Volatile October, rough start into November, but no reason to panic.

5 November 2025

Dear Investors,

October was a volatile month for risk assets, including crypto. Macro drivers, tariff escalations, and subsequent de-escalations were contributors to swings in markets.

While crypto markets started the month positively, Bitcoin was eventually down approximately -4.6%, with liquidation events the main driver of underperformance.

November started with Bitcoin down almost -10% (at time of this writing), along with a broader equity market selloff. We will dive into why we think this is more likely a short-term correction, and not a reason to panic.

Executive Summary:

Liquidation cascade resets the market

• A rapid forced-liquidation event over 10–12 Oct wiped out >$19bn of leveraged positions, temporarily thinned liquidity and accelerated selling, but ultimately reset systemic leverage to healthier levels.

• Reports on potential lawsuits between a leading market maker and crypto exchange exacerbated the fallout in early November.

Equity risks, driven by macro events, are the most significant market factor

• While short-term moves are often crypto-specific, equity risk factors dominate medium-term behavior.

• In absence of very crypto-specific catalysts, macro developments (tariffs, monetary policy) will remain the primary driver of medium-term performance.

Keep calm, and stay invested

• Attempting to time crypto is hazardous; disciplined, gradual investing (DCA) historically smooths volatility and captures long-term upside.

Liquidation cascade resets the market

Over the weekend of 10-12^th October, the crypto market was rocked by a liquidation cascade triggered by a combination of geopolitical tensions and technical positioning. Specifically, the U.S. threatening to impose steep tariffs on Chinese imports led to a rapid sell-off in risk assets, with crypto assets plunging as well, leading to over $19 billion in leveraged positions wiped out in under a day. The situation was worsened by thinning order books, as market makers pulled liquidity. Some trading venues struggled pricing collateral assets due to illiquid markets, which accelerated forced liquidations. Overall however, the event led to a healthy correction of leverage levels, which have since stabilized.

Whilst the initial drawdown in crypto markets in early October settled quickly, the fallout is still visible in early November, as rumors spread that a leading market maker may pursue legal action against a large crypto exchange. We do not expect this to disrupt the market trend, and an agreement is likely to come soon.  We acknowledge that information is still sparse, however.

Macro risks driving the market

In recent months, crypto markets have been increasingly driven by equity risk factors, whilst still being lowly correlated to bonds and gold. In the historical context, this is not a unique environment, and one should expect the relationship to be variable. Over the long-term, crypto assets are mostly uncorrelated to all major asset classes.

In the medium-term, we expect a higher level or correlation as the overall sensitivity of markets to the macro environment increases. We remind investors that crypto is a FIFO (First In, First Out) asset class, where the market dynamics take hold most swiftly, but does not necessarily mean that it signals any asset-class specific risks.

Keep calm and stay invested

Many investors try to time the market, but this is empirically a “fool’s errand”. As the famous quote goes, "time in the market, not timing the market" is the goal every investor should optimize for. Therefore, we continue to suggest to clients that:

…The best time to invest in crypto assets was yesterday, the second-best time is today, and even better is to do both…

For example, suppose you enter the market at the peak in 2021 and decide to dollar-cost average, i.e. invest a pre-determined amount into Bitcoin every month (in our example every 30 days).

The data below shows that despite the unfortunate timing, and the almost 70% drawdown in Bitcoin during the year after initial investment, your overall investment would have achieved breakeven after less than 2 years. In fact, after 2 years you would have generated a 37% return, and after 3 years a 197% return!

Therefore, investors should stop trying to time the market, and start investing gradually, today.

If you would like to discuss any of our current market observations, please reach out to us via email.

info@matrixportam.com

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This is an advertising document. This material has been prepared by Matrixport Asset Management AG for informational purposes only for the sole use of the intended recipient. It does not seek to make any recommendation to buy or sell any particular security or to adopt any specific investment strategy. This document does not contain information material to an investor’s decision to invest in a product. The information should not be regarded by recipients as a substitute for using their own judgment. Neither Matrixport Asset Management AG nor any of its affiliates, or their directors, officers, or employees, accepts any liability for any loss arising from the use of the information in this document. Data therein should not be relied upon as such information is subject to change, without notice, at the discretion of Matrixport Asset Management AG at any time. Investors in crypto assets are subject to the risk of total loss of the amount invested. Crypto assets are highly volatile and may fluctuate extremely in a short period of time. Crypto assets may become illiquid depending on trading platforms or investment product. Therefore, crypto assets are high-risk investments and you should not invest in this asset class unless you understand and can bear the risks involved with such investments. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. We have relied upon and assumed without independent verification, the accuracy and completeness of all information available from public sources.

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