Key Takeaways :
- Despite a sharp plunge from all-time highs, derivative market data still suggests structural optimism for Bitcoin
- The crash was largely driven by forced deleveraging (long squeezes), not a collapse of fundamentals
- Investors should focus on derivative-based signals (funding rates, skew, open interest) rather than short-term noise
- Ethereum’s upcoming Fusaka upgrade may represent a “game-changer,” improving scalability, node efficiency, and economic design
- The upgrade could strengthen Ethereum’s competitive position among layer-1 & layer-2 chains
- Institutional interest and capital flows (such as ETFs and corporate treasuries) continue to compress available supply and support upside
- For Japanese and global investors alike, this is not too late—structural, long-term thesis still holds
1. Bitcoin’s Sharp Fall from All-Time Highs: Panic or Opportunity?
1.1 Derivatives Markets Still Lean Bullish
Bitcoin’s recent steep decline from historic highs caused significant short-term anxiety among traders. However, derivatives-related metrics suggest that the underlying market conviction remains predominantly bullish despite the dip. In many leading perpetual futures markets, funding rates have dipped during the crash but have remained positive (or in neutral territory) rather than turning deeply negative. Meanwhile, options markets show a tilt toward call demand over put demand, suggesting that many participants view the drawdown as a temporary dip rather than the onset of a systemic bear market.
These derivative metrics often reflect more structural sentiment than spot market panic—they are less swayed by impulsive selling and more by the balance of leverage, hedging, and positioning. Thus, while spot markets are reacting to fear, derivatives may be signaling underlying confidence.
1.2 Forced Liquidations: The Long Squeeze Explained
The precipitous drop around all-time highs is commonly interpreted as a “long squeeze.” Excessive leverage—especially among speculative traders holding long positions—gets violently unwound when the price moves against them. Liquidations cascade, driving further downward pressure, which in turn forces more liquidations, in a feedback loop.
This kind of deleveraging event is painful but not necessarily destructive to the long-term trend. In fact, many market analysts view it as a cleansing mechanism: it expels speculative excess and restores stability. Once the “smoke clears,” price tends to return to fundamentals-driven trajectories, especially if demand remains intact at lower levels.
1.3 Steady Hands: Strategy for Japanese & Global Investors
For investors, especially in Japan and similar markets sensitive to volatility, the lesson is to avoid overreacting to price swings and instead pay attention to the structural signals emerging from derivative markets. Rather than sourcing trades purely on price charts, focus on (a) funding rate trends, (b) skew and implied vol in options, (c) open interest shifts, and (d) flows from institutions. The crashes are often the noise; the signals lie beneath.
In short: view episodes of fear as potential buying opportunities, not fundamental breakdowns.
2. Ethereum’s Fusaka Upgrade: A Potential Game-Changer
2.1 Scalability Leap via Data Sharding & PeerDAS
Ethereum’s next major upgrade, dubbed Fusaka (a portmanteau of Fulu and Osaka), aims to substantially enhance network throughput and node efficiency. One of the key features is Peer Data Availability Sampling (PeerDAS), which allows validators to sample fragments of data rather than requiring full downloads. This mechanism dramatically reduces storage and bandwidth burdens for nodes, enabling participation with lighter infrastructure.
In terms of throughput, Fusaka plans to increase the block-level gas capacity from ~45 million to ~150 million, meaning more transactions per block. This jump offers the potential to scale Ethereum’s capacity closer to mass adoption levels without excessive gas costs.
2.2 Strengthened Economics & Deflationary Trajectory
Beyond scalability, Fusaka is expected to refine Ethereum’s economic model. By combining more aggressive “burn” mechanics with higher utilization, the upgrade could push ETH further into deflationary territory: the more the network is used, the more supply is removed. This enhanced supply pressure, paired with rising demand, strengthens the long-term bull thesis.
With institutional interest growing, ETH may increasingly be seen as a scarcity asset or an “inflation hedge”—a narrative previously reserved for Bitcoin.
2.3 Gaining a Decisive Edge in the Chain Wars
Ethereum competes with a growing roster of Layer-1 and Layer-2 blockchains (Solana, Sui, Aptos, etc.). Fusaka’s improvements in scalability, cost-efficiency, and decentralization could allow Ethereum to consolidate its network effect advantages. By lowering the barrier to node operation, it widens participation and security. By improving transaction cost dynamics, it attracts more applications and users.
In other words, Fusaka could reinforce Ethereum’s place as the foundational infrastructure for Web3, rather than be overtaken by newer chains weathering scaling trade-offs.
3. It’s Not Too Late: Pantera & Institutional Optimism
3.1 Crypto Still in Early Innings
The assertion by Pantera Capital executives that “it is not too late” to invest in crypto underscores the belief that the market remains fundamentally in its early phase. Despite rising valuations in Bitcoin and Ethereum, the total crypto market is still a fraction of traditional equity or bond markets. Many institutional adopters view adoption curves as analogous to early internet or smartphone penetration—massive growth still ahead.
Thus, the current levels are not viewed as exuberant peaks but rather entry points within a multi-decade growth trajectory.
3.2 Institutional Inflows Create a New Demand Phase
One of the most significant structural developments in 2025 is the massive wave of institutional capital entering the space:
- Global crypto ETFs pulled in $5.95 billion in a single week in early October 2025—$3.55 billion into Bitcoin alone.
- Public companies have increased their holdings: by 2025, digital-asset treasuries (DATs) rose ~40%, accumulating ~1.1 million BTC, or about 5.6 % of total supply.
- Combined, ETFs plus DATs now control more than 12 % of total Bitcoin supply. This constrains the free float for speculative supply.
These structural supply constraints, combined with sustained buying pressure, create a “supply cliff” effect: as more capital flows in, fewer coins are available for sale without moving price. That dynamic is often bullish.
3.3 “Core Asset” Strategy for Long-Term Investors
For Japanese and global investors, Pantera’s message translates to: treat Bitcoin and Ethereum as core holdings, not merely speculative plays. Rather than trying to time tops and bottoms, a time-distributed accumulation (DCA / averaging) approach is more sensible. Focus on structural growth drivers: protocol upgrades, adoption curves, institutional entry, and macro trends in monetary policy.
Even if the journey is volatile, the base case over 3–5+ years remains robust, in their view.
4. Recent Trends & Contrasts: What’s Changed in 2025
4.1 The October 2025 Liquidation & Hedge Surge
On October 10–11, 2025, the crypto market suffered its largest liquidation event on record—over $19 billion worth of positions were forcibly closed. Bitcoin fell ~14% intraday, while Ethereum dropped ~12.2%. In response, participants aggressively moved into hedges (puts), indicating rising short-term caution.
Despite the carnage, Bitcoin rebounded to ~$114,683 by October 13, suggesting that the crash may have purged excessive leverage, and current levels are viewed by many as a reset rather than breakdown.
4.2 ETF Flows vs. Derivative Signals: A Cautionary Tension
Even with robust ETF inflows (as described above), derivative markets have shown more cautious behavior. For instance:
- Futures premiums remain muted, reflecting uncertainty about sustained move direction.
- Options 25 % delta skew has turned negative in many venues—implying elevated downside insurance demand.
- Net Taker Volume (net aggressive flow in futures) recently flipped to a + $400M influx, historically an inflection signal.
This tension underscores that capital flows and derivatives positioning may not always align in the short term—investors should interpret the balance of both.
4.3 Fusaka Testing & Timelines
Ethereum developers began deploying Fusaka to the Sepolia testnet on October 14, 2025. The mainnet launch is currently targeted for late November to early December, contingent on successful testing.
Fusaka’s design merges upgrades to both consensus and execution layers, bringing 12 Ethereum Improvement Proposals (EIPs) to streamline data availability, reduce node cost, and enhance efficiency.
Analysts are bullish: some expect ETH could re-test or surpass $5,000 following the upgrade. Meanwhile, ETH has rebounded ~20% from its October 11 low, forming a “cup” technical structure.
5. Investing Implications & Tactical Considerations
5.1 Reading Derivative Signals in Real Time
- Watch funding rates: Persistent positivity is a sign of longer-term bullish conviction
- Analyze open interest vs. price movement: Divergence (price falling while OI rises) signals squeeze risk
- Monitor call vs. put skew / distribution: Heavy call demand often precedes bullish cycles
- Observe net futures flow metrics (like Net Taker Volume) for directional cues
These tools help distinguish between panic-driven moves and shifts in structural demand.
5.2 Portfolio Construction & Risk Management
Given elevated volatility, risk control is crucial:
- Cap individual allocation to volatile positions
- Use staggered entry via dollar-cost averaging (DCA)
- Keep a cash or hedging reserve to exploit drawdowns
- Limit leverage exposure—especially ahead of major protocol events
Also consider diversifying among crypto sectors: staking/PoS, DeFi, infrastructure, bridging, etc.
5.3 A 3–5 Year Base Case Thesis
- Bitcoin remains the digital “reserve asset” of crypto, with limited supply and institutional demand tightening float
- Ethereum + Fusaka may expand ETH’s role beyond settlement into a high-throughput, low-cost platform for mass adoption
- Protocol upgrades, adoption curves, regulatory frameworks, and macro monetary trends (e.g. inflation, fiat debasement) will drive volatility—but also opening windows
- The path upward will not be linear; crashes, consolidations, and regime shifts are part of the journey
Conclusion
The sudden plunge from all-time highs in Bitcoin has unsettled many, but derivative market signals suggest that the structural bull case remains intact. Rather than viewing the decline as a breakdown, it is better interpreted as a deleveraging event or resetting of excess speculative risk. Meanwhile, Ethereum’s impending Fusaka upgrade holds promise as a technical and economic inflection point—lowering barriers to node operation, increasing throughput, and tightening its scarcity narrative.
Institutional flows, ETF inflows, and concentrated supply among public treasuries are reshaping market dynamics. For long-term investors, this is not too late to build a crypto core; what matters is patience, discipline, and attention to the subtle signals beneath the noise.
