State of the Market: A Hawkish Hold as Midterms Loom

Weekly pulse

A Hawkish Hold as Midterms Loom

Markets navigated a hawkish Fed hold and hyperscaler earnings this week, with the midterms now just days away. AI and chip stocks rebounded early in the week, helped by Anthropic’s S-1 filing (first-half revenue of $16.3B, up from $1.2B in first-half 2025) and SK Hynix’s record quarter and upbeat outlook, which eased concerns about the AI buildout. Investors remain focused on whether hyperscaler growth can justify continued heavy AI spending. As expected, the Fed held rates unchanged at 3.75–4.00%. The hawkish hold leaves another increase on the table this year, with markets pricing a strong likelihood of a December hike. 

In digital assets, “Uptober” is yet to materialize. BTC slipped under $80K this week as spot demand and ETF flows stayed soft, with market breadth weakening. Separately, two plans to bring Hyperliquid based perps into US regulated markets surfaced this week. Hyperliquid said Payward intends to deploy CFTC-regulated perps through its HIP-3 framework, with Bitnomial running the markets and clearing. On Thursday, ICE, the NYSE’s owner, agreed to operate regulated perps tied to stocks, commodities and FX through trade[XYZ]’s Hyperliquid-based markets, pending regulatory approval. 

Attention now turns to the midterms on Nov 3. Bitcoin options price a relatively calm election week, while prediction markets put a Democratic sweep in the low-to-mid 60s. (Deeper dive below). 

Market performance 

The total crypto market cap stands at $2.82T, down 3.3% over the week, with BTC dominance at 57.9%. Bitcoin underperformed traditional assets, falling 2.5% against a flat S&P 500 (0.0%), the Nasdaq 100 (-0.2%) and gold (-1.7%).

• Crypto Majors: BTC -2.5% | ETH -4.0% | SOL -4.9%, with ETH/BTC down 1.5% to 0.0291.
• Top Gainer: Ethena (ENA) up 6.2%, ahead of Bitcoin Cash (+4.2%) and Zcash (+4.1%), Top Loser: Worldcoin (WLD) down 25.5%.
• Market Breadth: 11 of the top 50 assets gained (22% advancing), with decliners losing $86.2B of market value against $11.3B added by advancers.

Source: Talos State of the Market Dashboard, Talos CM Market Data (Chart: Performance of the top 10 crypto assets by market capitalization, as of October 28th, 2026).

Flows

• Spot Bitcoin ETF flows remained soft with $190M of net outflows over the week leaving the 30-day total roughly flat.
• Stablecoin supply contracted by about $1.7B, driven by a 2.9% decline in USDC supply.
• BTC & Exchange Flows: $409M of net outflows over the week and $3.2B over 30 days, consistent with coins moving off exchanges into holding.

Source: Talos Network Data Pro

Spot & derivatives activity

• Volume: Spot volume fell 15.1% WoW to $149B and futures volume fell 9.3% to $935B across tracked exchanges. Binance’s spot volume dropped 29%, cutting its share by 5.9pp to 30%, while Upbit’s rose 78%.
• Leverage & funding rates: BTC open interest fell 3.5% to $46.3B and ETH’s fell 2.8% to $24.0B, while BTC funding rose to +9.0% annualized, a mild bullish tilt.

Perps & prediction markets

• RWA perps reached 58% of BTC perp volume across Binance and Hyperliquid this week.
• Hyperliquid’s XYZ perp tracking the iShares Brazil ETF (EWZ) traded $85M while Brazil’s market was closed, falling as much as 28% after Lula won Brazil’s presidential runoff.
• Prediction markets: Kalshi midterm markets (Senate, House and balance of power) have traded $24.8M since Sep 23rd, and open interest has more than doubled to $117M notional.

Source: Talos CM Market Data, Hyperliquid (Trade.xyz) 15-min candles

Midterms through the lens of options & prediction markets

Crypto may be underpricing the midterms. Bitcoin options are pricing a far calmer election than 2024, just as uncertainty in prediction markets is starting to pick up again.

A modest election premium: Calm before the storm?

Based on Talos CM market data on Deribit options, Bitcoin’s implied volatility for election week is about 7% above a typical week (1.07×). That implies an extra move of about 1.8% on top of the ~4.9% a normal week implies. At the same point before the 2024 presidential election, the premium was roughly 34%, an extra move of about 6.7%. By contrast, in 2022 options priced almost no election premium.

Markets see lower stakes this time than in 2024, when the candidates were far apart on crypto policy. The election-week premium hovered around 2.5–3% in mid-October and has eased to about 1.8% in recent days. A low priced move doesn’t guarantee a quiet result. In 2024, even a much richer premium fell short: Bitcoin rose 9% the day after the vote.

Source: Talos CM Market Data Deribit Bitcoin options, as of Oct 28, 2026. Extra move options price for election week (Oct 30–Nov 6 expiries) above a normal week, not the total move. 2022 and 2024 use the equivalent expiries at the same days before the vote. Left: bp (0 = none). Right: vol ratio (1.0 = no premium).

We believe politics is only one driver this time, with monetary policy and AI valuations dominating attention. The market may have priced in little for the midterms alone, which means any surprise could produce an outsized move.

Election odds in motion: Uncertainty is creeping back

Prediction markets show the probability of a Democratic sweep rising from about 46% in late August to ~64% (as of Oct 28) on both Kalshi and Polymarket. Talos’ odds-of-odds indicator, which shows how settled the outcome looks (0 = certain, 0.75 = an even four-way split), fell from about 0.63 to about 0.48 as the market converged on Democrats. It has since edged back up to about 0.53 as sweep odds slipped from a peak of 69%. Neither Bitcoin nor equities have tracked the shift. As political uncertainty picks up into Nov 3, the options premium has moved the other way.

Source: Talos CM Prediction Market Data, as of Oct 28, 2026. Left: balance-of-power odds on Kalshi and Polymarket. Right: odds-of-odds indicator vs Bitcoin and S&P 500 perpetual (rebased). Indicator = 1 − sum of squared probabilities across the four balance-of-power outcomes (Kalshi, rescaled to 100%); 0 = certain, 0.75 = even four-way split.

We also took a deeper look at Kalshi’s election markets. The same question, “Will Democrats control the Senate?”, is priced through four different contract families, and their implied odds have differed by 3.3 points on average since August, by up to 9.7. Read more in our latest research: 50 Shades of Gray: Explore Pricing Gaps in Midterm Prediction Markets.

^{Disclaimer: Talos Global, Inc. and its affiliates ("Talos") is not an investment advisor or broker/dealer. This information does not constitute an offer to buy or sell, or a promotion or recommendation of, any digital asset, security, derivative, commodity, financial instrument or product or trading strategy. This information is not intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. This information is subject to change without notice. It is provided only for general informational, illustrative, and/or marketing purposes and is not intended for retail clients. The information provided was obtained from sources believed to be reliable at the time of preparation, however Talos makes no representation as to its accuracy, suitability, non-infringement of third-party rights, or otherwise. Talos disclaims all liability, expenses, or costs arising from or connected with the information provided. All content is provided for informational and illustrative purposes only. It does not represent firm offers, executable prices, or commitments of any kind, and should not be relied upon as indicative of current or future market prices or the terms on which any transaction may be executed.}

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