Welcome to the institutional newsletter, Crypto Long & Short. This week:
- The top headlines institutions should read by Francisco Memoria
- Insights and Analysis of Global Exchanges by Joshua de Vos
- Crypto’s “Hopeful Signals” as We End the Year by Andy Baehr
- Bitcoin weekly returns in 2025 in the Weekly chart
Thanks for joining us!
-Alexandra Levis
This week’s headlines
– By Francisco Memoria
Cryptocurrency prices fell more than 13% over the past week, as measured by the performance of the CoinDesk 20 (CD20) index of bitcoin lost 12.6% of its value in the period. Yet headlines tell us that institutions are not backing down.
Expert insight
Licenses, liquidity and the changing geography of exchange quality
– Off Joshua de Vosresearch manager, CoinDesk
For years, Europe looked like the natural center of gravity for crypto regulation. Clearer frameworks, early VASP schemes and a growing regulatory environment made the EU feel like the region poised to dominate licensing and registration. However, as MiCA moves deeper into its implementation phase, we are seeing a new trend in the underlying registrations.
The center of gravity is shifting, and it is shifting towards the United States
The latest edition of CoinDesk’s Exchange Benchmark makes this clear. For the first time in several cycles, thanks to data from VASPnet, North America has overtaken Europe as the top licensing region for digital asset exchanges (based on the number of benchmarked exchanges duly licensed/registered under these jurisdictions). The American regulatory model is often described as fragmented or slow, but it is proving to be more stable and functional than many expected. Exchanges now treat FinCEN registration and a network of money transmitter licenses as a viable path to legitimacy.
Europe is moving in a different direction. Increasingly strict regulations are creating difficulties for some of its own VASPs. VASPnet’s data suggests that the end of MiCA grandfather periods is putting pressure on medium-sized companies that were comfortable under previous national regimes. The result is consolidation and in some cases a shift of business operations towards more permissive jurisdictions.
The data reinforces the trend:
- EU registrations fell 33 percent since April.
- The Netherlands experienced a drop of 83 percent after the end of the transition period.
- Only 16 exchanges currently have MiCA authorization.
- Meanwhile, 59 percent of global exchanges are now regulated under a broader virtual asset or market regime, up from last cycle.
The direction of travel becomes clearer. The exchanges are concentrated in regions where licensing is still practical and commercially viable for them.
Liquidity: why execution has become the right signal
Benchmark also introduced the most important market quality update since launch. Historically, liquidity assessments have relied heavily on static order book depth. Although simple to measure, the depth shown is often separated from real performance conditions. Outdated liquidity, spoofing and inconsistent update rates limit its usefulness as an indicator of market quality. This year’s framework moves the analysis towards executed trades rather than displayed orders.
The new Composite Liquidity Score draws on:
- realized slip
- an execution-based depth proxy
- trade density
- continuous trading activity
- activity across the top 25 pairs
The principle is straightforward. The liquidity should reflect the actual execution conditions, not what appears in the order book.
This shift occurs at a time when the market structure itself is changing. Top-tier exchanges no longer dominate global spot volumes as they did in the past few years. In the 1st quarter of this year, the top class captured almost 60 percent of the market share of volumes. In the third quarter, that figure is 41 percent. Liquidity is becoming more distributed and execution quality is now a clearer differentiator than raw size.
The exchanges that rise to the top under this more stringent, execution-driven approach are also strengthening their regulatory footprint. Binance, Bitstamp, Coinbase, Kraken and Crypto.com all score highly here. Regulation and true execution quality are increasingly aligned.
Where the exchanges still lag
Despite clear progress, the benchmark highlights several areas where the industry continues to fall short:
- Only 34 percent of the exchanges publish audited accounts.
- Only 49 percent provide evidence of reserves and 35 percent provide evidence of liabilities.
- Security losses reached $62 million during the assessment period, although several exchanges now operate formal bug bounty programs.
Overall, the exchange landscape is becoming more mature and more execution-focused, while also becoming more uneven. The regional licensing standards are divergent. Liquidity is fragmented. Transparency is progressing in some areas and stalling in others.
The benchmark shows what high quality now looks like:
- licenses that provide access to markets
- liquidity that reflects true execution conditions
- transparency that supports institutional expectations
Stocks that get these right drive the continued divergence of our benchmark universe.
Vibe Check
What did we expect?
– Off Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
With precious few weeks to go, what will the digital asset class deliver in 2025?
Over the weekend, bitcoin plummeted below its opening price of around $93,400. Sure, we’re a long way from 2025’s lows (below $75K in early April), but with less than seven weeks to go, we wonder what message 2025 will end up delivering. This was meant to be (and in many ways has been) the year crypto got permission. We think it’s fair to say that the US administration has done its part, both in terms of accelerating legislative progress and (some) legislative results. Wells Notice futures thoughts. Most observers agree that it is the “markets” that have erased crypto’s impressive Q2 and Q3 gains. Lack of security, lack of liquidity and lack of catalysts. Even lack of data.
There is some irony that the US government did more to lower crypto prices by being closed than by being open.
And let’s not be mistaken – crypto has more to prove. If a sour market takes the shine off growth stocks in 2025, well, that’s the game. There’s always next year. For the young digital asset class aspiring to earn allocations from global investors, a bad year is more of a deterrent.
Crypto risks delivering poor 2025 results
A few hopeful signs
There is no shortage of good news about the adoption of blockchain technology and its integration into the global financial system. (We’ve referred to this as “Slow Money” – M&A, new launches, IPOs, etc.) Yet we’re not seeing consistent conversion of these advances into returns in the digital asset market. Where we do see encouraging signs are in quality of these trading markets.
As always, width is key. Looking at our two flagship market indices (CoinDesk 5 and CoinDesk 20), we see that they have held firm relatively well in bitcoin terms.
- CoinDesk 5 is almost flat in bitcoin terms, down < 2% YTD.
- The CoinDesk 20 is only down 8.4% YTD in bitcoin terms (and dead even year-over-year).
We are observing an annihilation of “distracting” assets. Minor names and frenzy-era memecoins steadily declined in 2025, allowing the market to train its focus on a more sensible beta.
- CoinDesk 80 (80 names outside CoinDesk 20) lost half of its value in CD20 terms.
- The CoinDesk Memecoin Index (CDMEME), which tracks 50 memecoins equally weighted, lost more than 60% of its value in CD20 terms.
Chart of the week
Bitcoin closed last week down 10.0% at $94,244. This marked the biggest weekly drop in the BTC price since the week ending March 9. This also recorded a third consecutive week of negative bitcoin price action. Bitcoin has since traded below its yearly open and is on track to record four consecutive weeks of negative price action, which would be the first time since the first week of July 2024.
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