A Weekly Digest of Bitcoin News & Insights

Greg Cipolaro, Global Head of Research at NYDIG

Oct 10, 2025

IN TODAY'S ISSUE:

• Bitcoin rose 6.2% in its seasonally weakest quarter, a middle-of-the-pack  performance compared to prior Q3s.
• Most asset classes performed well this quarter, but precious metals were a particular standout with gold and silver hitting new highs, attributed to the “debasement trade.”
• Despite the “digital gold” narrative, correlations with gold remain low, although the bitcoin ETFs continue to gain ground on the gold ETFs as a share of AUM.
• The proliferation of DATs was the most significant market development this quarter, but most underperformed BTC due to liquidity unlocks and investor concerns about the premium to NAV durability.
• Regulatory changes, such as stablecoin legislation, in-kind ETF orders, generic ETF listing standards, and option position limit increases, add to industry tailwinds.
• Despite setting multiple new all-time highs, network activity remains subdued, pointing to an increasing financialization of Bitcoin by institutions and corporations.
• Looking ahead, most cyclical indicators have yet to flash warning signs, but the increasing financialization of Bitcoin is muddying signals.

PERFORMANCE REVIEW

Bitcoin Rallies, as Does Rest of the Market

Bitcoin gained 6.2% for the quarter, a period largely characterized by rangebound trading between $108K and $120K. Despite the narrow range, bitcoin managed to break out twice, setting new all-time highs of $123,231 in July and $124,533 in August. It would go on to establish yet another record of $126,296 just after the quarter ended, on October 6th.

Bitcoin wasn’t alone in reaching new highs, though. U.S. equity markets and gold also posted multiple record levels. Shortly after quarter-end, silver surpassed its 1980 high from when the Hunt brothers’ attempted to corner the market. Precious metals, led by silver and followed by gold, were the top-performing assets of the quarter, a move many attribute to the ongoing dollar “debasement trade.”

Ironically, however, the U.S. Dollar Index finished the quarter slightly higher against other fiat currencies. Overall though, it was a “rally-everything” quarter, with only a few exceptions: oil (reflecting economic growth sensitivity), volatility (naturally subdued amid equity market strength), and defensive or haven assets like Consumer Staples equities and the Swiss franc, all of which declined during the quarter.

On a year-to-date basis, bitcoin is up 22.5%, still top quartile performance, but behind precious metals and certain equity sectors. Emerging and developed market equities got an early-year head start from the tariff and geopolitical turmoil with the new administration’s priorities and continued to add to their gains in Q3. U.S. technology stocks (Communication Services and Technology) have been the darling this year, with AI investments and narratives dominating  stocks. 

Precious Metals Are on Fire

Given how strongly gold and silver have performed, not just this year but over the past several years, we thought it useful to take a closer look at the broader precious metals complex. It’s not only gold and silver that have done well. Platinum and palladium have also been stellar performers.

Because the share of annual supply used for store-of-value or investment purposes (bars, coins, jewelry, central bank holdings) is much smaller for platinum (<10%) and palladium (<5%), compared with roughly 90% for gold and 20% for silver, their strong performance is noteworthy. 

Quarterly Return Ranking Middle of the Pack

Historically, Q3 has been bitcoin’s weakest quarter in terms of returns, with performance often softening through the summer months, similar to seasonal trends seen in equity markets. This year’s 6.2% gain was roughly middle of the pack for Q3 outcomes, neither particularly strong nor weak. Looking ahead, Q4 has traditionally been one of bitcoin’s best-performing periods, and with “Uptober” already off to a strong start, the seasonal tailwinds appear to be setting in once again.

Correlations with Stocks Remain Elevated

Bitcoin’s correlations with U.S. equities remained persistently elevated this quarter, despite periods of volatility in both crypto and equity markets. The 90-day rolling correlation with U.S. equities ended the quarter at 0.33, down from prior peaks earlier in the cycle but still notably above pre-COVID norms, when correlations typically hovered near zero. This sustained linkage highlights how macro and liquidity factors continue to drive cross-asset behavior.

Correlations with gold oscillated around 0.0, suggesting bitcoin has yet to consistently trade as a “digital gold.” Correlations with the U.S. dollar remained slightly negative, ending the quarter at -0.25, as bitcoin tends to strengthen when the dollar softens.

THE EVENTS THAT SHAPED THE QUARTER

DATs Exploded, but Underperformed Bitcoin

Without a doubt, the market development of the quarter was the explosion of digital asset treasury companies (DATs). What started off as a balance sheet investment with MSTR in 2020 morphed into a full-blown industry of public companies whose nearly entire objective is to own one crypto or another. It started with bitcoin, but now there are DATs dedicated to ETH, SOL, LTC, and DOGE, to name just a few. 

While investors and newly formed DATs might’ve been enticed by some eye-popping short-term gains by some of the early DATs, because of liquidity, or the lack thereof, much of these gains are pyrrhic, existing only on paper for most investors. When liquidity is finally unlocked, investors are finding in many cases that gains, if any, are hard to come by, and some are stuck with losses. Investors are beginning to recognize these dynamics, and coupled with the lack of clear strategy differentiation among DATs, this has led to significant underperformance of DATs relative to bitcoin. During Q3 2025, only Empery Digital (EMPD) outperformed bitcoin, and their stock was already trading below NAV. 

As a result of this dynamic, equity premiums to NAV for bitcoin have compressed significantly. All have declined over the past quarter, even with the ASST from SMLR deal. The following are the changes in equity premium to NAV from 7/1/25 to 10/9/25: 

• MSTR from 86% to 39%
• MTPLF from 510% to 37%
• SMLR from -3% to -27%
• CEP from 120% to 53%
• ASST from 485% to 44%
• NAKA from 959% to -9%
• BRR from 37% to 26%

The table below summarizes the bitcoin DAT premiums to NAV. As an aside, we’ve observed that some DATs and hedge funds are using an unusual, and incorrect, definition of “enterprise value” (EV). Specifically, they fail to exclude the value of the crypto treasury when calculating EV. This defeats the purpose of the metric, which is meant to capture the value of the core operating business and the cost to acquire it. Properly defined, EV equals equity value plus debt minus cash and investments, including crypto holdings.

For an ETF, this figure should be zero. For a DAT, a C-corp that issues both debt and equity to acquire crypto assets, the EV should reflect whatever premium or discount investors assign to its equity relative to its net assets. We had previously commended firms and analysts who used the EV approach rather than market cap, but it seems even that’s being applied incorrectly.  

Crypto Legislation Front and Center this Quarter

Regulation and legislation was once again a major theme this quarter. The GENIUS Act, governing the issuance and oversight of stablecoins, was passed and signed into law. With total stablecoin supply exceeding $300 billion recently, this sector remains one of the most significant components of the broader crypto economy. Although the law has not yet taken effect, it formally recognizes stablecoins, sets important standards and rules for issuers, and introduces important consumer protections. As prospective and current issuers prepare to capitalize on this new regulatory framework, we anticipate continued heightened activity across the stablecoin landscape.

The other major piece of legislation, comprehensive crypto market structure reform, remains under negotiation in Congress. Although both the White House and pro-crypto lawmakers had hoped to see a bill enacted by year-end, its fate is uncertain. Recent reports suggest that discussions have stalled over several contentious issues, including the regulation of DeFi, wallet development, and related areas. While we remain confident that a framework will ultimately be passed, the timing of such legislation is still unclear.

SEC Moves to Usher in New Crypto ETFs, Up Options Limits

The SEC made an important step forward that should usher in a variety of new crypto ETFs with generic listing standards for commodity-based trust shares. Under these rules, exchanges can list qualifying ETFs holding spot commodities (including crypto) without submitting a 19b-4 filing, which is subject to a 240-day review process. Instead, ETFs must file a registration statement which the SEC will review and rely on self-attestation by the listing exchange. As it stands, a handful of crypto assets are likely to get spot ETFs, but the available investable universe in the ETF wrapper is about to expand meaningfully compared to just BTC and ETH today. 

The SEC also approved in-kind creation and redemption orders for the spot bitcoin ETFs, something that issuers had wanted from the beginning. The change allows Authorized Participants (APs) to satisfy orders with the trust sponsor using bitcoin rather than cash. Operationally, it should simplify a complex process, allowing ETFs to trade at tighter spreads and closer to NAVs. There should be reduced costs for investors and lower tracking error–both good outcomes. However, the change may have put some APs and market makers that can’t trade or custody spot bitcoin at a disadvantage. 

The final notable development this quarter involved options position limits on several spot bitcoin ETFs. Previously, traders were restricted to 25,000 contracts per ETF, but the SEC has now increased those limits by 10x for select funds. This adjustment is expected to further dampen bitcoin’s volatility, which has already been in secular decline throughout the year. In turn, this could enhance the attractiveness of structured products linked to bitcoin and bolster the asset’s role within risk-parity and multi-asset portfolios. However, it may also place continued pressure on certain derivatives strategies, such as covered-call selling, which tend to benefit from higher volatility. 

Rate Cut the Macro Highlight of the Quarter

The major macro development this quarter was the FOMC’s 25-basis-point rate cut in mid-September, its first reduction since late 2024. While widely anticipated by markets, the move underscored the Fed’s challenging balancing act. Chair Powell emphasized the committee’s careful navigation between a softening labor market and persistently firm inflation, noting that the full effects of recently implemented tariffs have yet to be fully assessed.

Another significant monetary policy development this quarter was the appointment of the White House’s Stephan Miran to the FOMC, the first time since the 1930s that a member of the executive branch has sat on the FOMC. And while he’s just one of the 12 voting members, it’s possible his voice could have outsized influence given his position in the administration. It’s no surprise that the administration wants interest rates lower (by 3% is the call) and this appointment may have some impact on that. Regardless, Powell’s term as Fed chair ends in May 2026, at which point President Trump will be able to appoint someone more amenable to his monetary policy goals. 

Network Activity Points to Increased Financialization of Bitcoin

We highlighted this at the start of Q3, but it remains a key observation: despite the price of bitcoin reaching new all-time highs, on-chain network activity has not kept pace. This divergence suggests an ongoing financialization of the Bitcoin network within traditional finance.

The mempool remains largely empty following the inscriptions boom, with target transaction fees at just 1–2 sat/vB. Transaction fees now make up less than 1% of miner revenue, compared with spikes above 50% (for certain blocks) during the inscriptions craze, as the 3.125 BTC block subsidy continues to dominate miner earnings. Meanwhile, daily active addresses are flat to declining.

Conversely, total and change-adjusted transfer volumes (per Glass Node’s methodology) are rising, and entity-adjusted transfer volume (again per Glass Node’s methodology) is near all-time highs. In our view, this points to fewer entities moving larger amounts of bitcoin, consistent with the ongoing shift toward institutional and corporate usage, including ETFs, corporate treasuries, and bitcoin-focused DATs.

IBIT Hoovers Up 93% of ETF Inflows 

BlackRock’s iShares Bitcoin Trust (IBIT) remains the standout performer among U.S. spot Bitcoin ETFs, further extending its lead over competitors this quarter. The fund attracted $12.4 billion in inflows, accounting for nearly 93% of total net flows into the U.S. spot bitcoin ETF complex. With recent increases to options position limits, where IBIT was already the clear leader, the fund’s position as the dominant vehicle for Bitcoin exposure appears even more firmly entrenched.

Bitcoin ETFs Continue to Gain Ground on Gold ETFs

As of yesterday, U.S. spot bitcoin ETFs collectively hold nearly $165 billion in assets under management (AUM), a figure we significantly underestimated ahead of their launch. For context, U.S. spot gold ETFs total approximately $235 billion in AUM, meaning bitcoin ETFs represent more than 70% of the size of the gold ETF market. Bitcoin ETF's share of gold ETFs isn’t at its all-time high, but it's secularly growing with some cyclical ups and downs.

While gold’s total market capitalization stands at roughly $26.9 trillion, more than 10x larger than bitcoin’s $2.3 trillion market cap, bitcoin’s ownership through ETF structures is disproportionately high. In other words, bitcoin is far more heavily owned through ETFs than gold, underscoring both its appeal as an investable asset and the rapid pace of institutional adoption.

LOOKING AHEAD

Cycle or No Cycle? That is the Question

The question on every investor’s mind is where bitcoin’s price goes from here, and whether the market will continue to follow its familiar four-year boom-and-bust cycle around each halving event. Given today’s economic and geopolitical environment, there’s a credible case that this pattern may be giving way to a more stable, sustained growth phase. Even so, cycles have been a consistent feature throughout bitcoin's history and are hard to ignore.

Many of the systemic risks that once loomed large over the industry, including regulatory uncertainty, legal challenges, and questionable business practices, have either diminished significantly or turned into tailwinds. Furthermore, the speculative excesses that characterized prior cycles appear to have been significantly reduced. That said, bitcoin remains an experimental technology and monetary system, and its long-term incentives are still being tested.

Unfortunately, because of the changing dynamics around Bitcoin’s usage highlighted above, on-chain metrics we once relied upon as cyclical indicators are getting increasingly muddied, but we do our best to provide a balanced view. 

MVRV Ratio

MVRV (market value to realized value), a measure of on-chain profitability, has been our preferred cyclical indicator for some time. Here, the data shows the ratio rose above 1 standard deviation, but still below the 3.0x ratio that would normally demarcate a peak. We expect the amplitude of these peaks to decline over time as the “blow off top” price peaks lessen over time. But here, the metric is not flashing red.

Bitcoin Dominance

Bitcoin’s dominance, its share of the total crypto market capitalization, remains, in our view, a valuable cyclical indicator. Historically, at market peaks, speculative excess has driven altcoins to outsized gains, often far outpacing bitcoin’s performance, even as bitcoin itself reaches new all-time highs. This exuberance typically leads to a sharp decline in bitcoin’s dominance as capital floods indiscriminately into smaller tokens.

In the current cycle, bitcoin has ceded some ground, but the decline in dominance has been relatively modest. This may suggest that investors are becoming more selective, favoring quality over speculation, or that capital constraints, such as funds being held within traditional brokerage accounts rather than crypto-native platforms, are limiting broad-based altcoin participation. 

Long-Term Holding of Coins

The percentage of bitcoin held for one year or longer also appears to carry cyclical significance. Historically, as prices rise, long-term holders tend to move or sell coins, realizing gains from appreciation. Conversely, during price declines, investors typically accumulate and hold coins for extended periods, increasing the share of long-term holdings. In the current cycle, that share has indeed declined as prices have risen, consistent with past behavior. 

Comparing Cycles Past

Examining the current bitcoin cycle through a time-based lens, one might expect the price to peak in Q4 if historical patterns were to repeat. Indeed, as the following chart shows, the trajectory and duration of this cycle closely resembles those of 2017 and 2021, albeit with more moderate amplitude.

One notable change this cycle has been the reduced amplitude of bitcoin’s price peaks. Each successive cycle has shown diminishing trough-to-peak multiples, indicating a maturing market. As shown in the accompanying table, which reflects intraday highs and lows (in contrast to closing prices in the prior chart), the last two cycles saw peak gains equal to roughly 17–21% of the prior cycle’s multiple.

While we had expected that trend to persist, the current cycle has already broken the pattern, with the trough-to-peak multiple reaching approximately 37% of the prior cycle’s return. 

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