October 10 crypto market dip examined by Bitwise CIO; three-question test reveals no long-term damage.

Bitwise CIO: October 10 Crypto Sell-Off a Stress Test, Not a Market Shift

Bitwise Chief Investment Officer Matt Hougan called the October 10 crypto market drop a stress test rather than a structural change, according to his October 14 memo. Roughly $20 billion in leveraged positions were liquidated, but no major firms failed and core technology remained stable.

Hougan attributed the volatility to a late-Friday post from President Trump threatening 100% tariffs on Chinese goods. With U.S. equities markets closed, traders funneled reactions into crypto, triggering a chain of leveraged liquidations. Bitcoin fell as much as 15% before rebounding near $115,000, while Solana (SOL) briefly dropped nearly 40%.

Assessing market impact, Hougan found no systemic failures. Custodians and liquidity providers reported losses but no collapses among major hedge funds or market makers, helping the market recover quickly.

Crypto infrastructure largely held up. Decentralized platforms including Uniswap, Hyperliquid, and Aave operated normally, while some centralized exchanges faced challenges—Binance refunded nearly $400 million to affected traders. Hougan noted that overall, crypto’s infrastructure performed as well as, if not better than, traditional markets might under similar stress.

Investor behavior further stabilized markets. Institutional clients largely remained on the sidelines, reducing the risk of cascading liquidations.

Hougan concluded that fundamentals remain unchanged: security, technology, and regulatory conditions are intact. Structural drivers—clearer rules, rising institutional adoption, expanding stablecoin use, and tokenization of traditional assets—continue to support growth. Year-to-date, bitcoin is up 21% and the Bitwise 10 Large Cap Crypto Index has gained 22%.