Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Insights by Carter Feldman of Psy Protocol on where investors are chasing value in bear markets
- A mood check on ETH’s whirlwind year by Andy Baehr
- Top headlines institutions should read by Francisco Memoria
- “ETH DAT Flows vs. ETH Price” in Chart of the Week
-Alexandra Levis
Expert insight
Investors are looking for countercyclical value in privacy coins
– Off Carter Feldman, CEO and Founder, Psy Protocol
The sustained pressure from a bitcoin price drop acts not only as a system-wide dampener, but also as a catalyst for efficiency, forcing miners and investors alike to seek value in specialized plays. The bear market makes this a prime moment for ZK proof-of-work privacy coins, whose security and logarithmic scalability now matter more than ever for miners and private agent internet transactions.
When bitcoin’s price stagnates, miner margins are compressed. This economic reality is forcing miners to become smarter as capital allocators, shifting hash power towards more profitable, specialized chains. This is a calculated move towards protocols that reward not only raw energy consumption but provide utility that the market wants.
This is where privacy coins come into the conversation. While the broader market consolidated, there was a surge in privacy coins with Zcash leading the way encrypted electronic cash used for private, day-to-day payments. With price gains of up to 950% from September lows, it far outperformed the general market performance. This resurgence is a signal that both retail and institutional players recognize privacy as a missing piece in the maturing crypto ecosystem.
The adoption measurements confirm this. Zcash’s escrow pool (i.e. tokens held at private addresses) recently reached an all-time high of over 4.5 million tokens, signaling increasing user demand for true financial autonomy. The market is not only speculating; it functionally requires a system that offers accountability without sacrificing confidentiality.
The technology that supports this privacy, known as Zero-knowledge (ZK) proof, is the real long-term institutional feature that extends far beyond the crypto world. ZK is basically a computational tool that allows a party to prove that a statement is true without revealing the underlying data.
This capability is quickly moving into real-world applications where data protection is paramount:
- Decentralized identity: Proving you are over 18 without revealing your date of birth or name is essential for compliance with legislation (GDPR etc.).
- Supply chain: Verifying the ethical source or origin of a product without revealing sensitive supplier contracts or business relationships.
- Secure voting: Allows participants to prove their eligibility to vote without revealing their identity or ballot choice.
In this context, ZK-native protocols simply adapt this universal technology to the hardest, highest-stakes computational problem: Internet-scale financial transactions. By performing client-side transaction verification, ZK can scale while preserving the privacy that is becoming the global standard for data security across all industries. This dual utility is why ZK native assets are a shrewd long-term investment; they are built on a technology that is fast becoming mandatory, not just optional, for global digital infrastructure.
While the market fretted over bitcoin price volatility, smart investors recognized that privacy coins met a real market demand.
This week’s headlines
– By Francisco Rodrigues
This week we see major risk exposure for the world’s largest corporate holder of bitcoin, Strategy, and for the decentralized finance ecosystem as regulatory hurdles rise.
Vibe Check
Smooth the Ride, Part II: ETH’s whirlwind year has not been for the faint of heart.
– Off Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
A few weeks ago, we showed how a trend overlay on bitcoin helped save 2025 returns. Our Bitcoin Trend Indicator (BTI) signaled the upcoming “Significant Downtrend” in mid-October, allowing strategies to step aside and preserve capital. For advisors and institutions building long-term crypto allocations, we noted that trend-informed strategies can help “smooth the ride” and keep people in the game.
In last week’s Crypto Long & Short we reiterated the view that there can be no broad digital asset class rally without ETH participating – if not leading. Like it or not, Ethereum is the standard bearer of blockchain adoption narratives. It is – in the eyes of many – not an “altcoin”. When ETH rallies, it signals that something bigger is coming: that stablecoins, DeFi and tokenization are gaining mindshare in the global consciousness. We noted that the Fusaka upgrade embodies the kind of progress, focus and, yes, messaging that will drive even greater mindshare.
Still, ETH has been quite a handful by 2025, making conviction — and size — a challenge.
The case for Ether trend
This brings us to a natural question: how does our trend strategy work on ETH? We launched the Ether Trend Indicator (ETI) together with BTI back in March 2023, using the same quartet of moving average crossover signals. We tested these signals on both assets, liked what we saw, and haven’t needed to change them since.
ETH price color coded by Ether Trend Indicator (green is uptrend, yellow neutral, red downtrend)
Source: CoinDesk Indices
If you think about why time series momentum should work – new information spurs different segments of the market over time – then ETH seems like a good candidate. Hedge funds and crypto-native derivatives traders are more likely to start a trend. ETF flows are more likely to follow.
ETH has had three prominent phases in 2025: A Q1 crash, a Q2-Q3 powerhouse rally, and the heartbreaking Q4 slump. We applied a systematic trend strategy (live since October 2023) following ETI to ETH and the results are startling.
ETH trend strategy (live since October 2023) helped smooth the ride
Source: CoinDesk Indices. “ETIS1” strategy. Method here. Hypothetical outcomes ignore transaction costs. Past results are no guarantee of future results.
ETI has shown that ETH is in Downtrend for 5 days and in Significant Downtrend for the previous 29. For a marketplace that is numb from ringing bottom, it might be better to just follow the signals and wait for the trend to reverse.
Chart of the week
ETH DAT Flows vs. ETH Price
In this week’s COTW, we look at Ethereum Digital Asset Treasury (DAT) flows and the ETH price, revealing a clear correlation: the trend in DAT flows appears to be a core price driver. Prior to October 2025, increasing DAT flows strongly corresponded to the ETH price increase. Since the price of ETH peaked around October 2025, both flows and price have been on a downward trend. Given that these DATs hold approximately 3.5% of the circulating ETH supply, the current lack of upward momentum in these flows suggests that a renewed and clear uptrend in DAT accumulation is likely a prerequisite for the next big upward price move.
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