Hougan says crypto’s resilience shows growing market maturity

The recent crypto market crash caused by President Trump’s threat of tariffs against China has generated a mixed reaction. Bitwise Chief Investment Officer Matt Hougan said the event was short-lived, adding that crypto’s fundamentals remain solid despite the extreme volatility.

The stock market began to tumble as Trump called for a 100% tariff on Chinese imports after Beijing threatened to halt exports of rare earths. The post, which was circulated late Friday on Truth Social, surprised traders. With markets all over the world shut down, crypto was the only one open, and the first to react.

Bitcoin crashed by close to 15% to about $100,000 on various exchanges, with overleveraged trades being liquidated in a historic 20 billion U.S. liquidation. Ether dropped over 20%, and Solana dropped over 40%. Bitcoin, however, bounced back to about $115,000 on Monday following the indication by Trump that he is willing to defuse the trade standoff.

Hougan described the event as “a blip, not a breakdown.” He stated that crypto recovered in a short period since its base, i.e., technology, regulation, and institutional adoption, were not impacted.

How the crypto system withstood the stress

In a client note, Hougan identified three areas of emphasis: market stability, technology resilience, and investor behavior. According to him, there was no significant player who fell during the sell-off, and the losses were mainly limited to individual traders. Bitwise partners such as custodians and liquidity providers affirmed that the institutions remained intact.

Hougan also said that blockchains had passed a test of critical stress. Decentralized exchanges like Uniswap, Aave, and Hyperliquid continued to operate smoothly even as centralized exchanges faltered. Binance implemented a $400 million recovery plan following depegging incidents, which resulted in $283 million in refunds. Despite those issues, Hougan said that crypto’s decentralized systems coped better than expected.

Investor sentiment was also resilient. Hougan mentioned he didn’t get many panicked messages from clients during the crash, which he says is an indication that professionals saw the sell-off as a temporary correction and not a systemic risk. 

Analysts split on the nature of the crash

Market observers are still divided as to whether the crash was organic or coordinated. Some blamed major market makers for deepening the sell-off by withdrawing market liquidity abruptly. Other analysts, such as CryptoQuant, said the event was an orderly deleveraging.

During Friday’s crash, spot volume hit $44B (near cycle highs), futures $128B, while OI dropped $14B with only $1B in BTC long liquidations. 93% of OI decline wasn’t forced – this was a controlled deleveraging, not a cascade.

👉 A very mature moment for Bitcoin. pic.twitter.com/sTrziRUXXo

— Axel 💎🙌 Adler Jr (@AxelAdlerJr) October 14, 2025

Data indicated that open interest in crypto futures declined by between $26 billion and $14 billion, while the volume on decentralized exchanges increased to $177 billion. Crypto lending fees hit a record $20 million, signaling heightened trading activity rather than panic.

According to blockchain analyst YQ, liquidity disappeared from order books when Trump posted, resulting in a 98% reduction in market depth, until prices recovered. He referred to it as a liquidity vacuum enhanced by automated trading programs.

Short-term volatility, long-term strength

Hougan anticipates short-term jitters when the market makers withdraw following the volatility. He explained that lower liquidity might lead to greater price volatility. Still, he noted that the long-term drivers of the crypto economy remain in place, including regulatory clarity, institutional adoption, and technological innovation.

“Markets may breathe heavily for a few days,” Hougan said. “But when investors refocus on fundamentals, the bull market will resume.” At the time of this writing, Bitcoin is trading at $110,920, Ethereum at around $4,100, and Solana at slightly more than $200. Although the weekend was chaotic, analysts had concurred that the fact that crypto could recover swiftly was indicative of its increased maturity.

Get up to $30,050 in trading rewards when you join Bybit today