10/10: One Year After Rektober

Contributed by Peter

Remember? Bitcoin had just set a new all-time high of more than $126,000. Sentiment was through the roof, and X was buzzing with speculation about the next milestones. Would the finish line be $200,000, $400,000 or $600,000? It was October 9, 2025. Uptober had begun. Anyone not on board was going to miss a “generational run.”

Little did we know.

On the evening of Friday, October 10, 2025, President Donald Trump posted a message on Truth Social. He threatened additional tariffs, this time on Chinese goods. Investors didn’t take kindly to the escalation, and they made their displeasure loud and clear in the crypto market, which keeps trading long after Wall Street closes.

In a matter of moments, more than $19 billion in leveraged positions were liquidated. Over 1.6 million traders were caught in the carnage. Some altcoins lost more than half their value in a few minutes. On Binance, prices appeared that were barely distinguishable from zero.

And so the crypto world gained a shared trauma: 10/10.
Uptober became Rektober.

Last Saturday marked exactly one year. Since then, the date has become the go-to explanation for nearly everything that went wrong. Why didn’t altcoins bounce back? 10/10. Why isn’t liquidity returning? 10/10. Why does nobody want to take risk anymore? 10/10.

And of course there’s a kernel of truth to that. The crash did serious damage. Technically, on the charts, but also quite simply to investor confidence.

Remarkably, it’s still unclear exactly what happened that Friday. Binance drew heavy criticism, partly because the stablecoin USDe went off the rails, briefly dropping to 65 cents. More than two months later, the exchange acknowledged that there had indeed been a problem with how USDe collateral was being valued. But that wasn’t the cause of the market-wide crash, it added.

Star Xu, CEO of OKX, didn’t buy it. In his view, reckless marketing campaigns by Binance had left the market so fragile that an ordinary market shock could snowball into a disaster. The pile of kindling had simply grown too big.

Early bitcoin investor Star Xu, founder of OKX, blames Binance for BTC’s October crash

Months after Oct. 10’s flash crash and liquidation cascade, a fresh spat has opened between exchange executives and market watchers over whether a leveraged yield loop, thin liquidity, or busted market plumbing did the real damage.

CoinDeskShaurya Malwa

Where there’s smoke, there’s fire, was the prevailing view. But a complete, public reconstruction of 10/10 never materialized. It’s still missing today.

Even so, the market did what it always does: it moved on. Looking back at the period since 10/10, the after-effects have proven sticky. Bitcoin is still 33 percent below its record, many altcoins have been punished even harder, and trading volume remains noticeably lower. For bitcoin and ether, liquidity has since recovered handsomely, but for smaller tokens it has actually dried up further. The money that’s coming back is primarily interested in the established names.

But that’s obviously not the whole story. The past year also brought new developments. Stablecoins have become increasingly important, for one. And the migration of traditional financial products, such as stocks, onto blockchain networks has genuinely begun. It’s being backed by the key US regulators, who, in the absence of political muscle, are clarifying the rules of the game themselves.

According to Galaxy, the market for onchain stocks and bonds grew from roughly $28 billion to $39 billion in a single year. Onchain stocks grew fastest, by a factor of five.

The way investors value tokens also seems to have shifted. According to Galaxy, they’re increasingly looking at traditional metrics such as revenue and profit. As a result, more and more projects are looking for ways to let token holders share in their income. Of the fifty largest tokens, Galaxy says only eight are trading above their 10/10 price. Most of those eight are tied to projects with a working business model.

A Year Later, 10/10 Is Shaping Up to Be a Blip in Crypto’s History

For the most part, the market that crashed on 10/10 doesn’t really exist anymore, while the one that replaced it is just starting to get priced in.

GalaxyLucas Tcheyan

Galaxy draws an optimistic conclusion from this. The crypto market that collapsed on 10/10 largely no longer exists. Rektober is gradually becoming a footnote in crypto’s history. The more mature version that has taken its place, the analysts argue, is slowly starting to show up in prices.

Whether Rektober gives way to Uptober once again, we’ll only know in a few weeks.

More Alpha

Are you a Plus member? Then we’ll continue with the following topics:

1. Theft via Ledgers shipped from Malaysia with a spy implant
2. Bitcoin in bunker mode?
3. US scraps two controversial crypto rules

After that come the news snacks, a handy roundup of the news that really mattered this past week.

1️⃣ Theft via Ledgers shipped from Malaysia with a spy implant

Contributed by Erik

On Friday afternoon, rumors surfaced on X of hacked Ledgers, by far the best-selling hardware wallet. Fortunately for owners in the Netherlands, it turned out to involve a tampered batch shipped to Southeast Asian customers who bought their device through reseller CryptoBilis. The lesson: buy your hardware wallet directly from the manufacturer. 

Heads up: be on your guard as well if you recently bought a Ledger through a reseller in the Netherlands. See the section at the bottom of this post.

It appears an intermediary fitted the Ledgers with an “unauthorized hardware implant.” So not a software bug or a phishing case, but physical tampering somewhere between the factory and the customer. Ledger has confirmed finding such an implant in one user’s device.

Pseudonymous onchain sleuth Specter traced suspicious addresses on the bitcoin, ether and tron networks, spread across hundreds of wallets. He put the damage at $86 million. Data firm Bitquery arrives at around $93 million. Ledger itself hasn’t confirmed a figure.

A spy chip behind the screen

Mark Karpelès (once CEO of the imploded crypto exchange Mt. Gox) showed how he believes the manipulation works, using a Ledger he bought in Malaysia, still neatly shrink-wrapped. Behind the screen, where a padding cushion normally sits, he found a second circuit board with a microcontroller, an antenna and an LTE module with a data eSIM.

So how does the attack work? The chip reads along with the screen, recognizes the moment during setup when the device displays the seed phrase, and sends it to the attacker over the mobile network.

From there, the attacker simply waits for the victim to load funds onto the wallet. And because Ledger’s original secure chip hasn’t been tampered with, the device sails through Ledger’s authenticity check. The company acknowledges this limitation in its own threat model: the check proves the chip is genuine, not that nothing was added along the way.

How do you protect yourself?

After last summer’s Coldcard hack, this is yet another incident leaving self-custody holders squirming in their seats. On Sunday, reports emerged that the affair may extend beyond Southeast Asia. So keep the following in mind.

A hardware wallet isn’t a magic shield. You’re trusting the manufacturer and the supply chain. But that doesn’t mean there’s nothing you can do.

• Buy directly from the manufacturer. Ledger has explained here how to make sure you’re ordering an authentic wallet. Saving a few euros at a reseller isn’t worth the risk.
• Run for the hills if a seed phrase has already been filled in. A hardware wallet only generates the recovery words during setup, on the device itself. If there’s a card with pre-printed words in the box, or a “manual” asks you to copy words or enter them on a website: stop immediately.
• Use a passphrase, meaning an extra password on top of your seed phrase. Even if a spy chip reads out the 24 words, the attacker still can’t do anything. Multisig offers similar protection.
• Start with small amounts. Binance founder CZ shared this advice following the incident. Put a small amount on a new device first and wait a few weeks before transferring more. Compromised devices are often drained in waves. The first victims then serve as your warning.

2️⃣ Bitcoin in bunker mode?

Contributed by Peter

According to Justin Drake, a researcher at the Ethereum Foundation, the industry needs to brace for a period in which cryptocurrencies hide away in ‘bunkers’, safe places out of reach of... AI agents.

The trigger was a publication by OpenAI. Last week, the company posted solutions to more than 700 math problems, devised by an internal AI model. Some of them contain surprising results, including for problems mathematicians have been banging their heads against for years. For Drake, that’s reason enough to sound the alarm.

To understand why, let’s take a quick look at the cryptography behind bitcoin. From your private key, you can easily generate a public one. The reverse, deriving a private key from a public one, is practically impossible. Even the most powerful computers have nowhere near enough computing power to even attempt it. The integrity of the digital signatures that keep all bitcoin holdings safe rests on this status quo.

But... what if AI agents discover new methods that drastically reduce the computation required?

That’s Drake’s line of thinking. Plenty of algorithms already solve certain problems faster than simply brute-forcing every possibility. Perhaps AI agents will discover similar methods for the cryptography bitcoin relies on. Then something that’s practically impossible today could suddenly become feasible tomorrow.

But for now, that’s pure speculation. No working attack has been devised. Yehuda Lindell, head of cryptography at Coinbase, points out that there’s no evidence whatsoever that the underlying mathematical assumptions have weakened.

Still, Drake thinks it’s wise to prepare. Bitcoins whose public key is already visible in blockchain data deserve particular attention. Think very old bitcoins, or funds on addresses that are reused over and over. With many modern address types, such as Native SegWit, the public key stays hidden behind a hash. Taproot is the exception; those addresses reveal their public key directly.

Investors don’t need to rush to move their bitcoins. Both Drake and Vitalik Buterin say there’s no reason to start frantically shuffling your funds around. That could “do more harm than good.”

That gives the message a dual character: alarming and reassuring at the same time. The alarm turns out to be aimed at developers and large crypto companies: start preparing stronger security in good time, is the idea. A security assumption that has held for decades may become a little less of a given.

3️⃣ US scraps two controversial crypto rules

Contributed by Peter

For years, two questionable proposals hung over self-custody and financial privacy in the US. Last week, the US anti-money laundering agency FinCEN took them off the table. The reason: both rules could also hit ordinary users.

Treasury Kills Crypto ‘Unhosted Wallet’ and Mixer Surveillance Rules - Decrypt

FinCEN has withdrawn its long-pending “unhosted wallet” rule and a separate proposal targeting crypto mixers.

DecryptDecrypt Staff

The first proposal dates back to 2020. Banks and crypto service providers would have had to collect additional information on transactions above $3,000 to and from a so-called ‘self-hosted wallet’: a wallet whose owner controls the keys themselves. For amounts above $10,000, reporting to FinCEN would also have become mandatory. Self-custody would have been discouraged through an extra layer of oversight and paperwork.

The second proposal, from 2023, concerned mixers. These are services that make transactions harder to trace. FinCEN wanted to designate this activity as a primary money laundering concern under the Patriot Act, with sweeping obligations for financial institutions as a result.

But the definition of mixing was so broad that legitimate privacy applications would have been caught in the net too. In withdrawing the proposal, FinCEN explicitly acknowledges that tension. The rules could have discouraged legitimate use.

FinCEN’s crypto-friendly stance fits Trump’s deregulation agenda. As you can imagine, that’s not a permanent position. Under a new administration, similar rules could be put back on the table.

🍟 Snacks

To wrap up, a few quick snacks:

• Ethereum’s next major upgrade, Glamsterdam, has been running on the Sepolia testnet since last week. The rollout to that network went off without major issues. Glamsterdam is meant to make transaction processing faster and cheaper. Validators also get more time to verify the contents of blocks. That in turn allows the network’s capacity to be expanded, up to three times the current limit. The question is how much of that capacity will actually be used; for now, supply is running ahead of demand.
• ‘Crypto Mom’ Hester Peirce has left the SEC after more than eight years. For years she was one of the so-called dissenters under former chair Gary Gensler. Through speeches and publications, she was an outspoken champion of clearer crypto rules and innovation. Under the new chair appointed by Trump, she was put in charge of the Crypto Task Force. Starting in November, she’ll teach law at Regent University. With her departure, the SEC is down to just two commissioners.
• Russian banks are allowed to offer bitcoin to their customers. The central bank has given five financial institutions the green light to provide crypto services. Sberbank, with 110 million customers, is the largest; VTB ranks second with 31 million. Sberbank is targeting December 1 for the launch of products around bitcoin, ether and USDT. Compared with other countries, Russia is cautiously playing catch-up. Crypto payments within Russia remain banned for now.
• China wants to build a national blockchain network. That’s according to new policy guidelines from the Communist Party and the government. Blockchain and a “national computing power network” have been designated as building blocks of the digital economy. The plans focus on industrial applications, smarter data collection and publication, and the digitalization of manufacturing. AI, robotics and quantum technology are mentioned in the same breath. No change in stance toward crypto trading has been announced.
• Netflix is releasing a drama series about the downfall of FTX on November 19. Last week saw the release of the trailer for The Altruists, starring Anthony Boyle as Sam Bankman-Fried and Julia Garner as Caroline Ellison. The series portrays the multibillion-dollar fraud as a kind of tragic love story. Not everyone is thrilled. Former FTX executive Constance Wang says the trailer made her throw up. In her view, Netflix is romanticizing a “financial disaster.”

Thank you for reading!

To stay informed about the latest market developments and insights, follow our team members on X:

• Bart Mol (@Bart_Mol)
• Peter Slagter (@pesla)
• Bert Slagter (@bslagter)
• Mike Lelieveld (@mlelieveld)

We appreciate your continued support and look forward to bringing you more comprehensive analysis in our next edition.

Until then!