Volatility Rises as Stablecoins, ETFs and CBDCs Drive Structural Shifts

This week brought a decisive shift in risk sentiment as Bitcoin extended its drawdown, ETF outflows accelerated, and early indicators of weakening institutional demand emerged across spot and derivatives markets. While new ETF launches and stablecoin infrastructure initiatives continued to gain traction, investors recalibrated expectations amid rising volatility, limited macro data visibility, and persistent geopolitical overhangs.

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Bitcoin slides below $95K as structural signals turn bearish

Bitcoin’s downturn deepened this week, falling below $95,000 and extending its drawdown to more than 24% from the October all-time high. Over $1.24 billion in leveraged longs were liquidated within 24 hours, adding mechanical selling pressure to a market already contending with weakening spot demand. Cross-market stress was visible across equities and commodities as well: the S&P 500 fell nearly 1% pre-market on Friday, while gold dropped nearly 3%, underscoring broader risk aversion.

On-chain and derivatives indicators point to a meaningful shift in market structure. CryptoQuant’s Bull Score shows 8 out of 10 metrics trending bearish, including declining stablecoin liquidity, lower network activity, and capital rotation out of derivatives. Rising perpetual futures open interest alongside a falling cumulative volume delta suggests that shorts are increasingly in control of price action. Meanwhile, the Coinbase Premium Index flipping negative indicates a notable cooling of U.S. spot demand.

Analysts warn that the combination of stronger selling pressure, weaker liquidity, and macro uncertainty resembles late-2021 to early-2022 dynamics. The formation of a potential “death cross” — with BTC’s 50-day moving average drifting below the 200-day — reinforces a cautious outlook. While experts frame the move as a broader cycle correction rather than a full market breakdown, the next phase will depend heavily on regulatory clarity, updated macro data, and whether institutional flows recover once the U.S. government shutdown ends.

Canary’s spot XRP ETF posts strongest debut of the year

Canary Capital’s new XRPC spot XRP ETF launched with $58 million in first-day volume — the highest ETF debut of 2025. The product exceeded expectations by a wide margin, surpassing Bitwise’s recently launched BSOL fund despite launching in a market-wide downturn. Analysts attribute the strong opening to pent-up demand for regulated XRP exposure following Ripple’s legal clarity wins earlier in the year.

The launch comes amid volatile crypto markets, with broader capitalization sliding 3.5% over the same session. XRP fell nearly 8% by close, but the ETF’s early flows reflected a mix of retail enthusiasm and institutional test allocations. Market-makers also played an outsized role, with liquidity providers managing creation and redemption baskets contributing significantly to day-one volume.

Analysts say the key test will be whether XRPC attracts sustained inflows. Retail participation is expected to remain strong given XRP’s long-standing community base, but institutional inflows will depend on market stabilization and renewed ETF demand across asset classes. If flows persist through next week, the ETF could signal a broader rotation into non-BTC/ETH exposures despite current market headwinds.

Cash App adds USDC via Solana and expands Lightning support

Block's Cash App unveiled its upcoming stablecoin payments feature, enabling users to send and receive USDC — beginning with Solana — and marking a notable shift for a platform long centered on Bitcoin-only infrastructure. The company said it plans multi-chain, multi-stablecoin support in 2026, reflecting growing demand for low-cost, instant-dollar transfers across mainstream fintech applications.

Solana confirmed that USDC rails will power the Cash App integration, leveraging the network’s high throughput and low fees. The move aligns with broader industry trends as major firms — including JPMorgan, Meta, and Amazon — expand blockchain-based payment capabilities following the GENIUS Act’s passage. Cash App’s choice to integrate stablecoins before enabling Lightning-based Bitcoin payments illustrates a pragmatic route: stablecoins offer cheaper, faster settlement for everyday transactions.

In parallel, Cash App announced new Lightning features enabling users to make BTC payments even when holding only USD balances — with automatic conversion handled at point of sale. Block executives said the long-term vision is “Cash App v2 built on Bitcoin,” positioning the company to bridge fiat, stablecoins, and L2 Bitcoin rails for its 57 million monthly users.

Czech National Bank launches $1M digital asset pilot

The Czech Republic became the latest European jurisdiction to formally experiment with digital assets, announcing a $1 million pilot program focused on Bitcoin, stablecoins, and tokenized bank deposits. The initiative will test custody models, settlement workflows, AML controls, and crisis-scenario simulations, marking a significant shift for a central bank that previously maintained a cautious stance.

The pilot follows a rejected proposal earlier this year for a multi-billion-dollar Bitcoin reserve, but accompanying documentation suggests the testing infrastructure could later support digital assets within official reserves. Analysts note that the ECB’s earlier objections to Czech reserve diversification contrast with the more favorable global environment shaped by the GENIUS Act in the U.S.

Governor Aleš Michl stated that the program will run for two to three years before assessment. The announcement frames Bitcoin as “mature and viable” and positions tokenized Czech government bonds as a likely early use case. The initiative underscores Europe’s growing urgency to modernize payment and settlement systems as other jurisdictions accelerate tokenized money adoption.

JPMorgan upgrades Circle on stronger fundamentals and Arc momentum

JPMorgan assigned an “Overweight” rating to Circle, raising its year-end 2026 price target to $100 on expectations of stronger USDC adoption and improving margins. Analysts highlighted Q3 revenue of $740 million — a 66% year-over-year increase — and rapid growth in USDC held directly on Circle’s platform, which rose from $1.1 billion to $9.1 billion within nine months.

The bank cited Circle’s enterprise-grade Arc blockchain as a major catalyst, noting early interest from Deutsche Börse, Finastra, Visa, and other large institutions. Circle is also exploring a native Arc token, which could provide an additional monetization vector similar to Coinbase’s potential strategy for Base. Analysts view Arc’s FX engine and settlement capabilities as differentiators that could support large-scale payment infrastructure.

Despite growing competition from Wall Street stablecoin entrants, JPMorgan said USDC’s regulatory posture remains a competitive advantage as compliance becomes increasingly central to institutional adoption. The main question, analysts noted, is whether stablecoins become a “winner-take-most” market — a dynamic that will depend on how quickly Circle scales Arc’s network effects.

Ark Invest purchases $30M in Circle shares amid valuation reset

Cathie Wood’s Ark Invest added more than $30 million in Circle stock across three ETFs, increasing its total holdings to nearly $255 million. The purchase came as Circle’s share price fell over 20% in five trading days, part of a broader correction wiping 37% from its value over the past month. Analysts attribute the pullback to post-IPO lockup expirations that expanded Circle’s share float from 50 million to over 210 million.

Despite the selloff, Circle beat Q3 forecasts and continues to scale its infrastructure footprint. The company’s Arc testnet launched in October with over 100 enterprise participants, and revenue trends remain strong. Ark’s accumulation signals long-term confidence in Circle’s positioning as regulated stablecoins gain prominence across payment, credit, and settlement markets.

Ark’s strategy mirrors its recent dip buy of Ethereum-focused BitMine Immersion Technologies. The firm’s thesis remains tied to structural growth in stablecoins, tokenized assets, and Bitcoin treasuries — sectors it expects to outperform as regulatory clarity spreads globally.

Taiwanese lawmakers push for Bitcoin in national reserves

Taiwan’s Legislative Yuan ignited debate over whether Bitcoin should become part of the country’s strategic reserves, citing concentration risks from heavy reliance on U.S. Treasuries and exposure to China’s economic cycle. Lawmakers argued that global reserve diversification is accelerating and warned Taiwan risks falling behind jurisdictions already evaluating digital reserve assets.

Vice co-chair Ko Ju-Chun pressed the central bank to update its Bitcoin risk assessment, calling the current stance “overly cautious.” Taiwan holds roughly $600 billion in FX reserves, with more than 80% allocated to U.S. bonds — a structure lawmakers say creates geopolitical vulnerabilities. They also urged the government to complete an inventory of seized Bitcoin before determining whether it should be retained or sold.

Analysts note that public reaction could influence how policy evolves, given local sensitivities around fraud and past crypto scandals. Still, Taiwan’s debate aligns with broader global reconsiderations of how digital assets fit into long-term monetary and security frameworks. Premier Cho Jung-tai committed to publishing an updated Bitcoin-reserve assessment by year-end.

Visa pilots USD-to-stablecoin payouts for gig and creator economies

Visa unveiled a new pilot enabling companies to send fiat USD while recipients receive funds in USDC directly to stablecoin wallets. The system targets gig-economy and creator platforms that deliver small, frequent payments to a global user base. The pilot initially supports only USDC and U.S.-based platforms, with broader rollout expected in H2 2026 pending regulatory approvals.

The scheme integrates into Visa Direct, the company’s proprietary payout network, marking one of Visa’s most direct entries into stablecoin settlement. The company has been expanding its stablecoin footprint throughout 2025, including strategic investments in BVNK and participation in Circle’s Arc testnet alongside BlackRock and Goldman Sachs.

Visa said stablecoin-based payouts could reduce cross-border frictions and broaden access to global income streams. The initiative complements Visa’s parallel push into stablecoin credit-card programs and its research into stablecoin-backed credit issuance for the $40 trillion global credit market.

Corporate Bitcoin accumulation slows despite record total holdings

Corporate Bitcoin treasuries grew by only 14,447 BTC in October — the smallest monthly increase this year — even as total holdings across public companies, governments, and ETFs reached a record 4.05 million BTC. The slowdown reflects a more defensive posture as firms face rising capital costs, compressed equity valuations, and heightened macro uncertainty.

Despite slower inflows, selling activity remained minimal, with only 39 BTC offloaded during the month. Public companies now hold over 1.05 million BTC, ETFs and exchanges account for 1.54 million BTC, and governments hold more than 644,000 BTC. Analysts say the buildup of illiquid supply is constraining volatility but also contributing to rangebound trading as short-term holders disengage.

The trend coincides with capital-efficiency shifts among treasury firms, including increased share buybacks and reduced recurring BTC purchases. Fidelity estimates that public companies now represent roughly 5% of Bitcoin’s illiquid supply — a figure expected to climb to 42% by 2032. Meanwhile, Tether continued its quarterly dip-buy strategy, adding 961 BTC worth $97 million this week.

Circle reports $740M Q3 revenue and explores Arc token launch

Circle reported Q3 revenue of $740 million, beating analyst expectations of $709 million and highlighting accelerating USDC adoption across global markets. The company pointed to rapid Arc testnet growth — with over 100 participating institutions — and continued progress toward building a unified settlement layer optimized for stablecoin transactions.

The company confirmed it is exploring a native Arc token as part of its infrastructure roadmap. Analysts say such a token could strengthen economic alignment across the network and provide additional monetization channels. USDC’s market cap has climbed from $61 billion to nearly $76 billion since Circle’s IPO in June, supported by rising enterprise demand and deeper integrations with financial institutions.

Despite strong fundamentals, Circle’s share price softened ahead of the Q3 announcement, reflecting broader market volatility and post-lockup selling pressure. Analysts expect Circle to generate $2.68 billion in revenue this year, with growth driven by increasing on-platform USDC balances, FX flows, and the expanding Arc ecosystem.

At Finery Markets, we continue to monitor how evolving regulatory frameworks, monetary policy shifts, and new market infrastructure are shaping digital asset adoption globally. Follow us for deeper insights into institutional flows, stablecoin strategies, and trading technology innovation. This newsletter is provided for informational purposes only and does not constitute investment, financial, or other professional advice.