The November Edition

By Jianing Wu & Su Young Lee

“Uptober” delivered on its promise of strong starts but not its guarantee of strong finishes. Both risk and defensive assets surged to record highs early in the month before reversing course, as optimism over monetary easing collided with renewed trade tensions and a late-month shift in monetary policy tone.

Early in the month, strong corporate earnings, persistent AI enthusiasm, and dovish Federal Reserve signals set the tone for a broad-based rally across asset classes. Chair Jerome Powell’s remark that the Fed’s balance sheet runoff could conclude “in the coming months” reinforced the perception that policymakers were leaning toward a more accommodative stance. The result was a synchronized surge across risk and defensive assets: the S&P 500 and Nasdaq 100 reached record highs, gold extended its breakout rally, and BTC hit all-time high above $126,000 on October 6. Investors were effectively expressing the same macro bet across asset classes: that lower rates, weaker job markets, and stable inflation would sustain asset valuations.

By mid-October, that momentum faltered. The catalyst came from renewed U.S.–China trade tensions after President Trump proposed 100% tariffs on Chinese imports, sparking a sharp risk-off shift. The shock triggered the largest liquidation event in crypto history, wiping out over $19 billion in leveraged positions in one day on October 10. During the crash, BTC fell 13% intraday, ETH dropped 20%, and some altcoins lost up to 75%. As Galaxy’s Thad Pinakiewicz noted, “High leverage combined with shallow liquidity and one macro headline sparked the crash.” The selloff cascaded through digital assets but also coincided with modest pullbacks in equities as volatility picked up globally.

Later in the month, rate-cut expectations began to fade as policymakers turned more cautious. In his press conference following the October meeting of the Federal Open Market Committee (FOMC), Chair Powell warned that further easing was “not a foregone conclusion,” prompting a repricing in rates and tightening of financial conditions. Treasury yields rose and the dollar strengthened. Gold retreated below $4,000/oz, equities slipped from their highs, and crypto stabilized but failed to recover prior levels.

As October closed, markets were recalibrating to a world of more selective liquidity and less certain policy support. The weakness extended into early November, with BTC dipping below $100,000 for the first time since June. As Galaxy’s Head of Firmwide Research, Alex Thorn, observed in a client note, “heavy whale distribution, rotation into competing narratives like AI, gold, and stablecoins, and weak performance from BTC treasury companies” had weighed on sentiment. The October 10 leverage wipeout also left lingering scars, while market composition shifted from speculative traders toward slower, more institutional capital.

October’s synchronized rallies and subsequent reversals underscored how dependent markets remain on liquidity and policy expectations. Until greater clarity emerges on the trajectory of economic growth and monetary easing, price action is likely to stay rangebound, reactive, and driven by macro headlines rather than fundamentals.

• Altcoin Spot ETFs Debut Amid Shutdown: Four new U.S. altcoin spot ETFs launched during the government shutdown, led by Bitwise’s Solana fund, expanding mainstream market access to digital assets beyond bitcoin and ether.

• Wall Street Keeps Warming to Crypto: Major U.S. financial institutions, from Morgan Stanley and Vanguard to JPMorgan and Citi, are opening wealth and banking channels to crypto, signaling the asset class’s accelerating integration into mainstream finance.

• U.K. Reopens Retail Crypto Market: The Financial Conduct Authority’s reversal of its retail crypto Exchange-Traded Notes (ETN) ban marks a major step toward normalizing digital asset investment in the U.K., though lingering tax and distribution hurdles still limit participation and liquidity.

001 Altcoin Spot ETFs Debut Amid Shutdown

On October 28, three new crypto spot exchange-traded funds (ETFs) began trading in the U.S. markets, none of them tied to bitcoin or ether. Canary launched two ETFs, one for the Hedera blockchain’s HBAR token (HBR) and the other for one of the oldest altcoin networks, Litecoin (LTCC). Bitwise’s spot Solana staking ETF (BSOL), however, took the spotlight.

Earlier in the month, Grayscale added staking features to its two Ethereum spot exchange-traded products (ETPs), and on October 29, its Grayscale Solana Trust (GSOL) was uplisted with a staking feature. With these launches, there are now 115 crypto ETFs in the U.S., of which more than 25 offer single-asset crypto spot exposure.

Anticipating the government shutdown, the Securities and Exchange Commission (SEC) had issued guidance beforehand that allows issuers to remove the “delaying amendment” from their registration statements. This change allows filings to automatically go effective after a 20-day waiting period, which makes it possible for these ETFs to begin trading during the shutdown.

On its first trading day, Bitwise’s BSOL saw $69.5 million in net inflows, while Canary’s two altcoin ETFs saw none. On the second day, BSOL attracted another $46.5 million, compared with $2.2 million for HBR and $0.5 million for LTCC. As of the close on Nov. 5, BSOL had accumulated $282 million in net inflows, HBR added $70 million, and LTCC saw only $1.7 million.

The latest wave of crypto ETF launches tells a bigger story about timing, regulation, and competition in the digital asset industry. These are among the first spot crypto ETPs to debut following the SEC’s approval of generic listing standards in September, and they did so during a government shutdown. The launches reflect a direct benefit of the new listing framework, which enables national exchanges to list qualifying spot crypto and commodity-based ETPs under standardized criteria, easing the path to market for eligible assets.

While Bloomberg analyst James Seyffart noted that it remains unclear whether this procedural shortcut formally applies to crypto ETF filings, what stands out is how quickly issuers moved to secure a first-mover advantage. In an increasingly fee-compressed market, timing is critical, and several issuers leveraged this automatic-effectiveness mechanism to bring products to market through an unconventional route, underscoring how fiercely competitive the landscape has become.

The long-awaited launch of the first spot Solana ETF with staking was a milestone for the U.S. market. In its first two days, Bitwise’s BSOL attracted $116 million in inflows, roughly 0.1% of Solana’s $106 billion market cap. For comparison, the nine Ethereum spot ETFs that launched on July 23, 2024, recorded two-day outflows of $26.4 million out of the gate, largely due to Grayscale redemptions. Flows remained muted for several months before picking up meaningfully around the November 2024 presidential election. The 10 bitcoin spot ETFs, by contrast, drew $858 million over their first two days, also about 0.1% of BTC’s $837 billion market cap at that time. What makes BSOL’s debut particularly notable is that its early inflows are especially strong given the far smaller number of available products. It is one of only two spot Solana ETFs, compared with nine for Ethereum and 10 for BTC. As Bloomberg’s Eric Balchunas noted, BSOL also recorded the highest trading volume of any ETF debut this year, with a volume of roughly $56 million on the first day.

In contrast, the two altcoin ETFs, HBR and LTCC, showed little activity, with zero flows on day one and $2.2 million and $0.5 million, respectively, on day two. This highlights how demand tends to taper as one moves further out on the risk curve. Altcoins remain less familiar to traditional investors, and educating them about these protocols takes time. Their weaker long-term narratives compared with Bitcoin, Ethereum, or Solana also help explain the muted interest, as these networks play narrower roles in the broader crypto ecosystem.

Price action for all three coins was also limited following these ETF debuts. Litecoin (LTC) rose 3% the day after its ETF began trading, HBAR gained 2.6%, and Solana’s SOL climbed just 1.6%, suggesting that much of the bullish repricing likely occurred ahead of the ETF launches.

In the coming months, more ETFs are expected to target assets that meet the new generic listing standards. Beyond Solana, Hedera, and Litecoin, potential candidates include DOGE, BCH, LINK, XLM, AVAX, SHIB, and DOT.

Finally, one notable detail stands out about BSOL. The fund aims to stake up to 100% of its assets, which are currently around 90% staked. Most issuers limit staking exposure to 50%-80% to ensure liquidity, because unstaking SOL takes roughly two days. To mitigate redemption risk, Bitwise partners with a third party that swaps pending unstaked SOL for unencumbered SOL. This arrangement maintains liquidity for the fund while capturing yield. In a market where every basis point counts, this innovation could pressure other issuers to follow suit.

002 Wall Street Keeps Warming to Crypto

On October 10, Morgan Stanley removed longstanding restrictions on crypto fund access for its financial advisors, allowing them to allocate digital assets to all clients across any account type. Advisors can now proactively recommend crypto investments, a privilege previously limited to high-net-worth investors with elevated risk tolerances. In its newest published report, the firm suggested clients allocate up to 4% of portfolios to digital assets, a conservative but nontrivial endorsement from one of the largest U.S. wirehouses. The report framed the asset class as both a hedge against inflation and a long-term growth opportunity.

In a similar shift, Vanguard, the $11 trillion asset manager, is reportedly preparing to offer select third-party crypto ETFs to its brokerage clients, a significant reversal for a firm historically skeptical of digital assets. The move appears driven by strong client demand and a more supportive regulatory climate, though Vanguard has not yet announced a specific timeline or which ETFs will be made available.

Meanwhile, Citi said on October 13 that it plans to launch institutional-grade crypto custody in 2026, following two to three years of development. That same day, JPMorgan also signaled that its clients would soon be able to trade bitcoin and other crypto assets, though custody services are not yet planned. These moves show banks preparing for and beginning to capture the crypto opportunity, using their integrated trading, custody, and advisory systems to open regulated access to digital assets.

The wealth channel is one of the last remaining distribution bottlenecks in U.S. financial markets for digital assets. It encompasses roughly 300,000 financial advisors managing about $30 trillion in client assets. If even a modest 2% allocation to bitcoin ETFs emerged across this channel, that would translate to roughly $600 billion in potential inflows, a figure comparable to the entire global gold ETF market (~$472 billion) and more than 3× the U.S. spot bitcoin ETF AUM (~$146 billion).

For those unfamiliar with the channel, financial advisors within wealth management platforms manage portfolios for a wide range of clients, including individuals, families, trusts, and institutions, but they can only allocate to products formally approved by their firms. These approvals depend on factors such as custody readiness, compliance frameworks, operational integration, and client suitability standards. Approval of crypto products has been especially cautious due to crypto’s volatility, evolving regulation, and relatively limited track record.

The barriers to crypto access in wealth management are now beginning to recede. As institutional adoption accelerates, particularly in a more pro-crypto regulatory environment, banks are building their own custody and trading infrastructure, which serves as the critical backbone needed to close the loop internally and offer secure, scalable crypto access through their wealth platforms. The Trump administration’s recent executive order allowing 401(k) plans to include crypto as an option has added further legitimacy, helping wealth channels grow more comfortable with crypto’s risk profile.

Over the past year, major asset managers such as BlackRock, Fidelity, Bridgewater’s Ray Dalio, and Ric Edelman have publicly suggested crypto allocations ranging from a conservative 1% to as high as 40% in aggressive scenarios. Now, with Morgan Stanley, Vanguard, and other wirehouses entering the field, crypto exposure is progressively integrating into mainstream wealth management.

Once the large advisory platforms fully open access to crypto ETFs, financial advisors will be able to integrate crypto directly into traditional balanced portfolios. This shift represents a change in how digital assets are distributed: moving from retail-driven speculation to advisor-led portfolio construction.

The impact could be substantial. New inflows may follow as wealth managers begin allocating to the asset class, potentially pushing total bitcoin ETF AUM to $500 billion within a few years, assuming just a 1% average allocation across managed portfolios. Such flows would reshape market dynamics and reinforce bitcoin’s position as a mainstream, investable asset.

At the same time, advisory compliance frameworks will make these allocations more permanent and disciplined, reducing the impulsive turnover often seen in retail trading. The result could be greater price stability and deeper market maturity, as long-term holdings replace short-term speculation.

In effect, the opening of the wealth channel could mark the point where crypto transitions from a niche investment to a standard portfolio component, alongside equities, bonds, and gold.

003 Stablecoins: UK Reopens Retail Crypto Market

October 8 marked a significant regulatory inflection point for the U.K. digital asset market, as the Financial Conduct Authority (FCA) reversed its 2021 ban on retail access to crypto Exchange-Traded Notes (ETNs). The decision, coming after months of structured dialogue between the FCA, His Majesty’s Treasury (HMT), and market participants, reflects the U.K.’s evolving stance toward digital assets and its broader ambition to position itself as a competitive hub for regulated crypto financial products by the government. The FCA and HMT have been actively refining their frameworks around stablecoins, tokenization, and the treatment of digital securities as part of an ongoing effort to balance investor protection with innovation. The review of the retail ban is part of this overhaul, seeking to align the U.K. with global peers such as the U.S. and Europe, where crypto exchange-traded products have become an integral component of the market ecosystem. Policymakers have also pointed to the success of the U.S. spot crypto ETFs and a maturing institutional infrastructure supporting the products as catalysts for re-evaluating prior restrictions.

While professional investors in the UK have had access to crypto ETPs on the London Stock Exchange since March 2024, trading volume have remained modest. On average €462k per day of crypto ETPs were traded on the LSE, slightly more than 1% of the continental European exchanges activities. Last year, crypto ETPs traded on Germany's Xetra exchange recorded approximately €44m per day on average. Following the reopening of retail access, daily trading volumes in products such as iShares’ IB1T and 21Shares’ CBTC have risen to above £1m, a significant increase from last year, yet liquidity remains thin relative to both the U.S. and EU. The UK’s ETF market, valued at roughly £1 trillion in assets under management (AUM) on the London Stock Exchange alone, represents one of the largest pools of exchange-traded capital globally, and therefore the reintroduction of retail access to crypto ETNs was met with excitement given its long-term implications for investor diversification, and market competitiveness.

However, early indicators suggest that participation has been constrained by lingering regulatory and structural frictions. Chief among them is uncertainty surrounding the tax treatment of crypto ETNs. Under current guidance from His Majesty’s Revenue and Customs (HMRC), such instruments may no longer qualify for inclusion within traditional Stocks and Shares Individual Savings Accounts (ISAs), the most common tax-efficient wrapper used by U.K. retail investors. If this interpretation remains unchanged, investors holding crypto ETNs could be required to divest by April 2026 or transfer their holdings to the less mainstream Innovative Finance ISA (IFISA) vehicle with limited availability and almost no market awareness. This limitation, combined with the absence of crypto ETNs on several major retail brokerage platforms, has dampened early enthusiasm and impeded broader retail distribution.

Further headwinds stem from the continued caution of U.K. financial authorities toward digital assets more broadly. The Bank of England has recently proposed caps on stablecoin holdings between £10,000 and £20,000 for individuals and £1 million for corporates to mitigate perceived risks of deposit flight from the traditional banking system. The proposal, which is designed to preserve the fractional reserve model that is considered essential to credit creation, has been met with industry criticism. Stablecoins are structured as fully backed liabilities rather than fractional deposits, with ownership of the backing assets resting directly with token holders where issuers hold the asset in trusts on users’ behalf. This setback stands in sharp contrast to developments in the U.S., where regulatory momentum from the GENIUS Act is increasingly supportive of stablecoin integration across payments and capital markets under a coherent federal framework.

The U.K.’s reopening of retail access to crypto ETNs marks an important step in the normalization of digital asset investment within the country’s regulatory perimeter. Yet, the muted trading response underscores that clarity on taxation, product inclusion by major retail platforms, and broader regulatory alignment remain essential before meaningful retail participation can be achieved. Over the medium term, sustained engagement between regulators, issuers, and distributors will be critical to translating policy shifts into tangible liquidity and positioning the U.K. as a European counterpart to the U.S. in the institutionalization of crypto finance.

004 Our Takeaways and Predictions

Markets enter November on a cautious footing as the U.S. government shutdown becomes the longest on record, compounding uncertainty around policy and liquidity. Investors will remain focused on the Federal Reserve’s next moves, with rate expectations and short-term funding conditions likely to dictate sentiment into year-end.

In crypto, sentiment has weakened following a volatile October. Recent ETF outflows suggest that much of the prior strength was met with profit-taking, rather than new inflows, as investors trimmed positions after a prolonged rally. This has left the market more vulnerable in the near term, with short-term holders approaching loss-making levels, raising the risk of forced selling if prices continue to decline.

Still, the ownership base continues to evolve, shifting from leveraged and speculative participation toward more stable, institutional channels. Institutional participation through newly opened wealth and banking channels continues to expand, providing a constructive sign of deepening adoption even as short-term pressures persist. In addition, while the next phase of the cycle may not depend on retail engagement, a renewed pickup in retail flows would signal improving market breadth.

With the holiday season approaching, trading activity is likely to thin, leaving markets more reactive to incremental headlines and liquidity shifts. For now, the path forward remains one of moderation and selectivity. And as year-end nears and the holiday season approaches, we’ll see just how many grandparents can be convinced to buy BTC at the Thanksgiving dinner tables.

Key Events to Watch:

• November 17: G20 Meetings

• November 19: FOMC Meeting Minutes

Key Macroeconomic Data Releases:

• November 13: Jobless Claims, CPI

• November 14: PPI, Retail Sales MoM

• November 20: Jobless Claims

• November 21: Flash Services PMI, Flash manufacturing PMI

• November 26: Preliminary GDP QoQ, Jobless Claims, Core PCE Price Index MoM

To learn more about the topics covered in this month's newsletter, contact our team or reach out to your Galaxy representative.

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