Thank you for joining our institutional newsletter, Crypto Long & Short. This week:
- In-depth analysis by Carter Feldman from Psy Protocol on where investors are seeking value amidst bear markets
- An overview of ETH’s dramatic year by Andy Baehr
- Essential headlines for institutions curated by Francisco Memoria
- “ETH DAT Flows vs. ETH Price” featured in Chart of the Week
Expert Insights
Investors Seek Countercyclical Value in Privacy Coins
– By Carter Feldman, CEO and founder, Psy Protocol
The ongoing decline in bitcoin prices acts not only as a system-wide depressant but also as a catalyst for efficiency, compelling both miners and investors to search for value in niche plays. The bear market presents an optimal opportunity for ZK proof-of-work privacy coins, whose security and logarithmic scalability are increasingly vital for miners and private internet transactions.
When bitcoin prices stagnate, miners’ margins diminish. This economic reality prompts miners to refine their capital allocation strategies, directing hash power towards more lucrative, specialized chains. This strategic shift targets protocols that reward not merely raw energy expenditure but also provide meaningful utility that the market craves.
Privacy coins enter the narrative here. Amidst broader market consolidation, there was a notable surge in privacy coins led by Zcash , a form of encrypted electronic cash utilized for private, everyday transactions. With price increases reaching up to 950% from September lows, it significantly outperformed the overall market. This resurgence indicates that both retail and institutional players recognize privacy as a crucial component in the evolving crypto landscape.
The adoption metrics reinforce this trend. Zcash’s shielded pool (i.e., tokens stored in private addresses) has recently reached an all-time high of over 4.5 million tokens, reflecting increasing user demand for genuine financial autonomy. The market is not merely speculating; it is actively seeking a system that offers accountability while maintaining confidentiality.
The underlying technology supporting this privacy, known as zero-knowledge (ZK) proofs, is what truly attracts institutions in the long run, extending far beyond the crypto sphere. ZK functions as a computational mechanism that allows one party to confirm a statement’s truth without divulging the underlying data.
This capability is swiftly transitioning into real-world applications where data security is vital:
- Decentralized identity: Proving age without disclosing birthdates or names, essential for regulatory compliance (GDPR, etc.).
- Supply chain: Verifying ethical sourcing or product origin without exposing confidential supplier contracts or business relationships.
- Secure voting: Enabling participants to prove their eligibility without revealing their identity or choice of ballot.
In this regard, ZK-native protocols are simply adapting this universal technology to address the most complex and high-stakes computational challenge: internet-scale financial transactions. By conducting transaction verification client-side, ZK can scale while preserving the privacy that is rapidly becoming the global standard for data security across industries. This dual utility is why ZK-native assets are a strategically wise long-term investment; they are founded on a technology that is likely to become essential for global digital infrastructure.
While the market was concerned with bitcoin price swings, astute investors recognized that privacy coins address a real market need.
Headlines of the Week
– By Francisco Rodrigues
This week, we observe significant risk exposure for the world’s largest corporate bitcoin holder, Strategy, along with the decentralized finance sector as regulatory challenges mount.
Vibe Check
Smooth the Ride, Part II: ETH’s tumultuous year has been anything but easy.
– By Andy Baehr, CFA, head of product and research, CoinDesk Indices
A few weeks prior, we illustrated how a trend overlay on bitcoin salvaged returns for 2025. Our Bitcoin Trend Indicator (BTI) highlighted the impending “Significant Downtrend” in mid-October, offering strategies the opportunity to step back and protect capital. For advisors and institutions formulating long-term crypto allocations, we’ve highlighted that trend-informed strategies can help “smooth the ride” and keep participants engaged.
In last week’s Crypto Long & Short, we reasserted our position that no widespread digital asset rally is feasible without ETH’s involvement—if not leadership. Regardless of preferences, Ethereum is perceived by many not as an “altcoin.” When ETH experiences a rally, it suggests something larger is unfolding: that stablecoins, DeFi, and tokenization are gaining recognition in the global psyche. We emphasized that the Fusaka upgrade exemplifies the sort of progress, focus, and communication needed to cultivate even greater awareness.
Nevertheless, ETH has proven to be quite challenging in 2025, making conviction—and sizing—difficult.
The case for Ether trend
This raises a natural inquiry: how does our trend strategy perform on ETH? We introduced the Ether Trend Indicator (ETI) concurrently with BTI in March 2023, utilizing the same set of moving average crossover signals. We examined these signals on both assets, were pleased with the outcomes, and have since maintained them unchanged.
ETH price categorized by Ether Trend Indicator (green indicates uptrend, yellow neutral, red downtrend)
Source: CoinDesk Indices
If we consider why time series momentum should be effective—new information influences various market segments over time—then ETH seems to be an exemplary candidate. Hedge funds and crypto-native derivatives traders are more inclined to initiate a trend. ETF flows are likely to follow suit.
ETH experienced three notable phases in 2025: a breakdown in Q1, a dominant rally in Q2-Q3, and a painful drawdown in Q4. We applied a systematic trend strategy (in effect since Oct 2023) following ETI to ETH, and the outcomes are remarkable.
ETH trend strategy (active since Oct 2023) aided in stabilizing the experience
Source: CoinDesk Indices. “ETIS1” strategy. Methodology here. Hypothetical results do not account for transaction costs. Past performance is not indicative of future results.
ETI has indicated ETH has been in a Downtrend for 5 days and in a Significant Downtrend for the preceding 29. For a marketplace that has struggled with identifying bottoms, perhaps the wisest course is to adhere to the signals and await a trend reversal.
Chart of the Week
ETH DAT Flows vs. ETH Price
This week’s COTW examines Ethereum Digital Asset Treasury (DAT) flows against the ETH price, revealing a clear correlation: the trend in DAT flows appears to be a key price influencer. Prior to October 2025, a rise in DAT flows closely corresponded with an ETH price surge. Since ETH peaked around October 2025, both flows and prices have been experiencing a downward trend. Given that these DATs account for approximately 3.5% of the circulating ETH supply, the current stagnation in these flows signifies that a renewed uptick in DAT accumulation is likely necessary for the next major price increase.
