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Good Morning and Happy Monday (and Happy Diwali) from Cumberland APAC!  Crypto has slightly bounced this morning, but for the most part it seems as markets will be looking to the US trading session to find a firm direction.  Risk assets within crypto right now are taking their cues from three indicators:

  1. Macro. After a six-month steady rally, equities had their first real drawdown on 10/10 since Liberation Day, and stocks did not fully recover last week. In fact, SPs recovered about half of 10/10s selloff, which very much feels like no-man’s land, so every tick feels consequential as the market looks to choose a direction.
  2. Crypto risk appetite. It’s not 100% clear that BTC recovers to it’s 10/9 levels, even in the case where equities do make new highs. The 10/10 price action revealed just how much leverage was being used within crypto, and it’s possible that the levels we saw a few weeks ago were more a function of market microstructure (high usage of leverage) than macro price discovery. On the other hand, Gold has been on an absolute tear, and with a slight drawdown on Friday, we could see some rotation from XAU into BTC.
  3. Betas and the risk curve. If BTC does fully recover here, how do alts do? Alts are down more than BTC or ETH since 10/10, so on a pure risk-on environment, it is possible that they could bounce harder. However, capital might be slower to flow back into alts after 10/10: many alts felts essentially bidless during that move, and risk capital might be a bit gun-shy about moving back.

Don Wilson’s views on market structure, and learnings from 10/10, can be viewed here: https://x.com/drwconvexity/status/1979211257933693236

With all of the volatility of the past few weeks, there has been one theme developing quietly in the background: a focus on privacy-enabling digital assets.

  • During the week of Token, STRK rallied from $0.12 to $0.19
  • In the same week, ZK performed well, moving from $0.05 to $0.06
  • Aleo rallied from $0.22 at the start of Oct to a peak of $0.40 as it was listed on Binance Alpha
  • And of course: ZEC rallied from $60 to a peak of $300 in the first two weeks of the month, as the privacy narrative took hold amongst within some OG crypto communities

With financial institutions moving towards blockchain more so in 2025 than in any year, privacy matters.

  • Privacy matters for payments: if I pay for a coffee with USDC on Ethereum, the barista can figure out where I bought coffee yesterday, how much USDC I have in my wallet, and how much I get paid, if I happen to be paid in stables; it’s all available on Etherscan.
  • Privacy matters for collateral. If a trading desk is seen sending stablecoins to an exchange, the market sleuths immediately start trying to figure out what positions they’re holding that require more capital. This isn’t theoretical: look no further than the rampant speculation about who was holding what positions during the 10/10 move.
  • Privacy matters for institutional flows. As the institutions in crypto get larger, the flows get larger, and anyone deploying nine figures worth of assets is going to do it without the world’s eyeballs on every trade, including their test transfers. A lack of privacy is equivalent to a lack of efficiency, in open markets.
  • Privacy matters for the regulators. Some transactions, particularly in the banking space, are required by law to be private. While transparency is one of crypto’s core innovations, the complete transparency of many blockchains is among the reasons that institutions have been slow to adopt crypto.

It is perhaps indicative of just how much privacy matters that many of the newer blockchains place a strong emphasis on privacy, not just as a feature added on after go-live, but as an embedded feature.

  • The Midnight blockchain, which has already announced its Glacier Airdrop, will look to enable privacy utilizing zero-knowledge proofs
  • The Canton Network enables privacy with its modular architecture and role-based asset control
  • The Arc blockchain, a stablecoin-focused L1 announced by Circle, will include privacy features in order to develop payment use-cases.

Happy Trading!

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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.