Policy Progress & Portfolio Pressures

Key takeaways for the month

October 2025 was defined by another wave of new product access and easing policy. The SEC's recently released generic listing standards green-lit new U.S. spot ETFs beyond BTC and ETH, headlined by Bitwise's Solana staking ETF, which gathered over $400M in fund flows in the first five days of trading. CME launched options on Solana and XRP futures, expanding tools for hedging and directional strategies. The FOMC delivered a 25 bp cut to 3.75–4.00% and signaled a tapering of quantitative tightening, modestly easing financial conditions. Fund flows set early-month records, then turned choppy before firming into month-end as investors rotated across BTC, ETH and SOL-related ETPs.

Risk-Off Rotation: However, product breadth and incremental monetary easing failed to reinforce confidence. The Fed Chair's post-meeting remarks dampened sentiment and boosted market volatility, leading digital assets lower in October with broad declines and a renewed tilt toward defensiveness. The CF Ultra Cap 5 Index fell 4.19% for the month but remains up 13.64% YTD. The CF Free-Float Broad Cap Index slipped 4.87% (+9.13% YTD), and the CF Diversified Large Cap Index declined 7.15% (+3.62% YTD). Higher-beta cohorts led the drawdown: the CF Smart Contract Platforms Index dropped 17.09% (−23.38% YTD), the CF DeFi Index fell 18.82% (−36.31% YTD), and the CF Digital Culture Index plunged 22.92% (−54.21% YTD). Overall, mega-caps proved relatively resilient while riskier segments materially underperformed.

Individual Movers: Bitcoin demonstrated notable resilience amid a broad market downturn, declining only 4.5% as approximately $5 billion in ETF inflows provided a steady bid during the selloff. Hedera’s HBAR token also exhibited relative strength, falling just 6.6%, supported by positive sentiment following its October 28th ETF listing, which provided a notable boost to the token’s price. General-purpose smart contract platforms Avalanche (AVAX) and Fantom (FTM) were among the weakest performers in October, declining 39.4% and 37.6%, respectively. Despite continued developments in both ecosystems, the persistent impact of low liquidity following the liquidation event on October 10th remains a significant headwind.

Fund Flows Remain Robust: October saw continued inflows into digital asset funds, with investors allocating roughly $6.2 billion. Bitcoin accounted for the lion’s share at $5.1 billion, while Ether lagged with a more modest $1.1 billion. Regionally, North America dominated activity, recording net inflows of about $9.1 billion, compared to Europe’s $120 million, highlighting the relative strength of U.S. investor demand.

Alt-Futures Activity Surge: Bitcoin futures saw a slight decrease in open interest in September, falling 5.7% from 15,014 to 14,157 contracts. Ether futures also gained momentum, with open interest climbing 14.5% to a record 17,281 contracts, supported by robust trading activity that peaked at 88,733 contracts at month-end. Meanwhile, Solana and XRP futures posted substantial expansion amid heightened investor interest: Solana’s open interest surged 30.5% to 13,053 contracts, with volumes exceeding 31,000 contracts, while XRP’s open interest jumped 18.1% to 6,628 contracts, accompanied by a material increase in trading volumes.

BVX Records 3.2 Sigma Mid-Month Spike: The CF Bitcoin Volatility Index Settlement Rate (BVXS) is a daily benchmark that provides a forward-looking, 30-day constant-maturity measure of implied volatility, derived from CFTC-regulated Bitcoin option contracts traded on the CME. The BVX reflects the fair strike of a variance swap. Over the past month, the BVX ranged between 38.1 and 52.0. During this period, volatility increased materially, with the BVX recording a 3.2 sigma move (based on our rolling 30-day z-score) around mid-month.

Total Value Locked Slips: Total Value Locked (TVL) in decentralized finance (DeFi) represents the aggregate value of assets deposited across DeFi protocols, expressed in U.S. dollars. It serves as a key indicator of the sector’s overall health and growth. Over the past month, total DeFi TVL declined by 1.9% to approximately $432 billion, as growth stalled amid pullbacks in Ether and Solana following their recent rallies.

Miner Economics Stable: Bitcoin’s hash rate grew significantly in September, rising 9.7% to 1050 exahashes per second. Mining difficulty, which measures the computational effort required to mine a new block and adjusts to maintain consistent block creation times, increased by 5.1% after a period of faster block times in late September. The next difficulty adjustment, expected in the mid October, is currently projected to be a 0.8% increase.

ETH Fees Up 15.3% as DEX Activity Commands 43% Share: Analyzing Ethereum’s total fees and their sector composition provides insight into the use cases driving network revenue. Ethereum layer-1 fees rose 15.3% month-over-month, increasing to $41.1 million in October from $35.9 million in September. Decentralized exchanges accounted for the largest share at 43.3%, followed by lending protocols at 21.9% and liquid staking at 17.8%. Derivatives contributed 15.7%, while real-world asset tokenization represented just 1.3%, underscoring the continued dominance of DEX activity in network fee generation.

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