State of the Market: The AI Trade Wobbles as BTC Holds

Talos State of the Market is a weekly view of market structure, venue activity, derivatives positioning and flows across the digital asset landscape.

Calls for “Black Monday” echoed over the weekend after a selloff in AI and memory stocks intensified across Asian and U.S. markets on Friday. Hot September inflation (3.7% headline CPI), combined with the 10-year holding above 5%, put the cost of debt funded AI expansion in focus. CoreWeave fell about 25% last week as its bond yields neared 16%, while the Nasdaq had its worst week since June. Tech has since regained some ground as attention turns to earnings.

The volatility response was uneven. The VIX spiked in the final hours of Friday’s session, finishing up 21%, then gapped back to about 18.4 by Monday. Bitcoin’s implied volatility perp index (BVIV) on Hyperliquid, remained comparatively calm. The divergence suggests the equity selloff in overexposed AI names did not trigger a comparable rise in Bitcoin’s expected volatility. 

Source: Talos Market Data 

The pressure nevertheless reached crypto equities and altcoins. Strategy, Coinbase and Circle fell alongside miners. Among tokens, the losses skewed towards small cap higher-beta names like QNT, PUMP and ENA, while higher quality large-caps and BTC fared better.

BTC held relatively steady before pushing above $84K on Wednesday. Futures open interest is edging higher and funding has risen to +6% annualized, while spot ETF inflows have resumed but remain uneven. With BTC’s correlation to the Nasdaq still elevated (30D correlation of 0.6), its resilience faces a test from upcoming big-tech earnings and the October 28 Fed decision. 

Source: Talos Market Data 

Market performance

The total crypto market cap stands at $2.91T, up 2.5% over the past week, with BTC dominance at 58.1%. Bitcoin outperformed equities and gold as tech recovered only part of the AI-led selloff, rising 3.3% versus the Nasdaq 100 (-0.4%) and gold (+0.3%), while oil prices rose over the week (+4.6%).

• Crypto Majors: BTC +3.3% | ETH +2.4% | SOL +2.6%
• Top Gainer: Zcash (ZEC) up 15.1%, with Monero (XMR) +13.0% and NEAR +7.5%, privacy coins leading the rebound | Top Loser: Canton Coin (CC) down 2.9%
• Market Breadth: 35 of the top 50 assets gained (70% advancing), adding $84.2B of market value against $3.9B lost by decliners. The recovery was broad among larger names, but the median small-cap token still ended the week down 1.9%.

Source: Talos State of the Market Dashboard, Talos CM Market Data

Flows

• Spot Bitcoin ETFs recorded about $93M of net inflows over the week, reversing last week’s $405M of outflows and bringing the 30-day total to $1.63B. 
• Coinbase BTC premium, which measures the price difference between Coinbase (USD) and Binance (USDT), remains at a discount of about 0.10%, where it has spent most of the past 3 months. This suggests subdued US spot demand, consistent with muted ETF flows.
• Exchange flows: about $443M of BTC left exchanges on net this week, extending the $7.4B 30-day net outflow, consistent with coins moving into holding. ETH saw modest net deposits of $63M.
• Stablecoin supply contracted by about $366M, a mild outflow of liquidity from the on-chain ecosystem.

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Source: Talos Market Data, Talos Network Data Pro

Spot & derivatives activity

• Spot volume fell 7.5% WoW to $175B, with Coinbase down 22%, while futures volume rose 4.8% to $1.03T, with Hyperliquid growing fastest amid the volatility in equities (+17.4%).
• BTC futures open interest rose 6.0% to $47.9B and funding sits at +5.4% annualized, a mild positive bias, while ETH open interest was little changed at $24.7B (+0.5%).
• RWA perps volume rose 26.2% to $55.3B, reaching 60.3% of BTC perpetual volume as 24/7 perps became an avenue for trading the AI volatility and earnings. Gold ($11.5B) led, followed by SpaceX on Binance ($8.9B, +35.8%) around its earnings and crude ($6.6B, +25.9%), while SK Hynix (SKHX) on Hyperliquid rose 75% and Micron on Binance 22% as the memory selloff played out.

Earnings highlight: SpaceX Perps on Binance

SpaceX reported Q3 earnings after the US market closed on Tuesday, and perps priced the reaction overnight. After revenue grew 161% and Elon Musk said SpaceX and Tesla are studying a possible merger, the Binance SPCX perp rose 8.5% by Wednesday’s US open. SPCX perps traded about $5.6B of volume across Binance and Hyperliquid, more than 8x the prior day. Volume peaked in the hour spanning the open, while open interest fell about 8% since the earnings release. Investor attention now turns to the remaining big-tech earnings and whether AI capex is translating into revenue and profits.

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Source: Talos Market Data 

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