Chip Selloff Spreads to Asia as BTC Stages V-Shaped Rebound

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In Today's Note

• The chip selloff spread to Asia and the S&P 500 closed marginally lower as Treasury yields eased, while BTC was flat at $83.5K after a V-shaped rebound and ETH fell 1.4% to $2,515 overnight ahead of bank earnings.
• Bitmine and Strategy added to their ETH and BTC holdings, DeFi Development bought more SOL, and Standard Chartered launched RLUSD custody on the XRP Ledger.

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Market Snapshot: Overnight Moves

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Macro & Markets

• BTC has posted a V-shape recovery over the past 24 hours, falling below $81K and rebounding to briefly trade above $84K. 
• Meanwhile, the selloff in US chipmakers continued ahead of the Q3 earnings season, dragging the S&P 500 to close marginally lower (-0.055%) despite gains in most of the companies in the index. 

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• The retreat from the AI-trade first began late last week after it was reported that OpenAI’s revenues for the year may come in lower than expected. 
• However, the rout has deepened and spread globally this week, as Asia’s largest semiconductor firms, Samsung Electronics and SK Hynix, sold off sharply earlier today after a report that Chinese rival CXMT Corp. has made progress on a memory development the other two firms are also working on. 
• Sentiment was also shaken after comments from Broadcom Inc.’s CEO who said “A lot of investors have no clue what they are investing in” and they “set very extreme expectations only to find out that it’s almost like they are in a casino”. 

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• Earnings season will begin from today, with major banks such as Goldman Sachs, JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. all due to report their results today, with Bank of America Corp. and Morgan Stanley’s figures due tomorrow.
• According to Bloomberg, firms in the S&P 500 are estimated to post a 25% jump in third-quarter profits compared with a year earlier. 

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• While the S&P 500 index is still trading within striking distance of its all-time high, large US banking stocks have been trading on the edge of correction territory. 
• The benchmark KBW Bank Index, which tracks the performance of the 24 leading banking stocks, has dropped more than 10% since mid-August (meeting the definition of a technical correction). 

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• US Treasuries did however advance higher today after an extended weekend following Columbus Day. 
• Both the 10-year US Treasury yield and 30-year yield fell as much as 5 basis points to 5.19% and 5.56% respectively.
• The easing in yields today comes after the benchmark 10-year yield hit 5.36% last week, its highest level since 2002, amid growing fears over US fiscal deficits and as elevated oil prices weigh on expectations for further Fed rate hikes. 

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• In remarks prepared for an event in Cleveland, President of the Cleveland Fed Beth Hammack said, “When feasible, I generally think it’s preferable to make smaller adjustments, and to do so relatively quickly, rather than to wait and risk needing a larger course correction”. 
• Hammack said that inflationary pressures are not limited to energy and pointed to higher prices on the back of tariffs and stronger demand for electricity and tech components driven by the build-out of infrastructure for artificial intelligence, though she fell short of signalling support for a rate increase in the FOMC’s meeting later this month. 
• Her speech was mostly focused on communication, emphasising the benefits for investors and the public when policymakers outline their reaction function. 
• However, she warned that officials should not give “firm predictions” about where they see interest rates headed. 
• Hammack said, “I want to draw a sharp line here. A reaction function is not forward guidance. Treating the two as interchangeable can turn a well-meaning explanation of logic into the expectations of a promise.”
• Her comments come after last week’s FOMC meeting minutes which showed all 19 officials backed the decision to raise rates in September and expect one more hike before year-end. 

Defi/ Crypto

• Bitmine Immersion Technologies, an Ethereum treasury company chaired by Tom Lee, purchased an additional 12,532 ETH, bringing its holdings to 6,028,946 ETH worth approximately $15.3B, equivalent to 4.9% of Ethereum's circulating supply, with total crypto, cash and other investments valued at $16.2B.
• Bitmine has staked 5,067,309 ETH, representing 84% of its holdings, through its MAVAN staking platform and external partners, generating a projected $336M in annualized staking revenue at a 2.61% yield, potentially increasing to $400M once its entire ETH balance is staked.
• Tom Lee predicted a potentially record-setting crypto market rally, stating "We see the potential for this to be the largest ever crypto bull market", citing tokenization, artificial intelligence and digital asset treasury companies (DATs) that remove circulating crypto supply from the market.

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• Strategy, the world's largest publicly traded bitcoin treasury company, acquired another 250 BTC for approximately $21.5M between Oct. 5 and Oct. 11 at an average price of $86,194 per bitcoin, bringing its total holdings to 848,250 BTC worth approximately $70.6B, purchased for an aggregate $64B at an average cost of $75,444 per BTC.
• The acquisition was funded through approximately $21M in sales of Strategy's Class A common stock (MSTR) and $0.5M from its USD Cash reserve, while the company also repurchased 1.93M STRC preferred shares for approximately $192.4M, leaving $4.88B in USD Reserve and $640.5M in USD Cash.
• Michael Saylor, Strategy's co-founder and executive chairman, signaled the latest purchase by posting "There's always room for more orange", as the company's bitcoin holdings surpassed 4% of Bitcoin's maximum 21M supply, representing approximately $6.6B in unrealized gains at the reported market price.

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• DeFi Development Corp. (DFDV), a Nasdaq-listed Solana treasury company, acquired approximately 22,070 SOL and SOL equivalents over the past week, increasing its total holdings to 2.59M SOL, a 12% increase since its August earnings report, despite its shares declining approximately 21% over the past week.
• CEO Joseph Onorati reaffirmed the company's accumulation strategy, stating "Short-term volatility has not changed our conviction or our commitment to accumulating SOL," while highlighting growing tokenized equity activity on Solana and Samsung's planned stablecoin functionality for 82M U.S. Galaxy devices as potential drivers of institutional adoption.
• DFDV's variable-rate perpetual preferred stock, CHAD, reached record trading highs despite the broader crypto selloff, carrying a 13% annual dividend rate when declared, with Chief Strategy Officer Dan Kang stating that "its recent performance demonstrates how its trading behavior can differ from SOL's," as the company authorized repurchases of up to all outstanding CHAD shares if they trade below their $10 par value.

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• Sui Foundation, the organization supporting the Sui Layer 1 blockchain, is investing $30M in DATA Network, an AI training data protocol, becoming its largest institutional holder alongside PIP Labs and DATA Foundation, as part of a strategic partnership to migrate DATA Network and its Trace registry onto Sui, retire its independent blockchain and transfer existing DATA tokens on a 1:1 basis, with the migration timeline yet to be announced.
• Walrus, a decentralized data storage platform built within the Sui ecosystem, will become the default storage infrastructure for DATA Foundation applications, while Trace, a protocol that records the origin, usage permissions and contributor payments associated with AI training datasets, has registered over 250M contributions and processes an average of more than 3M receipts daily, according to the foundation.

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• Bybit, a cryptocurrency exchange, is preparing to launch mStocks in November 2026 in collaboration with Mantle, an Ethereum Layer 2 blockchain, offering 24/7 trading of tokenized equities backed 1:1 by underlying shares.
• The proposed mStocks platform is expected to support tokenized shares as trading collateral, decentralized exchange (DEX) transactions and decentralized finance (DeFi) applications, extending Bybit's existing tokenized equity services, which already include 24/7 xStocks trading and the use of selected tokenized shares as collateral for margin trading and loans.

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• Standard Chartered, a multinational banking group, has launched institutional custody services for Ripple USD (RLUSD), Ripple's U.S. dollar-backed stablecoin, on the XRP Ledger, with the service now live through its Dubai International Financial Centre (DIFC) branch, regulated by the Dubai Financial Services Authority.
• Standard Chartered is also partnering with Ripple and LMAX Group, an institutional trading and exchange operator, to enable RLUSD as collateral for selected LMAX products through a collateral mirroring arrangement, allowing institutions to use the value of assets held in custody without transferring them directly to the trading venue, although the integration remains subject to testing, regulatory requirements and final approvals.

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This Week's Calendar

Charts of the Day

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Figure 1. Block Scholes BTC Risk-Appetite Index (white, left-hand axis) and BTC spot price (orange, right-hand axis).

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Figure 2. Block Scholes ETH Risk-Appetite Index (white, left-hand axis) and ETH spot price (purple, right-hand axis).

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Figure 3. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 4. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes.

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Figure 5. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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Figure 6. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes.

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