Wintermute, one of the largest crypto market makers, struck an overtly risky tone in a Monday market update on In an Oct. 28 note, the company wrote that “risk appetite is returning as softer CPI data and improved Trump-Xi relations improved markets, with yields easing and volatility easing,” adding that “Bitcoin recovered $115,000 on ETF inflows and short squeezes, while the DeFi and AI sectors led the recovery.”
Wintermute’s bullish crypto outlook for the fourth quarter
The desk framed the impulse is driven by both macro and micro structure. On the macro side, Wintermute pointed to “a softer US CPI print (3.0% annualized vs. 3.1% expected)” and “the announcement of a Trump-Xi summit in Seoul,” which he said sparked a “broad asset rally” as the S&P 500 gained 1.9%, the VIX hovered around 16 and Treasury yields fell amid the chances of rate cuts at the Federal Reserve meeting became even stronger this week.
On the crypto side, the update said: “Bitcoin performed well with a 5.3% gain, climbing above $115,000… boosted by $160 million in short liquidations,” while “Ethereum traded higher to $4,200” and “gold unwound nearly 7% from its highs, signaling a rotation from defensive assets to risk assets.”
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Wintermute characterized the advance as a broadening beneath the surface. “The DeFi and AI names delivered gains on strong protocol revenues and improved on-chain activity,” while “Utilities and Tooling benefited from infrastructure-related rotation as new L2 deployments and primitive withdrawals attracted liquidity.”
The derivatives position also became supportive: “On the perpetrator side, funding rates turned positive again at most majors… although positioning remains far from pressure.” The company also signaled a turnaround in crypto beta base money: “Stablecoin supply is rising for the first time since September, reinforcing that the macro tailwinds are starting to translate into new inflows.
According to Wintermute, spot demand from US spot ETFs continues to anchor the structure even as activity cooled. “US spot BTC ETFs absorbed moderate inflows during the week even as volumes thinned, underscoring persistent structural demand.” Meanwhile, derivatives leverage is recovering “at a measured pace after the early months’ flush,” which the company described as healthier: “cleaner leverage and more balanced financing.”
The house view until November is unambiguously constructive and relies on seasonality and positioning. One passage summed up the view: “While Uptober had a bit of a false start, macroeconomic tailwinds, cooling inflation, ‘stabilizing’ geopolitical tensions and a dovish FED set the stage for a supportive remainder of the year, which historically (Q4) has been the strongest for Bitcoin.”
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In its closing summary, Wintermute reiterated that “positioning is cleaner, volatility is moderate and capital rotation is gradually moving towards crypto. With liquidity conditions improving and sentiment stabilizing, the setup in the fourth quarter remains constructive, encouraging further risk continuation.”
A Decisive Week for Crypto
The note received immediate attention from market commentators. DeFi analyst Ignas compressed turned the message into a takeaway for trading: “Wintermute tells you to make the maximum bid,” citing “yields… easing, volatility… down, and BTC has recovered 115k, helped by ETF inflows and short squeezes.” He highlighted Wintermute’s own line that “macro tailwinds, cooling inflation, ‘stabilizing’ geopolitical tensions and a dovish Fed set the stage for a supportive rest of the year.”
Whether this marks an outright regime change or a tactically favorable window will depend on this week’s event risk – namely the Fed’s decision and any concrete outcomes from the Trump-Xi relationship.
However, Wintermute is explicit about the current state of play: markets are “turning back to risk” with “cleaner positioning” and “calmer volatility,” Bitcoin “has recouped early October losses with steady ETF inflows,” and sector leadership in DeFi and AI is consistent with an early risk rotation. “With cleaner positioning, calmer volatility and better macro insights, the November setup looks healthy for further recovery and rotation within crypto,” the firm concluded.
At the time of writing, the total crypto market capitalization was $3.78 trillion.
Featured image created with DALL.E, chart from TradingView.com