Lead
The sharp cryptocurrency sell-off in October 2025 did not mark the end of the bull market but served as a market "reset," according to Coinbase analysts. Leverage was flushed from the system while core fundamentals remained intact, with early signs of institutional participation returning.
Key Developments
Coinbase’s market view highlights a selective risk-on environment emerging after October’s volatility:
- Leverage cleaned up: Excess leverage has been reduced, though liquidity gaps persist across parts of the market.
- Capital rotation: Legacy capital is moving within crypto, making selectivity critical for performance.
- Macro risk remains: Broader economic risks still loom, yet structural demand is growing.
- Base-building phase: The market is forming a foundation ahead of the next potential leg higher, rather than printing a cycle top.
Focus Areas for Smart Capital
Analysts note that sophisticated investors are concentrating on:
- EVM networks (Ethereum-compatible chains) and their broader developer ecosystems
- RWA (real-world asset) tokenization, reflecting rising institutional experimentation
- Yield protocols, as on-chain income strategies regain traction in a lower-leverage landscape
Market Context and Liquidations
A review of market data through October 2025 shows:
- The total crypto market capitalization peaked above $4.5 trillion in mid-2025, before retracing into October.
- The period included some of the largest liquidations in recent crypto history, with significant spikes in both long and short liquidations as volatility rose.
This deleveraging backdrop aligns with the thesis that the correction functioned as a reset rather than a terminal blow-off, clearing weaker positions and paving the way for more durable participation.
Outlook
With leverage reduced and institutional players gradually returning, Coinbase’s analysis frames the current environment as a base-building phase. Near term, traders should watch for:
- Liquidity restoration across major and mid-cap assets
- Sustained institutional flows into EVM ecosystems, RWA initiatives, and yield platforms
- Macro catalysts that could either challenge or reinforce the nascent recovery
If structural demand continues to deepen and liquidity improves, the market may be positioned for the next advance following consolidation.