The Three Questions On Investor's Minds This Week

Hi Reader,

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: $117,872 (~A$178,543) (+8.6%)
• Crypto Market Cap: $3.63T (+10%)
• Gold: $3,354/oz (+0.5%)
• S&P 500: 6,259 (+0.2%)
• ASX 200: 8,580 (+0.2%)
• 10-Year Treasury Yield: 4.4% (+0.1%)

Executive Summary

Record-breaking, multi-billion dollar inflows, combined with a weaker dollar and corporate treasury adoption led the to a jump of more than 8.6% for Bitcoin this week, touching above $118,000 as altcoins followed.

We don't yet believe the markets are in a state of 'euphoria' as demonstrated by Bitcoin's rising market dominance, low appetite for speculative assets like NFTs as well as record cash balances held in money market funds. This could be the beginning of such a euphoria phase if we see continued rallies at this pace in altcoins, typical at the market cycle tops.

Lastly, we expect a slowdown in the second half of the year for bitcoin treasury companies as investors weigh up the price of the stock relative to the amount of bitcoin being held per share. We expect Ethereum to reach new all-time highs as institutional interest and development continues on this blockchain. Lastly, we also expect some altcoins will fail to make new all-time highs as measured in Bitcoin, as dominant blockchains with network effects attract more market share over time.

Question 1: What caused the recent surge in Bitcoin's price?

This week, the digital asset market surged by 10% to a market cap of US $3.6 trillion (A $5.5 trillion). Digital assets are now approaching nearly double the size of the entire Australian ASX200 equities market (A $3.2 trillion). Below we'll outline 3 of the main reasons why:

1. 2 Days Of $2B+ In BTC ETF Inflows

ETFs recorded 2 days in a row of inflows of more than a billion dollars a day. BlackRock's ETF alone, became the fastest ETF in U.S. history to reach US $80 billion in assets under management, reaching that mark in just 374 days. The second fastest ETF to do this Vanguard's S&P 500 fund, which reached it in 1,814 days (~5x longer).

Bitcoin ETF Inflows & Outflows

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2. Dollar Decline

An additional driver of the surge in Bitcoin's price has come amidst a rapid decline in the strength of the US dollar which has fallen by more than 10% in the first half of 2025 relative to a basket of major global currencies (EUR, YEN, CAD, GPB, CHF, SEK). The decline in US dollar strength is often associated with a rise in digital asset prices and international markets as debts, mainly denominated in US dollars become cheaper to repay as exchange rates become more favourable. When this happens, non-US nations have more capital to invest.

3. Corporate Treasury Buying of Digital Assets

Another driver that we've been highlihting over the last several months has been the institutional adoption of Bitcoin and other digital asssets. Over the last week alone, public companies like Metaplanet, Semler Scientific, and Bitcoin Treasury Capital added hundreds of millions of dollars to their balance sheets in Bitcoin. Ethereum treasuries have also made some small waves in recent weeks, with three companies collectively adding over a billion in Ethereum to their treasuries.

Question 2: Are we entering a phase of euphoria in markets?

Worthy of note is that altcoins had a bigger rally than Bitcoin this week, with the likes of Cardano (+23%), XRP (+23%), Hyperliquid (+20%) and Ethereum (+17%) all outperforming.

Some investors are beginning to question if we are entering the euophoria phase of the market. The euphoria phase is often categorised by a switch to more money flowing into altcoins than Bitcoin as retail investors pile in, usually right before the market takes a turn for the worse. This week may have been the start of that cycle, however, from our perspective it doesn't look like the end or 'top' of the market just yet. Here's why:

Bitcoin's share of the overall market is still at 63%,and rising. Altcoins have yet to reverse this in any significant way. It's also unclear to us if altcoins will rally to a similar extent to what we saw in 2021, though we expect some will.

For a good example of what euphoria looks like, in June 2021, the picture and digital rights to the image below sold for US $91.8 million - symbol of the huge levels of speculation at that time.

Pictures of cartoon monkeys would also sell for hundreds of thousands, each one unique. However, since 2022, the NFT market has been in a downward spiral. Trading volumes have dropped to US $823 million in Q2 2025, a sharp decline from US $4 billion the previous year. Once buoyed by celebrity endorsements, the sector has not recovered since its 2022 peak of over US $50 billion in volume.

Below is a chart showing the OpenSea monthly trading volumes for NFTs. OpenSea is the largest NFT marketplace in the world.

To summarise, we don't think we're in euphia phase just yet. There's still a lot of caution in markets, with cash in money market funds also at all time-highs in the US.

@themarketear

Now that's some dry powder! $7 trillion sitting in U.S. money market funds.

8:28 PM • May 26, 2025

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3. What can we expect later this year in markets?

This is the part where we would love to whip out our crystal ball. Alas, we haven't found a good one yet. However, in terms of what we see playing out in the second half of 2025 is a couple of themes.

1. Bitcoin and Ethereum treasury companies will continue to accumulate, but slow down. We think it's likely that investors will start to look more closely at the multiple of net asset value (mNAV) they're paying for companies like Strategy (1.7x mNAV) and MetaPlanet (~6x mNAV). Whilst these companies offer some attractive yields for bond investors looking to gain indirect exposure to Bitcoin, we think that the price of these companies is starting to look expensive relative to the advantages of just buying the underlying Bitcoin directly.
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2. Ethereum To Recover & Make New All-Time Highs. Perhaps a bold a prediction, but given that Ethereum still is the go to blockchain for building smart contracts, and is being adopted by major institutions like BlackRock for their tokenisation projects and funds, we think the institutional interest in holding Ethereum will carry it back up to new all-time highs by the end of this year.
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3. Some blockchains will struggle to make new highs, ever again. As investors become increasingly experienced with digital assets, we think it's likely that several big names in the altcoin space will not see new highs when priced in Bitcoin. Put another way, we think most altcoins will still underperform just holding Bitcoin. There are going to be outperformers that have strong adoption, applications and fee revenue from transactions occurring on their blockchains. After a torrid start to the first half of 2025, we think the strongest alts have got a long way up to go, yet.
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Until next week,
James

James Brannan
Managing Director
BlockByte
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(+61) 412 393 634
​james@blockbyte.com.au​
​https://blockbyte.com.au/​

BlockByte does not provide financial advice. We provide a personalised brokerage service with tailored support, research and secure custody for investing in digital assets. Reach out to our team to discuss how we can help.

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