Welcome to the institutional newsletter, Crypto Long & Short. This week:
- Overview of DeFi sector growth in 2026 by Martin Gaspar of FalconX
- The headlines institutions should read by Francisco Memoria
- Analyzing Investor Sentiment Following Relentless Selling by Andy Baehr
- “Altcoins vs BTC performance” in the chart of the week
-Alexandra Lévis
Expert Views
The striking dichotomy in DeFi tokens after 10/10
– By Martin GasparSenior Cryptography Research Associate, FalconX
The October 10 crash continues to reverberate through the crypto market with a broader slowdown across all sectors. This is particularly notable in DeFi, the lifeblood of on-chain activity today and the single sector that generates the majority of crypto token revenue.
Let’s take a quick look to see where we stand. Out of a subsector of 23 top DeFi names in the decentralized exchange (DEX), lending, and yield verticals, only 2 are positive since November 20, 2025. As of November 20, 2025, the group is averaging -37%, highlighting the damage caused by this prolonged sell-off. But the mixed price development reveals certain nuances.
1) Investors appear to be opting for safer stocks (“buying”) or focusing on stocks with fundamental catalysts. On the buyback side, names like HYPE (-16% in the quarter) and CAKE (-12%) posted some of the best returns for the larger market cap names in the cohort, indicating that investors could invest there or that their price was supported by their substantial buybacks. Meanwhile, MORPHO (-1%) and SYRUP (-13%) both outperformed their lending peers on idiosyncratic catalysts, such as minimal impact from the Stream financing collapse or growth elsewhere.
2) Some DeFi subsectors became more expensive, while others declined compared to September 30, highlighting the changing landscape after the October 10 crash. The Spot and Perp DEXs saw declining P/S multiples as their price declined faster than protocol activity. In fact, some DEXs such as CRV, RUNE, and CAKE showed higher 30D fees on November 20 than on September 30. We see similar trends in perp DEXs, with HYPE and DYDX multiples compressing faster than their fee generation declines.
3) Loan and yield securities have generally steepened on a multiple basis, with prices declining significantly less than fees. For example, KMNO’s market capitalization fell 13% during this period, while fees fell 34%, according to Artemis data. Another factor could be that investors attract lenders when selling, considering that lending and yield-related activities are often considered more difficult than trading activity during downturns. Lending activity could even pick up as investors turn to stablecoins and look for yield opportunities.
This positioning may reflect how investors believe the DeFi sector will see growth in 2026. On the DEX front, QTD performance suggests investors expect players to continue to dominate, and HYPE’s relative outperformance may indicate investor optimism around its “pers-on-anything” HIP-3 markets, which are seeing their highest volumes as of November 20. Therefore, the depreciation of the DEX sector could be justified by lower growth expectations. On the lending side, investors could look to more fintech integrations to drive growth. AAVE’s upcoming high-yield savings account and MORPHO’s expansion of its Coinbase integration are recent examples of this trend.
Overall, these trends reveal potential opportunities related to the post-10/10 upheavals. It will be interesting to see if the changes mark the start of a broader shift in DeFi valuations or if these will reverse over time.
Headlines of the week
Francisco Rodrigues
This week’s crypto market crash sent mixed signals on the institutional side, as historic ETF outflows and declining stablecoin liquidity pointed to short-term capital flight. Despite risk aversion, the conviction of States and companies has strengthened.
- BlackRock takes first step toward a staked Ether ETF: BlackRock registered the iShares Staked Ethereum Trust in Delaware this week, signaling plans for a yield-generating ether ETF that would stake the underlying asset to help secure the network.
- ETF Outflows, Stablecoin Flows, and DAT Reversals Signal Crypto Capital Flight: Spot Bitcoin ETFs saw $3.79 billion in net outflows from November through November 21, the highest since February’s $3.56 billion, led by more than $900 million in single-day outflows on November 20.
- El Salvador buys 1,090 BTC as prices fall and IMF pressure mounts. El Salvador took advantage of the crypto market decline and purchased 1,090 BTC at around $90,000 each, bringing its holdings to almost 7,500 BTC despite a $1.4 billion IMF deal discouraging public sector crypto purchases.
- Mastercard Chooses Polygon to Bring Verified Usernames to Self-Custody Wallets: Mastercard has extended its Crypto Credential system to self-custody wallets, using Polygon’s blockchain for human-readable aliases linked to KYC-verified identities.
- Metaplanet Unveils New Bitcoin-Backed Capital Structure With $150 Million Perpetual Preferred Stock Offering: Japanese company Metaplanet unveiled a two-tier preferred stock structure this week.
Checking the ambiance
More sellers than buyers
– By Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
Bitcoin has lost a third in seven weeks and people want answers. The dominant sentiments among podcasts, Substack articles, newsletters, and social media are:
1. The most recent descent caught many people off guard.
2. There is no shortage of technical explanations: ETF exits, DAT < mNAV, 10/10 damage, retail sales concentrated elsewhere and end of the “cycle”.
3. There are many macroeconomic explanations: the likelihood of a Fed rate cut is diminishing, continued damage from the government shutdown and the Clarity Act delay.
4. Hey, it’s crypto, it drops by 1/3 sometimes.
5. The feeling is maximally negative.
6. Maybe prepare for a rally, but maybe not in time to save 2025.
The crowd seemed to have gone through the five stages of grief and emerged humble and optimistic. (A nagging question: was there enough sorrow, or is it another false bottom? Did the capitulation take place?)
Humility, in particular, was welcome and best captured in Eric Peters’ superb “working notes.” With a wink, he alludes to the most meaningless form of market commentary: “There are more sellers than buyers.”
“…what we mean when we say that markets move because there are more buyers than sellers is that when prices start to really move, it’s okay to not understand why. We say this to remind ourselves that anything can happen. It’s a protective mechanism.”
He reminds us that humility is not only a virtue, but necessary for survival:
“Investors who blow up and lose everything tend to believe they know exactly why a market should move. They may believe it should go up and persist in going up, relying on leverage even as it goes down, and lower and lower. Or vice versa. Survivors of this game have seen enough people destroy themselves in such a way that we prefer to accept the wisdom of the markets. We learn that when prices go down even as most traders/investors think they should increase, there must be a reason we just don’t know yet sooner or later we will.
A manager’s point of view
It’s all well and good to be humble and optimistic, but when you run two hedge funds, you also have to make decisions. On Friday, I brought in Chris Sullivan from Hyperion Decimus for a CoinDesk Markets Outlook spot. (Disclosure: Hyperion Decimus is a client of CoinDesk Indices.)
We agree (both derivatives specialists) that market volatility, although anxiety-inducing, can also be exhilarating. A roller coaster. Chris sees a V-shaped event coming, declaring that it is (or soon will be) time to “feast on fear.” We also agreed that seeing bitcoin trend more developed over the past few weeks was a healthy sign that the market is maturing (i.e. the recent downside covering resembles more mature asset classes). Two other observations: 1) large holdings that might have sold above $100,000 appear to be buying back 20% less and 2) trend signals allowed his funds to break away weeks ago and have plenty of dry powder.
The trend has been a good friend in 2025
Speaking of trend, it is proving to be a performance savior of 2025. Our Bitcoin Trend Indicator (BTI), launched in March 2023, uses a quartet of moving average crossover signals to indicate the presence and strength of the Bitcoin price trend. It indicates a “significant downward trend” for 24 days. Our clients have implemented several BTI-based strategies to allocate to – and move away from – Bitcoin. The year-to-date performance of one of them appears below.
As more investors and advisors adopt bitcoin and crypto in their long-term portfolios, a trend overlay can help “smooth the ride” and keep people in the game. This is particularly relevant today as there are concerns that self-fulfilling “end-of-cycle” behavior is weighing on the price of Bitcoin.
Chart of the week
Altcoins vs BTC performance
Despite the overall downward trend following the major drop on October 10, altcoins – represented by the CoinDesk 80 Index (CD80) – have mostly performed in line with, or even better than, BTC, with market benchmarks CoinDesk 5 Index (CD5) and CoinDesk 20 Index (CD20) showing relative outperformance. This is surprising because altcoins typically show higher beta during a market decline, suggesting that recent selling pressure may be more focused on BTC, or that altcoin selling has already been significantly exhausted.
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Looking for more? Get the latest crypto news at coindesk.com and market updates at coindesk.com/indices.
Note: The opinions expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc., CoinDesk Indices or its owners and affiliates.
