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OVERVIEW

Q4’s Leverage Detox Is Strenghtening The Crypto Market 💪 

Before we dive in, here’s today’s crypto market heatmap:

Source: Santiment

And here’s a look at crypto’s total market and altcoin market cap charts:

Source: TradingView

NEWS
Richard Heart Washes $500M In ETH – Because of Course He Did 💩

Protos came out with another great piece of reporting, this time on of cryptos biggest ass hats and rug pullers, Richard Heart.

The HEX and PulseChain figurehead allegedly just sent over half a billion dollars worth of ETH through Tornado Cash.

Let’s get the numbers out of the way:

• $37M worth of ETH hit Tornado on Oct 19

• Another $102M a week later on Oct 26

• And because crime loves company, $366M more went through today
  Total: roughly 147,478 ETH – or over $500 million.

Protos indicates this all comes from wallets connected to the early HEX launch and Pulse ecosystem. And wouldn’t you know it, those wallets are tagged on Arkham Intelligence by users tracking the same suspicious activity the SEC once said Heart was “very familiar” with.

To top it off, Heart – whose real name is Richard Schueler, by the way – tweeted some brain-dead “thought experiment” about paying taxes yesterday. Which is kind of ballsy, considering Finland still has him on Europe’s Most Wanted list for alleged tax evasion.

The SEC case may be gone, but the stench isn’t. Even Tornado Cash got its sanctions lifted earlier this year, and yet somehow Heart still found a way to make it look shady again. That’s talent. 👏

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ON-CHAIN ANALYSIS
It Only Looks Ugly Out There 👀

In this part of the newsletter, we’re diving into the Leverage Absorption Ratio (LAR) – an on-chain metric I built to measure how well the market can actually handle leverage instead of just reacting to it.

I designed it because, like you, I got tired of staring at open interest, volume, and price swings that told half a story. Leverage is a tricky beast – sometimes price rips higher while open interest flatlines, other times everything dumps while leverage spikes and no one knows if that’s bullish, bearish, or just dumb money blowing up. Something was missing.

That “something” was context. The LAR shows whether the market’s absorbing leverage (healthy structure) or choking on it (fragile structure). It turns noise into signal – a way to see if the market’s getting stronger, weaker, or just pretending to know what it’s doing.

What LAR Measures

The Leverage Absorption Ratio (LAR) tracks how efficiently open interest growth is absorbed by the market instead of detonating as volatility.

Scale:

• 🟢 4-5 = Smooth Sailing (strong structure, low liquidation risk)

• ⚠️ 3-4 = Check Engine (neutral, stress building)

• 🔴 <3 = Danger Zone (fragile leverage)

Post-flush, 5 of 8 majors improved their LAR scores. Here’s who’s winning and who’s one bad day from imploding.

🥇 Ethereum (ETH) – The Leverage King 👑

Click to enlarge.

• Q1-Q3 Avg: 2.72 → Q4: 4.51 (+1.79)

• Smooth Sailing 97.1% of Q4; only 1 day in Danger Zone

• Volatility compressed to 5.58% despite $15B OI absorption

• Post-flush LAR: 4.72 (+0.13) after a -12.6% drawdown

Read: ETH didn’t flinch. It ate leverage, lowered volatility, and kept structure clean.
Outlook: Bullish. Best structural setup of any major. Long holds justified.

🥈 Bitcoin (BTC) – Still the Benchmark 🪙

Click to enlarge.

• Q1-Q3 Avg: 2.90 → Q4: 4.19 (+1.29)

• Smooth Sailing 85.3% of Q4

• Absorbed $1.3B November flush; +0.30 LAR while dropping -6.6%

• Current LAR: 4.74 (highest of all assets)

Read: Structure improved through the selloff. Funding reset, OI stabilized.
Outlook: Bullish. Healthy deleveraging confirmed.

XRP – The Reformed Chaos Token 🌀

Click to enlarge.

• Q1-Q3 Avg: 2.64 → Q4: 3.75 (+1.11)

• Smooth Sailing 73.5% of Q4

• Post-flush LAR: 4.38 (+0.05) despite -12.3% price drop

Read: LAR confirms the Q4 rally wasn’t a fluke. XRP’s structure held while others cracked.
Outlook: Bullish. Strong absorption, especially for a large-cap with high beta.

Litecoin (LTC) – From ICU to Recovery 💊

Click to enlarge.

• Q3: sub-2.0 Danger Zone → Q4: 3.58 (+0.79)

• Smooth Sailing only 14.7%, but trend improving

• Post-flush LAR: 3.95 (+0.29) after -12.1% drop

Read: LTC’s structure rebounded fast after months of stress. Still uneven, but healing.
Outlook: Cautiously bullish. Needs a sustained break above 4.0 to confirm.

Chainlink (LINK) – Quiet Overachiever 🔗

Click to enlarge.

• Q1-Q3 Avg: 2.95 → Q4: 3.57 (+0.62)

• Smooth Sailing 38% of Q4

• Post-flush LAR: 4.01 (+0.19) despite -16.3% drawdown

Read: LINK quietly handled stress better than most. Absorption improved during the worst price week of Q4.
Outlook: Bullish. Structurally sound, reliable absorption, minimal tail risk.

Dogecoin (DOGE) – Tail-Risk Casino 🎲

Click to enlarge,

• Q1-Q3 Avg: 3.09 → Q4: 2.95 (-0.14)

• Smooth Sailing 55.9% of Q4

• Mean 2.95 vs median 4.06 → massive volatility skew

• Post-flush LAR: 4.36 (-0.08) after -16.5% drawdown

Read: Great most days, catastrophic once a week. Meme-fueled leverage bombs drag down averages.
Outlook: Neutral to bearish. Absorption strong short-term but too episodic for conviction.

Aave (AAVE) – Weak Pulse 🫀

Click to enlarge.

• Q1-Q3 Avg: 3.05 → Q4: 2.92 (-0.13)

• Smooth Sailing only 20.6% of Q4

• Median LAR 3.53 vs mean 2.92 → persistent weakness

• Post-flush LAR: 3.53 (-0.05)

Read: Slight recovery after the flush, but structure still soft. Liquidity stress shows up early.
Outlook: Bearish until proven otherwise. Needs sustained 3.8+ reading to flip bullish.

Binance Coin (BNB) – Structural Breakdown 🧨

Click to enlarge.

• Q1-Q3 Avg: 2.81 → Q4: 2.90 (+0.09)

• Smooth Sailing 35.3%, Danger Zone 52.9%

• Post-flush LAR: 1.19 (-0.83) after -12.9% price drop

Read: BNB is the only asset that broke during the flush. Persistent structural fragility, no sign of recovery.
Outlook: Bearish. Market refuses to absorb leverage. Avoid entirely.

NEWS IN THREE SENTENCES
AI, Stablecoins, & Privacy News 🕵️

💸 Dash Votes to Add Confidential Transactions

Digital cash just got its mask upgrade. After years of mixing coins with CoinJoin, Dash is going stealth-mode with Confidential Transactions, hiding amounts while keeping a verifiable ledger. CT streamlines mixing, speeds up transfers, and sets the stage for next-gen privacy features like Sietch and network-level encryption. Dash.

Hashgraph Delivers Batch Transactions and AI Agent Tools

Hedera just made building AI-driven dApps as easy as clicking “run script.” Hedera’s October dev update introduced atomic Batch Transactions (HIP-551) and faster data via Blockstreams (HIP-1056), while the Agent Kit lets AI agents mint tokens, send HCS messages, and manage accounts. Hedera.

NEWS IN THREE SENTENCES
Real World Asset Tokenization (RWA) News 🪙

🏦 Plume Relaunches Nest as a Real-World Yield Engine

Plume’s Nest 2.0 turns RWA yield into gamified ownership with Nest Points (PNP), where every vault deposit earns both yield and loyalty rewards. Season One allocates 1% of $PLUME to participants, with multipliers up to 10× for integrations like Morpho and Pendle. Finally – yield farming that doesn’t depend on vibes. Plume Network.

⚡ Starknet’s Q3: Bitcoin, Decentralization, and Warp Speed

Starknet added Bitcoin staking, decentralized sequencers, and pre-confirmations so fast they’d make Solana blush. Over $72M in BTC is already staked, block times dropped to 4 seconds, and TVL tripled as new perps DEXs, bridges, and native USDC integrations went live. If 2025 had an “L2 MVP,” Starknet would be holding the trophy – or at least pretty damn close to getting it. Starknet.

NEWS IN THREE SENTENCES
DeFi, DEX, & Lending News 🏦

📈 dYdX Revives Trading Leagues With $1M in Prizes

The dYdX community is reviving its fan-favorite Trading Leagues, tossing up to $250K weekly for traders with the highest and lowest PnL. Four weeks, zero registration, just trade and see where you land. Winners get cash, losers get consolation clout. dYdX.

☁️ ASI:Cloud Crosses 6 Billion AI Inferences

ASI’s decentralized AI platform just passed 6 billion inference tokens processed – enough compute to caption every movie ever made twice. Translation: AI workloads are moving onchain, and ASI’s doing the heavy lifting behind the scenes while making GitHub jealous. CUDOS.

NEWS IN THREE SENTENCES
Protocol News 🏦

🗳️ Aragon Adds LockToVote and Simulated Governance

DAO ops, finally adulting. Aragon rolled out a “LockToVote” plugin that lets DAOs govern with any ERC-20 token – lock, vote, unlock, done. The new Tenderly integration simulates proposals before execution, while fresh UX and compliance tools make onchain governance idiot-proof and regulator-proof at the same time. Aragon.

🌍 IOTA’s Ambassador Program Levels Up With GiveRep

IOTA moved its Ambassador Program to GiveRep, automating rewards and tracking every tweet, post, and meme that spreads the gospel of Tangle tech. Anyone can join, earn points, and stack $IOTA for boosting ecosystem visibility. Iota.

🪙 Astar Tightens Supply, Expands Horizons

Astar’s October upgrades prepped it for “Evolution Phase 2,” testing Tokenomics 3.0 with fixed-supply mechanics and launching the Burndrop proposal that trades token burns for Startale allocations. Runtime-1900 kept Astar synced with Polkadot’s Asset Hub migration, while grants, staking, and new dApps padded its ecosystem. It’s infrastructure, economics, and governance all in one. Astar Network.

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Author Disclosure: The author of this newsletter holds positions in AVAX, PUDGY, WLC, IMX, XTZ, NEAR, HBAR, ALGO, INJ, LTC, LINK, XLM, ADA, ZEC, FET. 📋