TLDR
- Crypto saw $19B in liquidations as BTC fell from $126K to $107K on Oct. 10
- AI capital spending by major firms is seen as a key crypto growth driver
- Dollar-backed stablecoins are expanding use as payment and settlement tools
- Real-world asset tokenization is shifting from trials to real use cases
A sharp drop in crypto markets earlier this month hasn’t changed the broader outlook, says Alex Thorn, head of research at Galaxy Digital. Despite price weakness and fading risk appetite, Thorn believes the structural setup for crypto remains strong. He points to artificial intelligence spending, rising stablecoin usage, and tokenization of real-world assets as key drivers for a potential rally in the coming months.
Short-Term Fragility After October’s Market Drop
Alex Thorn addressed the recent October 10 sell-off, explaining that it was triggered by high leverage hitting low liquidity. He said market-makers were forced to reduce positions, while auto-deleveraging on exchanges made it worse. The market saw around $19 billion in liquidations as bitcoin dropped from its October 6 high near $126,300 to around $107,000. Ether also fell sharply from $4,800 to $3,500.
He noted that weakening risk sentiment followed this move. Investors grew cautious again due to falling chip stocks, a more hawkish stance from a Federal Reserve governor, and concerns around regional banks. Geopolitical issues also added pressure. Gold and silver moved higher, and the 10-year Treasury yield dropped below 4%, showing a shift to safer assets.
Digital asset treasury (DAT) flows also weakened. Thorn explained that crypto treasury companies were less active, with lower equity valuations cutting down price-insensitive buying. This drop in DAT activity added to short-term market weakness and kept trading conditions fragile.
AI Spending Adds Fuel to Crypto’s Long-Term Case
Thorn said artificial intelligence capital expenditure is now a strong economic driver. He believes the spending is led by large, cash-rich firms such as hyperscalers, chip companies, and data center operators. He also pointed to U.S. policy support as a major reason this trend is likely to continue.
Unlike past speculative tech cycles, he sees this AI wave as grounded in business investment and national policy. Thorn noted that the current spending is focused on real infrastructure and data capacity, rather than purely software or hype-driven products. He believes this steady investment can support new growth in digital assets over time.
Stablecoins Strengthen Crypto Market Infrastructure
Stablecoins are becoming more widely used as payment and settlement tools, Thorn noted. He said that dollar-linked tokens are helping grow liquidity and activity on public blockchains. These tokens are playing a larger role in crypto trading and other on-chain financial services.
Their steady use adds more reliability to crypto systems, even when price action is unstable. Thorn explained that stablecoins can attract new participants, support consistent volumes, and improve the base layer of crypto markets. He believes this usage trend will continue to develop and support broader adoption.
Tokenization Moves Toward Real-World Use
Tokenization of real-world assets is beginning to shift from early-stage trials to actual implementation. Thorn said financial institutions are now using blockchain to represent and settle real assets on-chain. This includes bonds, funds, and other instruments being created and moved using blockchain networks.
He also noted that demand for network space and native crypto assets is likely to rise as tokenized markets grow. Thorn said platforms that help secure and manage this tokenized activity will see more usage. Ethereum and Solana are among the networks positioned to benefit from this development.
Broader Outlook Remains Positive Despite Volatility
Although Thorn urged caution in the short term due to lower liquidity and reduced DAT activity, he maintains a positive outlook on core assets. He continues to see value in bitcoin as a hedge against uncertainty in global monetary policy. He also sees Ethereum and Solana as key players due to their connection to stablecoins and tokenized assets.
“The structural bull case is intact,” Thorn said in Galaxy’s Weekly Research Brief. He believes the three current drivers—AI spending, stablecoin growth, and real-world asset tokenization—could support a longer-term uptrend once the market recovers from recent shocks.
