Digital assets had a difficult week as a hawkish turn in rates, oil volatility and fading regulatory momentum tested risk appetite. Bitcoin came within reach of $87,000 on October 4 but reversed sharply. By Thursday it had fallen nearly 8% from that high, touching about $80,350 on Bitstamp, its lowest level since mid-September. Buyers returned near that level, and Bitcoin traded around $83,500 early Monday. Ether fared worse, losing roughly 9% over the week to trade near $2,500. Solana and XRP also fell by double digits over the week before stabilizing. The selling coincided with the one-year anniversary of the October 10, 2025 flash crash, when Bitcoin fell from about $122,000 to $105,000 within minutes. In our view, last week's decline reflected macro pressure more than anything specific to digital assets. Rising oil prices and Treasury yields at multi-decade highs drew capital away from duration-sensitive and speculative assets.
Bitcoin daily closing price, October 2025 to October 2026
Flows into exchange-traded funds turned decisively negative. According to Farside data, US spot Bitcoin ETFs recorded net outflows of about $679 million over the five trading days to October 9. The largest came on Wednesday, October 7, when about $485 million left the products. That was the biggest single-day outflow since late June and roughly two standard deviations below the 90-day average daily flow of about +$92 million. Fidelity's FBTC led redemptions with about $380 million of outflows for the week, while ARK's ARKB lost about $207 million. BlackRock's IBIT was broadly flat, as early-week inflows offset Wednesday's withdrawal. These outflows erased October's early gains, leaving the month about $386 million negative so far. That compares with net inflows of roughly $2.65 billion in September. Farside data put year-to-date net inflows at about $717 million as of Wednesday, before further outflows on Thursday, and cumulative net inflows since launch at roughly $57 billion.
Daily net flows of US spot Bitcoin and Ether ETFs, 10 September to 9 October 2026
Spot Ether ETFs had a weaker week still. They recorded about $542 million of net outflows, their largest weekly outflow since January, and extended their losing streak to nine consecutive sessions. BlackRock's ETHA accounted for about $477 million of that total.
Positioning was cleared out through derivatives as the market fell. According to CoinGlass, crypto liquidations totaled about $1.09 billion in the 24 hours to Friday morning, and most of the positions closed out were leveraged longs. On-chain data from CryptoQuant showed short-term holders sending about 55,600 BTC to exchanges at a loss on Thursday, consistent with capitulation by recent buyers. That said, such transfers do not confirm that the coins were sold. Technically, Bitcoin remains within a range. Resistance sits near $87,000, which has capped rallies in recent weeks. Support lies in the $80,500 to $81,500 zone, which includes last month's local highs and the 50-day moving average near $80,550. Below that, the recent lows around $76,000 and the 200-day moving average near $72,000 are the next reference points. The CoinDesk analysis published for the flash-crash anniversary noted that Bitcoin and Ether liquidity has largely rebuilt since last October, while liquidity in smaller altcoins remains thinner. In our view, that helps explain why the large-cap assets held their key levels while smaller tokens fell more sharply.
The regulatory backdrop has become less supportive in the near term. The Digital Asset Market Clarity Act remains stalled after the Senate failed to invoke cloture on September 15 by a 49 to 50 vote, well short of the 60 votes required. The main points of dispute were ethics provisions covering officials' crypto holdings and whether stablecoins may pay yield. A procedural path to reconsider the bill still exists, but most observers see passage before the November 3 midterms, or in this Congress at all, as unlikely. As a result, the policy agenda is moving to the agencies. The SEC's proposed Regulation Crypto Assets, which would create new registration exemptions and a safe harbor for crypto investment contracts, has a comment deadline of October 20. The CFTC has sent a prerule on crypto asset markets for interagency review and moved last week to bring event contracts under its swaps framework. Agency rulemaking can provide direction, but it is more exposed to legal challenge and political reversal than legislation. In our view, a durable US market-structure framework is still some way off. For European clients, the MiCA regime continues to offer a comparatively settled rulebook.
Monetary policy remained the dominant macro force. Minutes of the Federal Reserve's September 16 meeting were released on October 7. At that meeting the Fed raised its target range by 25 basis points to 3.75% to 4.00%, its first hike since July 2023. The minutes showed that all participants supported the move and that most expect a further increase to be appropriate by year-end. Officials pointed to higher oil and fuel prices linked to the Middle East, AI-related investment and the lingering effects of tariffs as sources of inflation pressure. Staff estimated August headline PCE inflation at 3.8% and core PCE at 3.4%.
The bond market reacted sharply. The 10-year Treasury yield reached about 5.37% on Wednesday, its highest level since 2002, before settling near 5.25% by Friday. The dollar index edged up to about 102.2, near an 18-month high. Futures price only around a one-in-four chance of a hike at the October 27 to 28 FOMC meeting but largely expect one by December. This makes Wednesday's September CPI report pivotal. Consensus expects headline inflation of about 3.7% year-on-year, up from 3.4% in August. In Japan, the Bank of Japan raised its policy rate to 1.25% in September, and markets assign a similar one-in-four probability to a further move at its October 30 meeting.
Geopolitics, transmitted mainly through oil, also drove sentiment during the week. Prices rose after reports that the White House had asked the Pentagon for strike options against Iran, and Brent crude touched nearly $106 a barrel on Thursday. Sentiment improved when President Trump ruled out US strikes on Iran before the midterm elections. A reported US-Russia arrangement on diesel supply, together with an announced “energy ceasefire” between Russia and Ukraine, also helped. Brent ended Friday near $104 and WTI near $91.
Bitcoin's recovery towards $82,500 on Friday tracked that easing in energy-related risk. Gold rose about 1.5% on Friday to around $4,220 an ounce. US equities closed the week higher, with the S&P 500 at a record, although technology shares were volatile. This divergence is notable. In our view, digital assets are currently more sensitive than equities to real yields and liquidity conditions, and less able to benefit from strong corporate earnings.
What It Means for Investors
In the near term, we see Bitcoin consolidating between roughly $80,000 and $87,000 while the market waits for this week's inflation data. A sustained recovery above $87,000, ideally with spot ETF flows turning positive again, would suggest that last week's flush has run its course and that institutional demand is returning. Conversely, a daily close below the $80,500 to $81,500 support zone would open the way towards the $76,000 area, with the 200-day moving average near $72,000 as a deeper reference point. A higher-than-expected CPI print, renewed upward pressure on the 10-year yield or a fresh escalation in oil prices would, in our view, be the most likely triggers for such a move. Ether is in a weaker relative position given its nine-day ETF outflow streak. A stabilization in those flows is the first signal we would look for before reading the recent decline as a reset rather than the start of a deeper trend.
Over the longer term, the structural picture for digital assets remains intact despite the cyclical headwinds. Cumulative inflows into US spot Bitcoin ETFs remain around $57 billion. Survey evidence, including a recent State Street study, shows institutions steadily increasing their allocations and expectations for the asset class. Market liquidity in the largest assets has also rebuilt meaningfully since last year's flash crash. The main constraints are macro and policy-related: a Fed that is still tightening, yields at multi-decade highs and a US legislative framework that has stalled. Shorter-term investors should monitor the September CPI release on October 14, the FOMC and Bank of Japan decisions at the end of the month, daily spot ETF flows, oil prices and Middle East headlines, and the outcome of the November 3 midterms for what it implies about crypto legislation in 2027. We continue to favor a disciplined, risk-managed approach in which position sizing reflects the elevated volatility of the current macro environment.
October 2026 - Special Report
Market Pulse: October 2026
Oil above $110, a failed crypto bill and the first Fed hike since 2023: Bitcoin still closed September up nearly 7%. Our October report on what held the floor.
