Alex Thorn, Director of Research at Galaxy Digital, stated that despite the recent sharp decline, the structural bull cycle in the cryptocurrency market remains intact. He believes the next major rally will be fueled by AI investments, stablecoin growth, and asset tokenization.
“AI spending is being supported by tech giants with strong balance sheets and government policies. Stablecoins are strengthening on-chain payment infrastructure, and tokenization is now moving from pilot to real-world use,” Thorn said.
The recent cryptocurrency crash disrupted the October rally known as “Uptober.” Over $19 billion in leveraged positions were liquidated that day, while some altcoins lost between 50% and 75% of their value in minutes.
Bitcoin briefly fell to $102,000 on October 10 from its peak of $126,300 on October 6. Ethereum, meanwhile, fell from a record high of $4,955 to $3,500. Solana (SOL) fell around 25%.
Galaxy Research analyst Thad Pinakiewicz noted that the crash was caused by “high leverage, low order book depth, and a single macro news trigger.” Exchanges’ automatic deleveraging (ADL) mechanisms further squeezed liquidity.
Thorn said that despite short-term fluctuations, there remains bullish potential for BTC, ETH, and SOL in the medium term.
Thorn noted that risk appetite weakened in mid-October, amplified by the decline in microchip stocks, the Fed’s hawkish rhetoric, and geopolitical tensions. Conversely, the record highs for gold and silver reflect investors’ tendency to avoid risk.
While some investors argue that AI investments are beginning to “bubble,” Thorn disagrees. The analyst argues that the current situation differs from the 1999 dot-com bubble because today’s investments are coming from giant tech companies, not speculators.
For example, moves like BlackRock and Nvidia’s $40 billion acquisition of Aligned Data Centers, Meta’s new $1.5 billion data center deal, Microsoft’s Nscale collaboration, and Google’s OpenAI-Coreweave deal stand out as real cash investments in AI infrastructure.
Furthermore, US government support for AI is seven times higher than internet investment in the 1990s. The $45 billion in incentives and $3.3 billion in AI R&D funding under the CHIPS Act demonstrate the strategic importance of this field. According to Thorn, AI could reach the scale of a new “Space Race” or “Manhattan Project.”
“Markets rise by climbing the wall of worry. We’re at that wall right now,” Thorn concluded.
*This is not investment advice.