Crypto Markets Recalibrate as Leverage Unwinds: Stablecoins Surge, Bitcoin Holds Sub-$112K Ahead of Fed Decision
October Alternative assets

The cryptocurrency market enters a cautious yet potentially decisive phase following last week’s sharp deleveraging. While the recent liquidation flushed out excessive leverage, paving the way for a healthier market structure, it also signalled the fragility of sentiment amid macroeconomic uncertainty. In addition, the continued expansion of Stablecoin highlights crypto’s evolution from speculative trading to real-world financial infrastructure, even as liquidity remains thin and volatility elevated.

Major Trends & Developments
  1. Massive Market Liquidation and Deleveraging: The aftershocks of one of the largest ripple liquidation events in crypto history, estimated at over US $19 billion, continue to shake the markets. Far from a simple panic-driven selloff, the event appears to have been amplified by coordinated market activity and technical triggers. Widely described as a “historic deleveraging” and “necessary purge” poised to drain excess leverage, it exposed the fragility of margin-heavy traders and reset the industry’s risk dynamics. Though painful in the short term, this large-scale liquidation could improve long-term market health by curbing speculative excesses and restoring discipline.
  2. Stablecoin Supply Surge and Evolving Role: Stablecoins have continued to redefine the digital asset landscape, with total supply jumping 72% year-over-year to nearly US $300 billion (CoinDesk, Oct. 15). The growth has been led by tokens on Ethereum and Solana, alongside the launch of new platforms like Plasma, which issued over US $6 billion in stablecoins within its first week. The expansion extends beyond trading with user cases spanning payments, card integrations, and “neo-banking” solutions, solidifying stablecoins’ position as a critical bridge between decentralized finance and traditional payment systems. The shift from speculation to utility marks a key step in crypto’s institutional expansion.
  3. Market Sentiment and Macro Context: With markets anticipating an upcoming Federal Reserve interest rate cut, investors have begun rotating toward safe-haven assets, triggering outflows from stablecoins and sell-offs into fiat currencies. As of the date of the report, major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) were underperforming historical norms, with Bitcoin’s October month-to-date return at approximately –6.1%, compared to a historical average of +19%. The pattern reaffirms that macroeconomic factors, particularly interest rates and liquidity, remain decisive in shaping crypto market behaviour.
    Bitcoin’s short-term hinges on whether ETF inflows can offset whale-driven selling pressure and whether fears surrounding quantum computing (quantum FUD) would intensify. Technically, BTC is caught between the 30-day Simple Moving Average (SMA) at US $114,462 and Fibonacci support around US $108,434, reflecting a delicate tug-of-war between momentum and support levels.
  4. Technical Resistance for Altcoins: While large-cap assets like BTC and ETH show relative resilience, altcoins remain under pressure. Analysts caution that XRP, despite their brief recovery, was approaching a strong resistance zone that could trigger renewed correction. Across the broader market, these resistance levels have increasingly acted as traps in volatile markets, exposing the instability that persists across smaller-cap digital assets.
  5. Ecosystem Events and Regulatory Outlook: Industry gatherings such as the European Blockchain Convention (11th Edition), held in Barcelona on October 16–17, 2025, continue to serve as platforms for major announcements, partnerships, and regulatory discussions that shape forward-looking developments across the crypto ecosystem. These events often act as a catalyst for sentiment shifts and early signals of evolving institutional and policy directions.

What Lies Ahead

We expect BTC to maintain below the $100,000 mark before the much-anticipated mega rally, as traders digest recent corrections and macro cues. The next major pullback will test whether the market is merely correcting or entering a deeper consolidation phase. Stablecoin’s supply could continue, especially where adoption expands into payments, cards, and cross-border transactions. The upcoming Fed’s decision will likely steer short-term flows, either reviving crypto appetite as yields drop or dampening sentiment should risk aversion rise.  In this evolving environment, decentralized infrastructure, DeFi, stablecoins, and chain interoperability will be monitored closely for resilience or cracks as the market transitions from speculation to substance.

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Quote

Quicksand Market

By: Sandra A. Aghaizu

The crypto market moves like a quick sand dream…
What looked solid yesterday now slips beneath our feet.
Last week’s fall pulled down the weight of greed,
Sinking the borrowed hopes of those who leaned too far.

Yet from that slow descent, a strange calm rises…
The ground resets, softer, cleaner, and bare.
Stablecoins glimmer like small islands of safety,
Steady shapes in a shifting land.

Still, every step is cautious,
For in this field of sand and promise,
One wrong move…
And even confidence can disappear beneath the surface.

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