The Weekly: From Record September to Midterm Uncertainty
OCT 12, 2026
Crypto delivered its best September on record, gaining 8.3%, while total market capitalisation rose 41% in Q3, the strongest quarter since Q4 2024. SOL outperformed BTC for a second consecutive quarter as investors moved further along the risk curve. Bitcoin, now 33.8% below its all-time high, is approaching a historically reliable recovery signal, even as Fear & Greed sentiment lags behind price. We look ahead to the US midterms and their historically bullish effect on risk assets, and review DeFi yields across Aave, Maple, Pendle, Ethena and Lido.
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Weekly Summary
We cover:
Looking back at a significant quarter for crypto and what it signals for the broader recovery.
Assessing the current market backdrop as price momentum improves despite persistent scepticism.
Looking ahead to US midterms and what historical patterns suggest for risk assets.
From Record September to Midterm Uncertainty
The Look Back
Best September on Record
Crypto gained 8.3% in September, its strongest September on record. Historically one of the weakest months for digital assets, September has now delivered four consecutive positive returns, challenging its reputation for seasonal weakness.
Q3: The Strongest Quarter Since Q4 2024
Total crypto market capitalisation rose 41% in Q3, ending three consecutive quarters of losses.
The strongest quarterly performance since Q4 2024 marks a meaningful shift in momentum, suggesting the market recovery is broadening beyond a short-lived rebound.
SOL Outperforms BTC for Two Consecutive Quarters
SOL outperformed BTC by 12% in Q3, following a 3% gain in Q2.
This marks the first consecutive quarters of relative outperformance since early 2024, suggesting investors are moving further out along the risk curve and sustaining allocations beyond Bitcoin.
The Now
Bitcoin Approaches a Historically Bullish Signal
Bitcoin has recovered from a 54% drawdown in July and now trades 33.8% below its all-time high.
Historically, after drawdowns exceeding 50%, a recovery above the 30% drawdown threshold has preceded a new all-time high in all seven qualifying instances, with a median wait of just 23 days.
Bitcoin’s historical drawdown-to-ATH recovery pattern, with green markers identifying previous bullish signals and arrows showing the subsequent return to all-time highs.
A daily close above $88,390, just 5.7% above current levels, would trigger a historically reliable signal that Bitcoin is imminently heading towards new all-time highs.
Price Up, Sentiment Down
Bitcoin is 3% higher than at its 21 September sentiment peak, yet Fear & Greed has fallen from 59 to 39. Monetary policy uncertainty, inflation concerns, geopolitical risks and the approaching US midterms are weighing on confidence despite improving prices.
Such a disconnect suggests investors remain sceptical of the recovery, leaving scope for upside surprises.
The approaching US midterms could provide a catalyst as political uncertainty begins to fade…
The Look Ahead
US Midterms: A Historically Bullish Turning Point
US equities have historically performed strongly following midterm elections, with the S&P 500 averaging 13% over the subsequent six months and 14% over twelve months.
The latter period has delivered positive returns after every midterm since WWII. With elections approaching in November, the historical pattern suggests political uncertainty could give way to a more supportive backdrop for risk assets, including crypto.
Markets
Markets begin a busy week with thin liquidity ahead of Wednesday’s CPI, earnings and Warsh’s final remarks before the October FOMC. Geopolitical uncertainty persists, with oil above $100 and gold reclaiming $4,200.
Crypto performance remains mixed, with markets potentially consolidating ahead of the US midterms in 22 days.
BTC is retreating back from $86k highs, finding its range from there to $80k.
BTC/USD (weekly)
Altcoin market dominance has held up well, successfully retesting former resistance as support, suggesting underlying risk appetite remains intact and providing a constructive setup for further altcoin outperformance looking ahead.
Altcoin market dominance (%).
State of Yields
Yields have expanded slightly across the board in light of recent market volatility:
Stablecoin lending yields:
~4.07% on Aave (USDC) — 15 bps higher than last week.
~6.84% on Aave (USDe) — same as last week.
~5.24% on Maple (syrupUSDC) — 12 bps higher than last week.
Fixed-rate DeFi lending: yield premium in fixed markets:
Pendle sUSDAi: ~16.06% (Oct 2026 – Feb 2027 maturities).
sUSDe: ~5.20% — ~18 bps lower than last week.
ETH yield benchmarks:
Lido staking: ~2.20% — 2 bps higher than last week.
About Re7
Re7 Capital is a research-driven digital asset investment firm specialising in DeFi yield and liquid alpha strategies.
Re7 Labs is an on-chain asset management and risk curation firm bringing institutional-grade rigour to DeFi.
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