Who Crashed Crypto?

DAILY MARKET OVERVIEW

The Mystery of October 10

👋 Hey, Crypto Enthusiasts! The gloves are off and everyone's pointing fingers.

Bitcoin is now trading below its January 2025 inauguration levels when pro-crypto Trump took office. It's even testing prices from last April's trade war announcement. After hitting records in October, the brutal October 10 liquidation event that wiped out $28 billion continues to haunt the market.

👉️ Now the finger-pointing has started again.

Cathie Wood vs. CZ

Cathie Wood's Take:
ARK Invest's CEO blames a Binance software glitch for the flash crash. Bitcoin dropped from $122k to $105k, liquidating $19 billion in leveraged positions. She says it was technical failure, not market forces.

CZ Fires Back:
Binance's founder says it was the tariff headlines, not their systems. His points:

• Internal investigation found no core system outage

• Bitcoin is a $2 trillion market, too big to manipulate

• Binance has U.S. regulators embedded in operations

• All affected users got full compensation plus a $400M relief fund

"No one in their right mind would risk hundreds of billions to move Bitcoin's price," CZ stated.

The Reality ❓️ 

Probably somewhere in between. Tariff fears triggered panic selling, but overleveraged positions and thin liquidity turned it into a cascade. Whether Binance had issues or not, the market was a powder keg waiting to explode.

Despite who is at fault, this event left a massive hole in market confidence that's still being rebuilt. Traders remain cautious, leverage is down, and the psychological scars run deep. The recovery won't happen overnight.

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SOCIAL SENTIMENT

Ethereum Changing Course

Ethereum is changing direction. Co-founder Vitalik Buterin announced this week that the blockchain's multi-year strategy of scaling through Layer 2 networks isn't working as planned, and it's time for a new approach.

The problem is simple: 

• Ethereum bet heavily on L2 rollups to handle high transaction volumes while the main chain stayed secure and decentralized.

• But L2s haven't decentralized fast enough. Most remain controlled by small groups or companies. Meanwhile, Ethereum's base layer improved more than expected, making the original plan obsolete.

What went wrong? Corporate interests and regulations kept L2s centralized. Some networks have openly said they'll never fully decentralize because their business customers demand ultimate control. Only a handful, like Coinbase's Base, have made meaningful progress toward decentralization.

The new vision: Buterin isn't giving up on L2s, but he's redefining their role. Instead of being simple scaling solutions, L2s should offer unique features like specialized privacy tools, ultra-fast transactions, or custom architectures for specific apps. If an L2 only scales without adding something unique, it's just a competitor draining value from Ethereum.

The bottom line: Ethereum's future combines a stronger, faster base layer with a diverse ecosystem of specialized L2s that do more than just process transactions cheaply. The days of viewing rollups as Ethereum's primary scaling solution are over. The network is pivoting toward becoming both more powerful on its own and supported by purpose-built tools rather than generic scaling chains.

NEWS OVERVIEW

The Latest Crypto Headlines 📰 

Aave Labs Winds Down Avara Brand to Refocus on DeFi
Aave Labs is shutting down its Avara umbrella brand and Family wallet as it doubles down on the core Aave DeFi lending protocol.

MetaMask Adds Tokenized US Stocks via Ondo Integration
MetaMask integrated access to over 200 tokenized U.S. stocks, ETFs, and commodities through Ondo, expanding onchain exposure to traditional assets.

Canada Introduces Tiered Rules for Crypto Custody
Canada’s investment watchdog rolled out a new custody framework with tiered limits to strengthen protections after past crypto exchange failures.

Crypto.com Spins Out Prediction Markets App Ahead of Super Bowl
Crypto.com launched OG, a standalone prediction markets app, as industry volumes surged past $17 billion driven by major sports events.

YOUTUBE INFLUENCER SUMMARY

Summary From The Top Influencers 📷️ 

Benjamin Cowen – Stocks to 10% Drop Soon? (04.02.2026 Summary)

In this video, Benjamin Cowen explains why he believes the stock market is likely heading toward a meaningful correction, even though his long-term approach to stocks remains bullish.

Key points

• Cowen stresses that he is usually a long-term stock bull and mainly invests through low-cost index funds, not short-term trading.

• Despite that, he sees a high probability of a 10–20% stock market correction, with around 10% being the most likely scenario.

• One major warning signal is the recent sharp drop in metals like silver and gold. Historically, after parabolic moves in metals reverse, risk assets such as stocks often sell off rather than receiving fresh inflows.

• He points out that the S&P 500 has broken down relative to gold, a pattern that also appeared before major stock declines in 1973 and 2008.

• Cowen highlights that stock markets often follow four-year cycles, with significant lows frequently forming during midterm years. Based on past patterns, the next major low could occur in late Q3 or early Q4 of 2026.

• He notes that 10% corrections are normal, even in healthy markets, and have happened multiple times in recent years.

• Weakness is already showing in large-cap stocks like Microsoft, Apple, and Netflix, which he sees as early signs of broader selling pressure.

• He also believes crypto often leads risk sentiment, and Bitcoin’s recent selloff could spill over into equities.

Takeaway
Cowen isn’t predicting a market crash, but he believes a 10% stock market pullback is likely and reasonable. If it happens, he views it less as a reason to panic and more as a potential opportunity, consistent with his long-term, disciplined approach to investing.

CoinBureau – The Coinbase Report That Could Change Everything for Q1 (04.02.2026 Summary)

In this video, Coin Bureau summarizes a new Coinbase Institutional and Glassnode report that examines investor sentiment, positioning, and on chain data heading into Q1 2026. Despite a weak end to 2025, the report shows investors remain engaged rather than capitulating.

Key points

• Investor risk appetite declined in Q4, with more participants labeling the market as a bear market, especially retail investors.

• Macro conditions, declining liquidity, and regulatory uncertainty are seen as the main risks for early 2026.

• Expectations for an altcoin rally faded, with most investors now expecting Bitcoin dominance to remain stable or rise.

• A strong majority of both institutions and retail believe Bitcoin is undervalued.

• Most investors held or bought during the October liquidation and say they would do the same on another 10% drop.

• Bitcoin maintained dominance in Q4 while mid and small cap altcoins suffered steep losses.

• On chain data shows many BTC holders remain in profit, contributing to sell pressure, but also strong dip buying.

• Ethereum saw more long term selling after October, yet network activity continues to grow and fees remain low after recent upgrades.

Takeaway

The report points to cautious but resilient market behavior. While upside may be limited without new catalysts, strong belief in Bitcoin’s value and consistent dip buying suggest a more controlled downside compared to past bear markets.

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