Shery_yr 07

Despite the hype around BTC ETFs, central banks and major asset managers still favor gold over crypto for reserves and payments. In 2025, gold not only led in price but also in investor trust compared to Bitcoin. Since the launch of spot Bitcoin ETFs in early 2024, many expected a sustained rally for BTC. Nearly two years later, gold has quietly outperformed, raising questions about Bitcoin’s readiness as a traditional safe haven.

While Bitcoin dropped around 12% since the ETF debut, gold rose 58% over the same period. Mark Connors, founder and chief strategist at Bitcoin Risk Dimensions and former head of global risk advisory at Credit Suisse, attributes this to Bitcoin’s relative immaturity. “Major buyers—central banks, sovereign wealth funds, and large asset managers—still prioritize gold,” he says.
The reasons go beyond volatility or legal uncertainty. Connors highlights infrastructure and historical precedent. Gold has centuries of trust and established financial channels. Central banks hold gold accounts and use it in trade, while Bitcoin has yet to integrate into these systems. BRICS nations, including China, India, and Russia, have accelerated gold accumulation, sometimes using it for oil payments—a role Bitcoin cannot fulfill.
Liquidity constraints also hurt BTC. U.S. fiscal tightening reduced systemic liquidity, disproportionately impacting leveraged crypto positions, especially in Asia. Even as government operations resume, delayed Treasury spending keeps Bitcoin in a temporary disadvantage compared to gold.
Looking ahead, Bitcoin’s performance could improve if liquidity returns or fiat confidence declines, particularly in emerging markets. Still, Connors cautions that Bitcoin is not yet a substitute for gold. Institutional allocation remains deliberate: gold fits today’s framework, Bitcoin does not. Trust and adoption will take time.
“Gold has stood for centuries. Bitcoin is still maturing,” he concludes.
#BinanceBlockchainWeek #BTCvsGold
$BTC

For the last 4 years, liquidity has been tight.

Rates were high, QT was draining the system, and high risk assets struggled.

But now the cycle is starting to turn.

✦1) QT ends on December 1st
Every time QT has ended, risk assets recovered.

The last time this happened in 2019:
• Alt-BTC pairs rose 80%-90%
• BTC moved down 50%-60%
• Even the 2020 crash didn’t erase that strength

Once QE began, altcoins entered a long uptrend.

The same structure is forming again.

✦2) Phase 1: Altcoins outperform BTC (alt-BTC strength)

Over the next 6–8 months, alt-BTC pairs can strengthen like they did in late 2019.

This usually happens before USD pairs start moving.

✦3) Phase 2: USD outperformance

If macro conditions stay supportive, the next 12–18 months can see alt-USD pairs outperform as well.

This is where returns compound:
BTC rises → alts outperform BTC → liquidity expands.

Historically, this is where altcoins deliver their best performance.

✦4) Macro tailwinds are lining up

• Mid-term elections → more stimulus expectations
• Possible new Fed leadership → more easing friendly
• Rate cuts coming in 2026
• QE is possible if growth slows
• Household liquidity improves due to tax benefits
• Global liquidity starts rising again

This environment always benefits high beta assets first.

✦5) Not every alt will benefit

This cycle favors quality altcoins, the ones with:
• Real product market fit
• Real revenue
• Real users
• Sustainable business models

Narrative only tokens won’t survive a multi-year cycle.

✦6) What this means for the next 2–3 years

If this liquidity cycle plays out like past cycles:
• Alt-BTC pairs strengthen
• Alt-USD pairs rise
• High beta assets outperform
• Smallcaps and quality alts lead risk-on sentiment
• This becomes a multi year move, not a short pump

The market isn’t at the end of a cycle.

It’s entering the beginning of a new one.

➯ Quality alts + improving liquidity + supportive macro = a strong setup most people overlook until it’s already underway.
$BTC
#BinanceBlockchainWeek

Key Takeaways:
Bitcoin investors have enjoyed high returns but have also stomached many challenging drawdowns. The ~30% drawdown since early October is in line with the historical average and the ninth meaningful pullback during the latest bull market.[1]Grayscale Research does not believe Bitcoin is on the cusp of a deep and prolonged cyclical drawdown, and we expect prices to potentially make new highs next year. Tactically, some indicators point to a short-term bottom while others are still mixed. Into year-end, positive catalysts may include another rate cut from the Fed and bipartisan progress on crypto legislation.Beyond the majors, privacy-related crypto assets continued to stand out. Meanwhile, the first exchange-traded products (ETPs) for XRP and Dogecoin began trading.

Investing in Bitcoin has historically delivered favorable returns, including annual gains of 35%-75% over the last 3-5 years.[2] However, it has also involved many significant drawdowns: Bitcoin’s price typically declines by at least 10% three times per year.[3] Like every other asset, its potential investment returns can be thought of as compensation for its risk. Bitcoin investors have been rewarded for HODL-ing over the long term, but they have needed to stomach sometimes challenging drawdowns along the way.

The Bitcoin drawdown that began in early October continued through most of November. From peak to trough, its price declined 32% (Exhibit 1). This makes the latest pullback, so far, close to the historical average. Bitcoin’s price has declined at least 10% about 50 times since 2010; these episodes had an average peak-to-trough price decline of 30%. Since Bitcoin’s price bottomed in November 2022, it has declined at least 10% nine times. It has been a bumpy ride, but not atypical for a Bitcoin bull market.

Exhibit 1: Latest pullback consistent with historical average

Bitcoin drawdowns can be measured by their magnitude and duration, and reviewing the data suggests there are largely two types (Exhibit 2). “Cyclical drawdowns” involve deep and prolonged price declines lasting 2-3 years. Historically these have occurred about once every four years. In contrast, “bull market drawdowns” have average price declines of 25% and last 2-3 months. These occur 3-5 times per year during bull markets.

Exhibit 2: Bitcoin has experienced four large cyclical drawdowns

Fading the Four-Year Cycle
Bitcoin supply follows a four-year halving schedule, and large cyclical drawdowns in price have historically occurred once every four years. As a result, there is an impression among many market participants that Bitcoin’s price will also follow a “four-year cycle.” After three years of appreciation, this thesis means price is scheduled to fall over the next year.

Although the outlook is uncertain, we believe the four-year cycle thesis will prove to be incorrect, and that Bitcoin’s price will potentially make new highs next year. First, unlike in past cycles, there was no parabolic price increase during this bull market that might suggest overshooting (Exhibit 3). Second, Bitcoin’s market structure has changed, with new capital largely coming through ETPs and digital asset treasuries (DATs) rather than retail exchanges. Third, as we discuss further below, the broad macro market backdrop still appears favorable for the crypto asset class.

Exhibit 3: No parabolic price increase this cycle

There are already some signs that Bitcoin and other crypto assets may have bottomed. For example, Bitcoin put option skew[4] is very high, especially for 3- and 6-month tenors, suggesting that investors have already extensively hedged downside exposure (Exhibit 4). The largest DATs are also all trading at discounts to the value of the crypto on their balance sheets (i.e., their “mNAVs” are below 1.0), which may also indicate light speculative positioning (often a precursor to recovery).

Exhibit 4: Elevated put skew suggests hedging of downside risk

At the same time, a variety of fund flow indicators point to still-tepid demand: futures open interest declined further in November, ETP flows were negative until late in the month, and there may have been more Bitcoin “OG” selling. For the latter, on-chain data showed another spike in Coin Days Destroyed (CDD) in late November (Exhibit 5). Coin Days Destroyed is calculated as the number of coins transacted multiplied by the number of days since they were last transacted — CDD therefore increases when many old coins move at the same time. Similar to the spike in CDD in July[5], the increase in late November could indicate Bitcoin selling by a large longtime holder. For the short-term outlook, investors can be more confident that Bitcoin has bottomed once these fund flow indicators — futures open interest, ETP net inflows, and OG selling — turn around.

Exhibit 5: More old Bitcoin moved on chain

Privacy Stands Apart
Bitcoin’s price decline during November was in the middle of the range among investable crypto assets, based on our Crypto Sectors family of indexes. The best-performing market segment was the Currencies Crypto Sector (Exhibit 6). Excluding Bitcoin, this market segment was higher during the month. The gains were tied to several privacy-focused cryptocurrencies: Zcash (+8%), Monero (+30%), and Decred (+40%).[6] There was also extensive focus on privacy in the Ethereum ecosystem: Vitalik Buterin unveiled a privacy framework at the Devcon conference, and Aztec, a privacy-focused Ethereum Layer 2, launched its Ignition Chain.[7] As discussed in our last monthly report, Grayscale Research believes that blockchain technology cannot reach its full potential without privacy elements.

Exhibit 6: Non-Bitcoin currency assets outperformed in November

The worst-performing market segment was the Artificial Intelligence (AI) Crypto Sector, which slid 25%. Despite price weakness during the month, there have been notable positive fundamental developments.

In particular, Near, the second-largest asset in the AI Crypto Sector by market cap, has seen rising adoption for its Near Intents product (Exhibit 7). Near Intents abstract away cross-chain complexity by connecting a user’s desired outcome to a network of solvers that compete to execute the optimal fulfillment path across chains. This feature is already boosting Zcash’s utility by allowing users to privately spend ZEC while recipients receive assets like Ether or USDC on other chains. It’s early, but we believe this integration could play a meaningful role in extending privacy-preserving payments across crypto.

Exhibit 7: Near finding product/market fit with Intents

Separately, developer attention has turned to x402, which is a new open payment protocol developed by Coinbase that enables AI agent-driven stablecoin payments directly over the internet. By eliminating account creation, human approval steps, and hosted payment processor fees, this payments standard enables frictionless, autonomous microtransactions executed by AI agents while using blockchains as the settlement layer. Recently, adoption of x402 has accelerated, rising from under 50,000 transactions per day in mid-October to more than 2 million per day by late November.[8]

Lastly, the crypto ETP landscape continued to expand, thanks to the new generic listing standards approved by the SEC (Securities and Exchange Commission) in September. Issuersbrought both XRP and Dogecoin ETPs to market last month, and more listings for single-token crypto ETPs are expected before year-end. According to Bloomberg data there are now 124 US-listed crypto-focused ETPs with assets under management totaling $145bn.[9]

Lower Rates, Bipartisan Legislation
In many ways 2025 has been an exceptionally good year for the digital assets industry. Most importantly, regulatory clarity drove a wave of institutional investment that will likely become the foundation for continued growth over the coming years. However, valuations have not tracked the improvement in longer-term fundamentals: our market cap-weighted Crypto Sectors index is down 8% since the start of the year.[10] Although 2025 has been uneven for crypto markets, eventually fundamentals and valuations will converge, and we are optimistic about the crypto market outlook into year-end and 2026.

Over the short term the key swing factor will likely be whether the Federal Reserve cuts rates at its December 10 meeting, and what guidance it offers about policy rates for next year. Recent press reports have indicated that National Economic Council Director Kevin Hassett is the leading candidate to replace Fed Chair Powell.[11] Hassett would likely support lower policy rates: he said in a CNBC interview in September that the Fed’s 25-basis-point rate cut was “a good first step” in the direction of “much lower rates.”[12] All else equal, lower real interest rates should be considered negative for the value of the U.S. Dollar and positive for assets that compete with the Dollar, including physical gold and certain cryptocurrencies (Exhibit 8).

Exhibit 8: Fed rate cuts would likely support Bitcoin, all else equal

Another potential catalyst could be continued bipartisan efforts on crypto market structure legislation. The Senate Agriculture Committee (which oversees the Commodity Futures Trading Commission) released its bipartisan draft text in November.[13] If crypto can remain a bipartisan issue — and does not become a partisan topic for the midterm elections — the market structure bill could make further progress next year, potentially driving more institutional investment in the industry and ultimately higher valuations. Although we are optimistic about the near-term market outlook, the most meaningful gains are likely to come from HODL-ing for the long-term.

Grayscale Research believes Bitcoin ($BTC ) could reach a new all-time high in 2026, countering fears that the market is entering a prolonged multi-year downtrend.
According to their latest report, Bitcoin no longer strictly follows the traditional 4-year cycle. Unlike previous cycles marked by parabolic rallies driven by retail investors, the current bull run is fueled primarily by institutional inflows, including ETFs and corporate treasury allocations. This structural shift suggests that past cycle patterns may not dictate future performance.
BTC has corrected roughly 32% from its October peak. Grayscale emphasizes that drops of 25% or more are normal within a bull market and do not signal the start of a long-term bear trend.
Key factors supporting Grayscale’s bullish outlook include:
Institutional capital replacing retail-driven demand
Growing Bitcoin holdings in ETFs and corporate treasuries
Potential Federal Reserve rate cuts in the coming year
Progress on favorable US crypto regulations
The report suggests that as institutional participation increases, market behavior may become less volatile and less reliant on historical cycle patterns. While price corrections are expected, the combination of deeper liquidity, regulatory clarity, and macro tailwinds could drive Bitcoin to new highs in 2026.
Investors are encouraged to view current dips as part of healthy market consolidation rather than a shift to a prolonged bear market, with institutional demand providing a stronger floor than previous cycles.