BlockByte Weekly: Why We're Optimistic, Even Though The Market Isn't

Thanks for reading The BlockByte Weekly, where we summarise the key updates in crypto over the last week and provide our perspective on what you need to know as an investor.​
​

Weekly Snapshot

• BTC: US $109,976 (-1.0%)
• ETH: US $3,870 (-1.7%)
• Crypto Market Cap: US $3.66T (-1.1%)
• Gold: US $3,989/oz (+1.3%)
• S&P 500: 6,840 (+1.0%)
• ASX 200: 8,881 (-1.7%)

‍

Key Stories This Week

Why We're Optimistic, Even Though The Market Isn't

Closing out the end of the week, we thought it would be worth taking a look back over the last month. Bitcoin fell by -3.7% across the month of October, with the overall crypto market faring significantly worse at -10.4%. The main drivers of the October consolidation were a US $19B liquidation of leveraged investors on October 10th following Trump's threat to add 100% tariffs on China.

‍

In addition, during the 0.25% rate cut last Friday, Fed Chair Jerome Powell indicated that the central bank might be less willing to make further rate cuts at the next FOMC meeting, dampening market expectations and shifting near-term market sentiment to risk-off.

‍

‍

Beyond this, there were other bearish sentiment drivers including circular AI capex spending and earnings leading to heightened equity valuations and unsustainable earnings growth as well as the end of the traditional 4-year Bitcoin cycle.

‍

Taking a step back, we think while some of these concerns have merit, it's not all doom and gloom. Jordi Visser, a Wall Street veteran, shared an article titled: "Bitcoin’s Silent IPO: Why This Consolidation Isn’t What You Think". In it, Visser concedes that Bitcoin (+17.8%) has 'underperformed' expectations year-to-date when compared to gold prices (+50.6%), surges in the Nasdaq (+23.3%), and stocks like Nvidia (+46.4%). Investors have come to expect higher returns from Bitcoin.

‍

‍

First of all, can we just appreciate that an 18% YTD return isn't exactly bad, and over 1 year, Bitcoin has returned 59%. Nonetheless, over the last 6 months Bitcoin has chopped sideways and people want to know why.

‍

To help explain why Bitcoin may be in a consolidation phase, Glassnode analytics note that long-term holders of Bitcoin are taking profits having held for at least 6 months, and in some cases years. According to the daily selling from long-term holders has increased from $1 billion in June to $3 billion in October.

‍

‍

Unfortunately, profit-taking by long-term holders can suppress price action, but is part of the investing journey. At certain prices, people want to take lifestyle chips off the table and take profit. What we don't see, is widespread market panic the likes which was seen during the FTX crash in 2022, COVID-19 in 2020 or the speculative boom and bust of 2017-18.

‍

What we do see is the Treasury Secretary of the US making posts like these on X, receiving over 4.7 million views from one of the key people setting the financial trajectory of the world's largest economy for years to come.

‍

‍

We also see over US $147B in Bitcoin ETF assets under management. We see a strategic Bitcoin reserve bill and a crypto market structure bill about to pass later this year. In other words, yes crypto markets are bearish right now, we might even head lower. But, by focusing on long-term quality holdings and the secular trend of adoption, investors that can stay the course have been consistently rewarded over time with moves higher.

‍

Here's why we're still optimistic:

‍

The US is $38 trillion in debt, it's still got a ~US $2 trillion annual deficit - no change here. Japan has debt-to-GDP of over 250%, the highest in the developed world, and continues to rely on ultra-loose monetary policy and yield curve control to keep the system afloat. In Europe, deficits are widening, with France and Italy both breaching EU fiscal rules as growth stalls and inflation remains sticky. Meanwhile, China is managing a slow-motion property unwind while funnelling stimulus into state-backed industries.

‍

What this all points to is a world still reliant on liquidity and stimulus - the very forces that have historically driven digital asset bull cycles. While the market may be consolidating in the short term, the macro backdrop remains fundamentally supportive for Bitcoin and broader risk assets once the current round of profit-taking and rate recalibration runs its course.

‍

In summary, be prepared for moves lower, but don't be scared of them. The current progress in regulation and adoption of digital assets on a global scale has never looked more positive than it does right now.

‍

Other Stories This Week

Solana's ETF Inflows Grow, Despite Some Underlying Signs of Concern

Solana ETFs recorded inflows for the fourth consecutive day, reaching a total of US $199.2 million. This comes as Bitcoin and Ethereum ETFs saw net outflows totalling over $760 million over just two days, indicating a profit-taking phase. Investors appear to be rotating capital into altcoin strategies, particularly Solana, which is benefiting from narratives around staking yield and high performance.

‍

Our take: While this is positive news, earlier in the week we did highlight some concerns we had around Solana’s market share of layer-1 blockchain fees which has dropped from over 50% to 9%, as Hyperliquid and BNB Chain now account for roughly 60% combined. The shift stems from declining memecoin trading activity on Solana and a surge in derivatives and structured products on Hyperliquid and BNB’s Aster platform.

‍

​
​‍

Massive Institutional Buying of Ether Continues, US $319M Purchase

Ethereum treasury firm BitMine Immersion boosted its holdings to 3.31 million ETH (US $13.7B) after purchasing 77,055 ETH over the past week. The company now controls 2.8% of Ethereum’s circulating supply, making it the largest ETH treasury holder globally and the second-largest public crypto treasury firm, behind Michael Saylor’s Strategy, which holds US $74B in Bitcoin.

‍

‍

Our take: BitMine has won the Ethereum treasury strategy race, holding more than 3x the Ether than its nearest competitor SharpLink as more institutional investors like Ark, Galaxy and Kraken invest. In line with our expectations, this is bullish for Ether the asset as many investors look for yield which Bitcoin doesn't natively provide.

‍

Zcash Surge Attracts More Investors, But Lack of ETF & Compliance May Limit Flows

The team behind Zcash (ZEC), released its Q4 2025 roadmap focused on improving privacy features, wallet usability, and developer fund security. The update comes as Zcash’s price surged from ~US $50 in mid-September to ~US $420.

‍

‍

Our take: While not typically on institutional radars, Zcash’s sharp rally is grabbing investors' attention as demand for transactional privacy amid broader regulatory tightening continues in places like the EU which is expected to rollout a CBDC called the digital Euro by 2029. That said, limited ETF access and low liquidity remain barriers for Zcash major allocators. Institutional interest may rise if tokenised privacy layers become a compliance-compatible narrative.

‍

Until next week,
James

‍

James Brannan
Managing Director
BlockByte