, is dominating sentiment. This emotional backdrop often precedes either capitulation or consolidation, depending on what policymakers do next.

The second layer derivatives activity offers a more nuanced picture. Perpetual futures volume surged by 9.15 per cent to US$1.62 trillion, suggesting heightened trader engagement. This surge was not accompanied by bullish conviction. Instead, average funding rates collapsed by 81.63 per cent to just 0.000974 per cent, a clear sign that leveraged long positions are being scaled back. Funding rates, which reflect the cost of maintaining long or short positions in perpetual contracts, serve as a real-time gauge of market sentiment.

When they turn deeply negative or collapse toward zero, it typically indicates that traders are either hedging or actively shorting, rather than chasing upside momentum. Open interest inched up by 2.33 per cent, hinting at new positions being opened, but without liquidation data, it is difficult to assess whether this reflects fresh shorts or defensive longs. What is clear is that the derivatives market is not signalling a return to aggressive risk-taking. A rebound in funding rates would be needed to confirm any meaningful shift back toward bullish positioning.

The third and most volatile layer lies in the altcoin segment, where event-driven sell-offs have amplified broader macro weakness. Tokens like Flamingo (FLM) and Concordium (CCD) experienced sharp declines of 5.59 per cent and 19.04 per cent, respectively, driven by idiosyncratic factors rather than systemic ones. In Flamingo’s case, the impending delisting from Binance, effective November 12, has triggered a wave of preemptive selling.

For Concordium, the drop appears to be classic profit-taking after an extraordinary 428 per cent rally year-to-date. Similarly, Giggle Fund (GIGGLE) corrected by 19.59 per cent following a staggering 541 per cent monthly surge. These moves highlight a recurring theme in crypto markets: low-liquidity assets are especially vulnerable to sharp reversals when macro conditions turn unfavourable. Without deep order books or institutional backing, even minor shifts in sentiment can trigger outsized price swings.

Looking ahead, all eyes will turn to Friday’s US nonfarm payrolls report. This data point carries outsized importance because it will offer the first major labor market signal since the Fed’s latest decision. Strong employment numbers could reinforce Powell’s cautious stance and further diminish expectations of a December cut, deepening the risk-off mood. Conversely, a softer print might revive hopes for additional easing, potentially stabilising or even reversing recent losses.

For Bitcoin, the technical picture adds another layer of intrigue. With a market capitalisation of US$3.74 trillion, the leading cryptocurrency is currently testing the 78.6 per cent Fibonacci retracement level, a key support zone closely watched by both algorithmic and discretionary traders. Whether this level holds will likely depend less on on-chain metrics and more on the macro narrative that emerges from the jobs data and subsequent Fed commentary.

In sum, the current crypto dip is not an isolated event but a reflection of broader macro caution. The Fed’s decision to cut rates while pushing back against further easing has created a policy gray zone in which markets must navigate conflicting signals without clear guidance.

In such an environment, risk assets tend to consolidate or correct until a new consensus forms. Derivatives data suggests that traders are not yet capitulating but are certainly treading carefully. Altcoins, meanwhile, remain exposed to both macro headwinds and project-specific risks.

The path forward hinges on whether incoming economic data validates the Fed’s caution or forces a pivot back toward accommodation. Until then, expect volatility to persist, and sentiment to remain fragile.

 

Source: https://e27.co/fed-cuts-rates-but-warns-against-complacency-bitcoin-and-altcoins-react-sharply-20251030/

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”.

www.anndy.com
j j j

The new market symbiosis: How Fed easing, AI, and crypto ETFs are lifting equities

The new market symbiosis: How Fed easing, AI, and crypto ETFs are lifting equities

As markets wrapped up trading on Monday, September 30, 2025, investors witnessed a steady climb in major indices, driven by ongoing negotiations in Congress to prevent a government shutdown. Traders focused on these developments, which injected a dose of optimism into the session.

The Dow Jones Industrial Average climbed 69 points, marking a 0.2 per cent increase. Meanwhile, the S&P 500 advanced 0.3 per cent, and the Nasdaq Composite led the pack with a 0.5 per cent gain. This upward movement highlighted a resilient market mood, even amid earlier fluctuations that tested investor resolve.

Earlier in the day, the Dow showed signs of recovery after a choppy start. It ended up 32 points, or 0.1 per cent, despite spending much of the session in negative territory. This modest rebound came as 18 out of the 30 component stocks turned positive, indicating solid breadth across the index. Such participation from a majority of its members suggested underlying strength, rather than a rally propped up by just a handful of heavyweights.

The S&P 500, for its part, held firm in positive ground throughout, rising 0.2 per cent by early afternoon. It experienced several ups and downs, reflecting the push and pull between buyers and sellers, yet it never dipped into the red for long.

The Nasdaq Composite’s 0.5 per cent advance stood out, fuelled by renewed interest in artificial intelligence-related names and the broader Big Tech sector. This dip-buying behaviour explained much of the divergence, as tech enthusiasm lifted the index while others lagged slightly.

The Dow faced headwinds mid-session, slipping 45 points or 0.1 per cent after an initial pop higher. Only 14 of its 30 stocks gained ground at that point, underscoring its relative underperformance compared to peers. Unlike the Nasdaq or S&P, the Dow carries fewer pure-play AI and tech exposures, and it prices its components by share value rather than overall market capitalisation. This structure amplified the drag from laggards.

Notably, Apple, one of the Dow’s key holdings, traded lower despite its recent strong run, which further weighed on the index. In contrast, the Nasdaq benefited from its heavier tilt toward innovative sectors, where investors scooped up shares on any weakness, perpetuating the rally in tech darlings.

Shifting focus to broader influences, several macroeconomic tailwinds and regulatory advancements played a pivotal role in bolstering sentiment. The Federal Reserve’s rate cut in September, which brought the target range to 4.00 per cent to 4.25 per cent, eased borrowing pressures across the economy. Coupled with this, the GENIUS Act streamlined rules for exchange-traded funds, enhancing liquidity prospects.

The Securities and Exchange Commission approved ETFs for alternative coins and unified derivatives regulations, which cleared away much of the fog surrounding crypto investments. These steps actively drew in more capital from institutions, fostering a positive spillover into equities. Crypto’s seven-day correlation to the Nasdaq 100 stood at +0.72, illustrating how shared economic drivers linked these assets.

Investors now anticipate the SEC’s October 10 deadline for approving a Solana ETF, with analysts pegging the odds above 95 per cent. This potential green light could further integrate digital assets into traditional portfolios, amplifying the bullish momentum seen in stocks.

Binance’s recent initiatives added another layer of institutional momentum to the mix. The exchange introduced a white-label platform allowing banks and brokerages to integrate crypto offerings seamlessly, echoing a similar launch by Coinbase in June. This development sparked a sharp uptick in activity, with spot trading volume surging 58.47 per cent over 24 hours and derivatives volume jumping 77.41 per cent.

Such increases pointed to heightened engagement from professional players, bridging the gap between traditional finance and digital assets. Tokens like BNB rose 3.78 per cent, while Mantle climbed 7.41 per cent, buoyed by corporate adoptions such as CEA Industries’ US$160 million purchase of BNB for its treasury.

These moves signalled growing confidence in crypto as a viable reserve asset. Looking ahead, Binance’s full rollout of this service in the fourth quarter will serve as a crucial gauge for enduring demand from institutions, potentially sustaining the uplift in related equities.

On the technical and on-chain front, the picture presented a blend of encouraging and cautionary signals. BNB’s Maxwell hard fork reduced block times to 0.75 seconds, accelerating network efficiency and spurring greater usage. Bitcoin’s market dominance edged up to 58.05 per cent, hinting at a shift toward established large-cap cryptos amid uncertainty.

Total open interest in crypto reached US$1.14 trillion, up 9.66 per cent in the last 24 hours, which underscored robust speculative interest. However, the MACD histogram dipped to -10.59 billion, flagging potential overheating in derivatives markets. This duality captured the market’s current state: enthusiasm tempered by risks of excess leverage.

In my opinion, this Monday’s market action marks a turning point where policy easing and innovation converge to propel assets higher, albeit with vulnerabilities. I view the Fed’s dovish stance as a foundational support, lowering costs and encouraging risk-taking that benefits both stocks and crypto. The rate cut directly contributes to improved liquidity, which in turn supports the Nasdaq’s outperformance through investments in AI and tech.

Regulatory clarity, especially around ETFs and derivatives, removes barriers that once deterred big money, and the high odds for Solana’s approval excite me as a catalyst for fresh inflows. Binance’s push feels like a game-changer, actively pulling traditional finance into the fold and driving those volume spikes that ripple into broader markets. The corporate buys, like CEA Industries’ sizable BNB stake, convince me that we’re seeing real adoption, not just hype.

I remain watchful of the mixed technicals. The rise in Bitcoin dominance suggests investors favor safety in giants, which could cap gains in smaller names and indirectly pressure diversified indices like the S&P. The open interest boom is thrilling, but that negative MACD reading worries me about overextension in derivatives, where unwinds could spark volatility. Spot ETF assets under management at US$147.75 billion provide a buffer, yet if leverage risks escalate, they might not hold the line.

Overall, I lean bullish, believing macro tailwinds and institutional integration outweigh the froth. The Dow’s recovery, with 18 components advancing, reassures me of broad participation, while the Nasdaq’s 0.5 per cent gain highlights sector leadership. If Congress averts the shutdown, this could extend the grind higher.

 

Source: https://e27.co/the-new-market-symbiosis-how-fed-easing-ai-and-crypto-etfs-are-lifting-equities-20250930/

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”.

www.anndy.com
j j j