Motus Market Flash - November 20, 2025

Crypto is an industry where emotions run high. It remains a mostly-retail space, and volatility creates and destroys fortunes frequently and spectacularly. Accordingly, it is a highly reflexive space—rising prices create gold rushes, and falling prices bring predictions of imminent demise.

Reflexivity guarantees overshoots in both directions, but not all volatility is equal. At Motus, we have always aimed to distinguish between volatility born of macro or sentiment versus structural breaks that portend a prolonged “crypto winter.” While we generally accept normal crypto volatility in service of high longer-term returns, we aim to pivot from directional exposure to other strategies during crypto winter. We believe this is more akin to earlier selloffs amidst “normal volatility” and not a crypto winter.  Here are a few things we are watching that leads to this view:

THE BIG PICTURE

The size and speed of the October 10^th drawdown and liquidation event has had a longer-lasting impact to both sentiment and positioning by crypto market participants. Exacerbating factors include broader economic concerns from a record-long government shutdown, labor market concerns, a lack of Treasury spending, AI bubble speak, private credit “cockroaches” as noted by Jamie Dimon, and lower implied probabilities of a December rate cut. Also, the “crypto market infrastructure bill”, aka the CLARITY Act, passed the House but has been held up in the Senate due to the shutdown.  This all result in the worst level on the Fear & Greed Index since the Q1’25 bear market (and lower than post-FTX collapse), and general calls for crypto’s demise.

Crypto Fear & Greed Index History

BTC is now negative year-to-date with most crypto assets down more, but arbitrary calendar performance doesn’t tell the full story.  We believe we are in a multi-year structural bull market in an emerging asset class, and these drawdowns are common.  The BTC chart below puts this in context. Since FTX collapse and subsequent calls for crypto’s demise, BTC rallied from ~$16K to a high of $126K. We are now in the midst of a familiar drawdown from a new all-time high of 30%, nearing the drawdowns seen in Q1 this year of -32%, and last summer -34%. Relative Strength and Fear Index is worse today than in both of those periods.

We remain optimistic we are closer to a bottom than a full-blown meltdown and will ride out this volatility in strong businesses growing in all metrics but price.  Here’s what we are watching that keeps us excited:

Economy and liquidity wise, global M2 money supply growth has been consistently growing, US financial conditions are shifting easier, and weekly economic indicators remain in growth territory, albeit slowing. Some of this slowdown can be attributed to the government shutdown, and the liquidity picture is also partially offset by a large build up of cash in the US Treasury General Account due to the government shutdown. This should begin to reverse and move into the economy.

Over $40B of leveraged positions have been taken off the market since peaking on October 6^th, resetting to levels seen in April/May which was the beginning of a 5 month rally out of the March/early April lows.

Also, we monitor Open Interest for BTC, ETH, and all Others.  When Others is below 30%, it’s typically healthy, and when greater than 35% we often are bit overheated.

Stablecoin growth continues and recently hit $300B of issuance. While the GENIUS Act was signed into law to provide stablecoin issuance and backing requirement, other regulatory clarity is still needed for traditional issuers. For example, just yesterday the OCC cleared banks to hold crypto assets like ETH that are required to pay for onchain transactions. We expect a deluge of traditional market participant involvement in the stablecoin space over the coming months. As more dollar-backed stablecoins come onchain, more assets arrive in DeFi apps driving fee growth across the ecosystem.

ETF flows have been quite negative, which further weighs on sentiment. But these flows alone only tell part of their story. The ETFs are often used by large institutional players like hedge funds for “Basis Trades” where they buy the BTC ETF, post it as collateral on a futures exchange, and short the BTC futures to earn a delta-neutral yield. When futures turn negative (curve is in “backwardation”) or the yield is unattractive, these positions unwind, and show up in the ETF outflows.  Futures backwardation is rare for BTC, and the last five observations were very near bottoms.  Backwardation appeared this week.

TOKEN SPECIFIC

In prior cycles, crypto assets have been driven by speculative retail frenzies about what an onchain app ‘might do’ instead of fundamentals.  As the asset class matures and more institutional capital arrives, the relative value of fundamentally-sound business models should increase. Look no further than our largest position, Hyperliquid. Daily revenue is volatile but steadily trending upwards and on pace to generate over $1B free cash flow this year. Its 2025 relative performance vs. BTC and most others is notable and a sign of fundamentals becoming more important.

Notably, Hyperliquid has begun rolling out an exciting expansion beyond crypto assets, starting with perps for US large cap tech stocks.  In the first few days alone, we’re already seeing $150MM in daily volume traded onchain. We anticipate more stocks, FX, commodities, and rates soon as well, in addition to more exotic perpetual futures on things like GPU costs etc.  Soon, we expect portfolio margining to be rolled out, providing a fully-onchain “prime brokerage” type experience for cross-asset trading. This is an onchain experience we have been excited about for years.

In this drawdown, we have established a position in Aerodrome (AERO). Coinbase’s stated goal is to move their entire business onchain to their Base blockchain, and Aerodrome is the liquidity hub for trading on Base with ambitions beyond. They just hosted an event in NYC (shoutout to our advisor Omid Malekan who was invited to speak at the event) to preview their 2026 roadmap, and believe it’s a strong model for future growth, while already generating attractive revenue for tokenholders. We are happy to chat about Aerodrome specifically if you have questions.

To summarize, we’re again in a familiar drawdown amidst macro uncertainty and a crypto-native leverage wipeout, and pushback against the post-drawdown calls that “the crypto cycle is over.”  We remain extraordinarily excited about the future of onchain apps, the regulatory changes to come that open the doors to real capital coming onchain, the focus shifting from memecoins to profitable enterprises delivering value to tokenholders, and more. We have spent years navigating these types of markets, and choose to withstand “normal” crypto volatility currently experienced, staying focused on investing in strong onchain assets for the long term, and avoiding getting chopped up trying to nail short-lived tops and bottoms. The risk is paid for over time.

Thank you for trusting us through these periods, and please reach out with any questions.

Sincerely,  

Motus Capital Management 

Past performance is not indicative of future results. This communication does not constitute an offer to sell or solicitation of an offer to buy the Interests in any jurisdiction where, or to any person to whom, it is unlawful to make such offer or solicitation in such jurisdiction. This communication is being provided solely as a high-level overview and is not intended to be relied on for the terms of any offering.