BlockByte Weekly

Thanks for reading The BlockByte Weekly, where we summarise the key updates in crypto over the last week and provide our perspective on what you need to know as an investor.​
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Weekly Snapshot

• BTC: US $109,473 (-5.4%)
• Crypto Market Cap: US $3.72T (-6.6%)
• Gold: US $3,758/oz (+3.2%)
• S&P 500: 6,643 (-0.1%)
• ASX 200: 8,788 (+0.5%)
• 10-Year Treasury Yield: 4.174% (+7 bps)

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Key Stories This Week

Leveraged Traders Pull Market Lower

Over the past week, the digital asset market cap retraced by ~6.6% to US $3.72 trillion. Ethereum fell 10.7% compared to Bitcoin's more modest 5.4% pullback. Smaller altcoins like Hype (-18%), Solana (-16%) and Sui (-14%) were hit hardest as risk-off sentiment took a hold of the market this week.

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While analysts debate whether this is the beginnings of a bear market or investors taking a breather remains to be seen. Part of the move lower was driven by the liquidation of leveraged traders which topped US $1.1B on Monday alone. The majority of positions that were liquidated were traders that were leveraged long, expecting the market to move materially higher following last week's rate cut from the US Federal Reserve.

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Breakdown of Liquidation Value by Asset (Monday 22nd October, 2025)

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Open interest which is the sum of the value of all bets on the future price action of digital assets (futures and options contracts) is currently US $195.8B, down slightly from the all-time highs of US $227B last week. In other words, the appetite for investing in and trading digital assets has never been higher.

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The key takeaway is that much of the recent correction was driven by a flush of overzealous and leveraged traders trying to speculate with anywhere from 2x-100x of their collateral hoping for outsized returns rather than a a more fundamental reason for a downturn in the market.

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There are broader concerns around a weakening US jobs market and sticky inflation which is tempering investor's appetite for risk-on assets, however, we believe that there are larger tailwinds which we expect to drive markets higher over the coming months which we'll dig into below.

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Global Liquidity is Rising, Gold Reserves Expected to Overtake US Treasuries

In a widely circulated online chart, the Financial Times revealed that gold reserves are expected to overtake the value of US treasuries held by central banks around the world. Gold has surged by more than 43% year-to-date in what is being described as part of global de-dollarisation in response to rising US fiscal deficits, accelerating debts and a shifting in the balance of power.

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Bond holders' demand for returns to hold US debt for 30-years have risen 7x from the March lows in 2020 of 0.7% to ~4.7% today. With the US running a US ~$2 trillion annual deficit, the overall picture to keep in mind here is that global liquidity is continuing to rise. With rates falling, and liquidity rising, we expect a continued push into alternative stores of value like gold, and bitcoin.

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While we have to use a different axis to measure the scale of returns (left axis) due to bitcoin's significant outperformance over time, take a look at the correlation of bitcoin (orange line) when gold moves higher. We largely view the recent move up in gold as a leading indicator of what is likely to transpire for bitcoin's price, albeit it might happen imperfectly or with a lag.

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‍World's Second Largest Asset Manager, Vanguard, Reportedly Considering Offering Bitcoin to Clients

While reports are still unconfirmed, several major outlets have reported that inside Vanguard, discussions are taking place to allow their clients with ~US $11 trillion in funds under management to begin investing in digital assets. Vanguard’s former CEO, Tim Buckley, who led the firm from 2018 to 2024, maintained its traditionally conservative approach and kept the company at arm’s length from crypto. He was succeeded in July 2024 by Salim Ramji, the first external hire to lead Vanguard, who previously ran BlackRock’s ETF and index business and oversaw the launch of its high-profile Bitcoin ETF which now holds ~US $80B worth of bitcoin.

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A move like this from Vanguard would not only drive more liquidity into the digital asset market, but it would cement bitcoin and digital assets as part of the traditional portfolio mix.

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In summary, we're structurally bullish heading into Q4 of 2025 despite the recent pullback in the digital asset market. We expect bitcoin to play catch-up to gold on the back of rising global liquidity and the search for alternative stores of value.

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Until next week,
James

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James Brannan
Managing Director
BlockByte