Bitcoin Tests Key Cost Basis Zone as Liquidity Tightens and ETF Outflows Weigh
Cointime reports: Global risk assets and crypto markets faced a renewed bout of macro headwinds this week, with the Federal Reserve holding rates steady at 3.75%–4.00%, a rising Treasury General Account (TGA) near $1 trillion, and declining bank reserves tightening liquidity at the margin. Technology stocks bore the brunt of valuation compression, with the Nasdaq falling 2.0% and the S&P 500 down 0.6%, as hedge funds trimmed crowded AI-related exposure through long-side selling rather than new shorts.
Bitcoin slipped below the $81.5k ETF cost basis amid a weekly net outflow of approximately $202 million from BTC ETFs, while ETH ETFs saw $431 million in redemptions. Despite the drawdown, BTC held above the $77.9k True Market Mean, a key on-chain valuation floor, as long-term holder selling pressure showed clear signs of exhaustion. Exchange inflows remain low, and the $77.9k–$85.3k band has become the critical battleground for near-term price discovery.
Market Structure and On-Chain Signals
Derivatives data suggests leverage remains resilient. CME open interest and funding rates held steady after the sell-off, indicating no disorderly unwind of leveraged longs. However, spot demand is still weak: Coinbase Premium remains subdued, signaling a lack of aggressive US-based buying, while stablecoin supply has yet to reverse its decline. The aggregated orderbook liquidity delta shows persistent overhead sell-side liquidity, capping the slope of any rebound.
On-chain CVD points to a buyer absorption phase, but without a simultaneous improvement in spot flows, Coinbase Premium, and stablecoin issuance, a durable trend reversal remains unconfirmed. The market is essentially repricing chips within the cost basis band, awaiting a catalyst.
Tokenization Infrastructure Gains Ground
In a notable structural development, Hong Kong’s SFC approved secondary trading of two tokenized money market funds—the ChinaAMC HKD Digital Money Market Fund and the ChinaAMC USD Digital Money Market Fund—on licensed VATP platforms, moving tokenized investment products from pilot to live secondary market operation. The HKMA is concurrently advancing EnsembleTX to support 24/7 real-value interbank settlement using tokenized central bank money, extending trials to tokenized FX fund notes and repo transactions. Meanwhile, the OCC issued final rules under the GENIUS Act for payment stablecoin issuance, reserves, redemption, and risk management, and the SEC updated its FAQ on digital asset securities.
Operational risk also took center stage after Binance disclosed a multi-stage cyberattack that compromised internal wallet signing services, affecting approximately $6.34 billion in digital assets. The exchange froze or intercepted about $2.85 billion and said 98% of affected token assets were replenished via SAFU and corporate funds by October 31. The incident underscores that for institutional participants, operational risk controls and incident coverage mechanisms are now as critical as trading depth and compliance credentials.
Forward Outlook
The current pullback looks more like a macro-driven stress test than a structural reversal. A sustained return of ETF inflows, stabilization in stablecoin supply, and improvement in Coinbase Premium and spot CVD would set the stage for a trend recovery. Conversely, a breakdown below the $77.9k core cost zone, accompanied by rising exchange inflows and realized losses, would elevate the risk of a second deleveraging wave. Near-term catalysts include the midterm elections, October unemployment data, and the structure of US Treasury issuance—all of which will shape risk appetite and bank reserve dynamics.
