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JIM ARMSTRONG: Where are crypto prices headed and why, and what’s next in the crypto space? Those are probably some of the most common questions we get. And although we never make any predictions, what we can do is study market signals to look for trends and try to develop some insights. Thanks for joining us for today’s Covering Crypto Livestream. I’m Jim Armstrong with Fidelity.
Today’s livestream features two of the researchers from the Fidelity Digital Assets® team who spend most, if not all, of their waking, working time, studying signals and indicators and metrics, all in an attempt to make a little bit of sense of crypto markets. And today, we get to ask you guys questions about that. So we’re thrilled for that opportunity. You’ve both been on the livestream before. So just as a bit of a refresher for the audience, just talk briefly about what you do here at Fidelity. And, Max, we’ll start with you.
MAX WADINGTON: Sure. We’ll keep it brief. Thanks for having us again, Jim. My name is Max Wadington, Senior Research Analyst with Fidelity Digital Assets®. Fidelity Digital Assets is a subsidiary of Fidelity Investments, and we focus on custody and trading of digital assets. And Matt and I are on the research team. So we both have our own niches within the crypto market that we’re happy to talk about today.
JIM: Cool. And, Matt, your answer is probably a little bit similar.
MATT HOGAN: Yeah, it might sound like there’s an echo in here, but Matt Hogan. I’m a Digital Assets Research Analyst as well on this team with Max. Really what we aim to do is bring as much crypto education to our audience as we can. And I’m sure we’ll get into a lot of that today. So excited to be here.
JIM: Absolutely. We’re actually going to start off today’s livestream with a live poll asking for our live viewers to participate. True or false: A cryptocurrency’s price is the most useful signal of its potential.
Just a quick note. We did get a lot of questions for this—registration questions, I should say, for this episode. People asking things like what is crypto? How does crypto work? Those are amazing questions. They are absolutely the right ones to be asking if you’re new to the space. They’re also questions that we have answered a ton before. So we’re not going to really spend any time today covering crypto basics.
But if you head to Fidelity.com/LearnCrypto, you will find tons of amazing resources there to help you get your beginner questions answered. All right, with that, I’ll take a look here. Oh, guys, 93% of those who voted said false. A cryptocurrency’s price is not the most useful signal of its potential, which I’m going to guess feels good to both of you. Its picture is much bigger and broader than that.
I would love your sense of how you answer a question like that when it comes to price’s role in any cryptocurrency’s overall value. And, Matt, we’ll start with you through the lens of this question that came in from a viewer named Lenny during registration, who wants to know if the crypto bull market has started.
MATT: Yeah, I think this is a great starting point. I am happy to see the poll results for the way they were. I do think that in terms of thinking about how prices affect markets, it can be a useful signal in and of itself for maybe sentiment, how the market is viewing an asset. We can look at price movements over time and get a feel for momentum, get a feel for how people are thinking about an asset or an asset class as a whole.
And so when we think about crypto prices, it might not be the most useful, but in isolation it’s not totally useless. Because price is really a reflection of all available information in the market. There’s a great adage out there about how price in the short term, the market acts as a voting system, whereas in the long term, it acts as a weighing system. And so I think that’s a good way to think about price in this context.
Now, when we combine this with on-chain fundamentals or on-chain metrics, digital assets, crypto prices, we have all this public available information with these public blockchain networks. And these on-chain fundamentals are really metrics that dig into some of the usage, the economic measures and signals in these networks. And it gives us a much better understanding of the overall health of the network and how it’s being used.
So I think when we take price and we combine it with some of these on-chain fundamentals or on-chain metrics, we get a much better understanding of the overall movement of these networks, how healthy they are, where they could be going in the future.
And so to put that into the context of the following question of whether the bull market is here or has it started, we don’t ever really know for sure, but I think it’s useful to use some of our signals in this report and to think about that and to disseminate them into a way that says, hey, some of these give us reason to be a little bit more optimistic, whereas some of these signals are telling us, well, maybe we should temper our expectations a little bit as well.
JIM: Max, anything you would add to that before we go into those signals?
MAX: Yeah, I mean, to address the question directly, I think there’s a reasonable case to be made on either direction. And what I look forward to exploring is where our audience members end up as a result of trying to answer that question, whether the bull market has started. And that’s what I’ll do my best to try to answer as much as possible.
And back to what Matt was saying earlier. This was the inspiration for the structure of our Signals Report. We’re first looking at it structured in a way such that we’re going to give a market overview that does largely include what prices have done historically and more recently. And then for each asset that we explore, it’s broken up into two sections. One is the market-price-based metrics that help inform the shorter-term timing component of things. And then we pair that with longer-term fundamental analysis that we’re re-analyzing quarter after quarter.
JIM: So you both mentioned the Signals Report a couple of times. So we’ll just say out loud to make sure everybody’s on the same page. Every quarter the Fidelity Digital Assets research team publishes a Signals Report. So here we are now mid to early October. You guys are just polishing up what will become your fourth quarter 2026 Signals Report.
One of the things that your analysis looks at is something called digital asset dominance. You’ve brought a bunch of charts with you today. So if you’re someone who likes visuals, you’ve landed in exactly the right livestream. Let’s take a look at the digital asset dominance chart. And, Max, maybe you can just start by explaining what people are looking at when they see it.
MAX: Yeah, wonderful. So the framing here is this is part of the market overview section intended to give investors a bigger picture lens in terms of what we’re seeing, the overall market sentiment being. So, when I look at the asset dominance chart, as we have up on the screen here, it really tells me two things. First, I’m looking for whether or not the market is in a risk-on or risk-off market regime.
When we look at the chart, we see in orange is bitcoin’s dominance. It’s essentially bitcoin’s market cap relative to everything else. And what we’ve seen historically is in risk-on market regimes, investors are more inclined to allocate capital to the long, riskier tail of digital assets. Basically, everything outside of bitcoin becomes slightly more attractive to investors deep in bull markets.
JIM: So, in the universe of, I mean, digital assets in general, being riskier than other traditional assets, you look at, they look at bitcoin as safest—wrong word—but among risky assets.
MAX: Among the sector, exactly. It’s the benchmark. And when things get a bit frothy, investors tend to go further out on that risk curve. So, what we’ll see as a result of that in the chart is small dips in this orange line that would be some indicator that investors are viewing the digital assets market as relatively risk-on. And the opposite is true. We’re looking for small increases or bumps in that orange line to indicate that investors may not be as willing to allocate to all the riskier things down the curve and are more—as a result, the market becomes more concentrated in bitcoin.
And then the second piece, I think, is really just a clear reminder of something Matt and I and the rest of the digital assets research team have been pounding the table for some time on about is the fact that bitcoin has remained the most dominant digital asset in the sector for decades at this point now.
I think that’s a really important reminder, especially for those just starting their learning journey. I’ll often get the question, hey, isn’t there a chance that something comes along and ends up being better at bitcoin than what it does? It’s such a common question we get, and I think we’ve already seen thousands and thousands of attempts of that exact thing fail.
And bitcoin remains this dominant asset. So, Matt and I have been talking about it for a while. Basically, it comes down to viewing bitcoin as completely different and completely separate from all other digital assets in our view.
JIM: What else would you add to in terms of story? When you look at this chart, Matt, what stories does it tell you?
MATT: Yeah, I think that was a great way of explaining this chart, Max. And I would say that one, to reiterate what Max you just said here, is that bitcoin is the largest, it’s the most liquid, it’s the most decentralized. It has the longest track record, the longest history out of any of these other digital assets. And so I think that’s important context to understand why it takes up such a large base there to understand that it’s the biggest really. It’s the place investors are going to look at first.
But I also think that when we think about it, it tells us how the market is currently positioned and also some trends of where we see the market moving. Max, you talked about this a little bit. When we see that dominance falling from bitcoin, it can be a sign that, hey, maybe there is a rotation happening, maybe there is a little bit more risk-on appetite at the moment. And usually that tells us where we’re at in the cycle as well.
So historically, when you’re getting these euphoric speculative environments, it’s towards the end of a cycle. You might see some capital rotation coming out of bitcoin into these other riskier assets. And when that happens, you see that bitcoin dominance fall. And it can be a sign. All right, hey, the risk appetite is returning to the space. Bitcoin dominance could go as low as 40%, we’ve seen in the past during these market peaks. But right now, it’s still remaining strong around 60%.
MAX: Yeah, and just to go back to the question we diverged from—
JIM: Almost answered.
MAX: —are we in a bull market? I think if we look at the chart here, we can see the bitcoin dominance starting to roll over as bitcoin has escaped from its doldrum lows over the past year. So that’s one snippet of evidence that we can use among many to help answer that question.
JIM: Which is a perfect segue to another chart that you brought with you that talks about asset performance. I’m not sure which of you wants to talk about it first, but, again, I look at this chart and the word winter comes to mind.
MAX: Yeah, same here. I can speak very briefly to the asset performance chart here. Winter, bear market, all words that come to mind. I think a word we’re going to start to hear a lot more of is this idea of the competition for capital. And that’s something Matt and I might expand on later as we go through the report, but I think not only have we seen a bear market over the past year, as we can see through the chart.
But I also think one of the possible accelerants to that bear market has been this competition for capital. And when I talk about, when I mention competition for capital, it’s really like, hey, where are all the excess dollars flowing? And a big trend we’ve seen lately is a lot of those flowing into AI-related stocks or AI-related CapEx to fund the data center build-out. So when I’m looking at, hey, why would this be? What could be some possible answers behind this bear market? That is certainly one that comes to mind.
JIM: So as an investor, if I have some extra dollars that I’ve allocated towards riskier investments, maybe over the past year, I have felt like AI is my place to go and ether, or ethereum, less.
MAX: We have some reasonable evidence to suggest that. Yeah, absolutely. Just one of many possible options. It’s never that simple. But yeah, that’s what we like to do is come up with some thesis and try to make it as simple as possible for investors.
MATT: Yeah, I mean, just speaking to the chart specifically, I think when we combine this with say, the digital assets dominance chart, this helps us to drill into to see individual performance of these three assets. So it gives us a better idea of when dominance is falling, where is the capital actually rotating to. So when we see certain assets start to outperform, they gain some momentum over a period of time. This chart is really helpful for calling that out.
And so we can see not only which assets are outperforming, but then ask the question why and dig into that a little bit more. And so when we see certain assets outperform like ETH in this case in March of 2026, you can ask why and dig in and actually dig into the details a little bit more because you see bitcoin and solana comparatively underperforming relative to that. And so maybe there’s a network upgrade. Maybe there’s just more hype and momentum behind that asset specifically. Max, you’re more of the ETH expert here. Maybe you can speak why there was the outperformance.
MAX: Thank you. There’s actually a really interesting story that we’ll try to walk investors and our audience members through as we go through the fundamental and price analysis. So yeah, if I’m using this report, I’m seeing, hey, ETH outperformed in this current time. If I look at the news story, a lot of it is around the strategic pivot that ETH had done.
So right around this time, essentially, developers in the community members said, hey, we want more and more people to use Ethereum, and we’re going to prioritize that when we upgrade the network going forward. And that was an unexpected change that the market at the time viewed as pretty positive, as we can see.
Now, in terms of answering why it may have given up most if not all of those gains, we’re going to dive into the fundamental analysis that may or may not support that, and help us answer that question of why.
JIM: Excellent. All right, the third overview chart that your Signals Report starts off with is a point of contention because I don’t know exactly how to pronounce it. It’s net unrealized profit and loss.
I’ve always said NUPL. You say?
MAX: NUPL.
JIM: NUPL. In any event, it’s on the screen right now. I think this is one that definitely bears a little bit of explanation. So, Matt, why don’t you start us off? What is this chart telling you as a whole?
MATT: Sure. Yeah. For starters, maybe we should break down what we’re actually looking at and maybe defining some of the parameters here. Net unrealized profit or loss, you’re looking at the market as an aggregate. All the holders. Is the market holding at a loss currently or holding in profits? So once profits become realized that’s when you actually exit a position.
So here it’s like you bought or you entered into a holding these assets. And let’s look at the overall health. Are people in profit, or are they holding at a loss? So that’s—
JIM: Looking at all holders in general regardless of when you bought and at what price you bought, that’s generally how.
MATT: That’s right. The whole market. And the weighted aspect of this is looking at these assets on a market cap–weighted basis. So bitcoin being, again, the largest, more dominant market share is going to carry more influence or more impact over a chart like this.
JIM: Yeah.
MATT: But this is really helpful, I think, for breaking down really where we’re at in the cycle. And again, thinking about how investors are viewing the asset class in the context of more of a multi digital asset portfolio. So instead of looking at these individual NUPL or NUPL scores here, we’re looking at it on a weighted basis. So largely you’ll see the lines. Maybe they follow roughly what the price or market cap is doing.
But it’s really helpful to understand, again, that overall sentiment and where we’re at in the cycle, when we see periods of that deep red capitulation, the market as a whole is holding at a loss. And so a lot of that can be a sign that the market has largely capitulated. Maybe investors have offloaded their positions or might want to in the future.
Whereas when we see huge amounts of euphoria, market prices are moving up. Investors are largely holding at very high profits. And perhaps this chart is a little counterintuitive in that regard, because when you see the market as a whole holding on to all these unrealized profits, it could be a sign that it could turn as those investors want to take profits off the table.
JIM: That’s exactly how I would read it. I think if I’m up a ton, this is my moment to pull it out.
MATT: Exactly. And that’s part of the reason why we have the Signals Report, is to help investors try to make some more informed decisions based off some of these metrics. Again, more counterintuitively, maybe when the whole market is at a capitulation phase, historically speaking, it actually is a better time to enter the market because there is more favorable upside there comparatively.
JIM: Max, any other context you’d give to NUPL?
MAX: Yeah, I think it’s a very relatable chart, and I really like it. I think the most important thing to glean from this chart, and we’ll get into other NUPL charts later as we proceed. But the most important question that it’s answering is, hey, where are we at in the cycle?
We’re looking for potential opportunities near this capitulation zone where fear is just palpable and it’s going against everything, all of your emotions. But those have typically, historically, rewarded investors as opposed to buying when social media is running hot. You’re hearing everyone’s making millions of dollars, and you’ve got a little FOMO. So, we’re trying to take a step back, let our investors know that, hey, it’s really we want to be trading without emotion here and just looking at the data and being as data driven as possible.
JIM: And your Signals Report, once you move on from this global outlook, dives deep into three specific coins. So, we’ll start with bitcoin. That is—you’re probably not surprised to know—the coin we get the most questions about.
People really are trying to figure it out. It’s the oldest, biggest by market cap. It does tend to be where a lot of investors start their crypto journey. So, we got a couple of questions that came in during registration. One from James asking what the main drivers of bitcoin valuations are? And then Richard was hoping you could explain bitcoin’s performance against M2 money supply and the debasement trade.
MATT: I think institutional adoption can always be a very powerful driver. When we think about valuation as a whole and how to think about valuing something like bitcoin, it’s a little bit difficult because not only has there never been an asset like it previously, but you can’t really apply traditional valuation frameworks to bitcoin.
You don’t have discounted cash flows. It’s not an equity. There’s no yield there. So, it is idle by nature, and it is that way by design. So, in thinking about how we actually value an asset like bitcoin, I think it’s important to take a lot of these on-chain fundamentals that we have. We can open this new box, and glean all this new information and get all these new insights from some of these metrics that aren’t available to other types of assets. So, it is really helpful to understand the usage, the economic signals that we get out of that.
But I think it’s important to remember that Bitcoin is both a monetary network and a scarce asset. So, in thinking about how do we actually apply a valuation framework to that, we can think about bitcoin starting as a network asset, compare it to other network effects and other different industries that we see. Social media, you have something like Facebook. Rideshare, you have Uber.
Really, this is to say that bitcoin becomes more valuable the more users and economic activity happen on its network. So as that network grows larger, it becomes more valuable. And then on the other side, we have that scarce asset component. And that gets at this debasement trade a little bit as well. You have rising fiscal deficits, rising national debts globally, not only in the US. And you have a denominator that’s constantly inflating and a currency that is debasing over time as a result of that.
But with bitcoin, you only have 21 million that will ever exist. And so, I think that’s a really important component of this, that you have this hard, scarce asset compared to a currency that is subject and prone to rapid inflation over time. And so, when we think about this, compared to M2, that is really the monetary aggregate, it gives us a good idea of all of the money floating around in the system. Bitcoin historically has been very, very correlated to liquidity conditions as a whole, as we can see in this chart, for example.
But we started to see a little bit of a divergence here starting in 2025. And so, we can apply some different ideas or analysis as to why we think that is. Max, I’m curious to hear your opinion because I know you touched upon this a little bit earlier as well.
MAX: Yeah, of course. I think we’re increasingly—when it comes to bitcoin’s investment thesis, we’re increasingly looking at fundamentals that paint the picture. How do others view bitcoin as a store-of-value asset? How is it performing versus other perceived stores of value? So, we have a long list of investment thesis metrics that you can look at in our Signals Report. But I think this is a really timely chart, and it just highlights what I mentioned earlier, in my opinion, the competition for capital.
We have historical data that seems pretty clear that when the money supply rises, at least some portion of that was going into bitcoin. We have some pretty solid historical evidence, but now what have we seen? We’ve seen that divergence really pick up steam since the beginning of 2025. And some of the main drivers that I think are responsible for that become clear when you ask, hey, where is that money flowing?
And I think a lot of us could come up with several answers, but the main one are, as I mentioned, are those AI-related stocks and all the CapEx required to fund the AI build-out. So the question for investors, given we have this kind of murky investment thesis playing out over the past year, is, will that change going forward? Does this spur any questions around bitcoin’s long-term store- of-value thesis, or is it more of a short-term, market-based dynamic that will work itself out in the future? Some questions.
JIM: We are in the process, Philip—I see your live question that came in—of answering this question. He says, for stocks and bonds, et cetera, values determined by discounted future cash flow, et cetera, et cetera, how is the value of cryptocurrency evaluated? How is it determined? So just as a reminder, we’re talking about, we’re answering that question with regard to bitcoin right now, but the answer is different for every cryptocurrency.
So, Philip’s question is about crypto in general. But I think if there’s one thing to take away from this particular show, it’s that not all cryptocurrencies are created equally, so everyone has to be evaluated separately, which is why we’re doing them one at a time, which takes me to Donna’s question that came in. Still bitcoin related. It came in during registration. She wrote in and said, I’ve heard that institutional buyers are periodically buying and selling en masse to control the price of bitcoin, and I’m questioning how a small retail individual investor can get ahead in crypto if this is the case. What are your thoughts? So Donna’s feeling boxed out by the big guys. Is that true?
MAX: I think that’s a common feeling that a lot of folks have had. I actually have pretty strong feelings on how retail investors can get ahead in crypto. It’s seemingly more influenced by larger and larger players, given it’s a worldwide interest, like we’ve seen probably for the past several years on the news. XYZ, traditional financial institution, doing something with blockchain technology.
So, you increasingly get that feeling like, hey, I don’t have an edge anymore. And Jim, this one you say every episode, and it’s not risking more money than you’re willing to lose.
JIM: Yeah.
MAX: In the institutional investor tongue, that really comes out as, hey, take position sizing very seriously. These are highly volatile assets. If you risk too much of your portfolio in a highly volatile asset, you are going to put yourself in a very stressful spot, best-case scenario. So that’s the first thing.
Take position sizing very seriously. We have a lot of data that suggests a small allocation to highly volatile assets like bitcoin and other crypto can go a long way for your portfolio. So, the data suggests you don’t need a lot for it to make an impact in your portfolio one way or another.
JIM: I was going to say, that’s about as close as we can come to answering a question that came in from a viewer named Winston right now. He wants to know about what percentage he should have in his portfolio. We could never answer that without knowing you at all, but generally speaking, that’s the way to answer.
MAX: That’s the right question, Winston. I love it. And yes, it’ll definitely change, depending on who you are, risk tolerance, things like that. So I would never spout out a number. And then secondly is, going back to the original question, is really just expanding your time horizon. I think that’s really important, especially given the volatility. When you have a long-term strategy, it makes it easier to execute that strategy without worrying too much about the short-term movements, without giving too much fuss.
That’s why we structure the Signals Report on a quarterly basis, because these are designed to support longer-term investors and they can check in on how their investment thesis and price action is doing on a quarterly basis.
JIM: Matt, over to you. There’s a chart too with talking about exchange-traded products. How do they play into it?
MATT: I think that was a great way to frame the original question here. And exchange-traded products are really important because we think about structural demand drivers. And I think these exchange-traded products, since coming to market, have been a useful gauge for us to gauge that demand. We can see what the flows are doing, where we are seeing net inflows or net outflows into these products, which end up affecting spot underlying prices.
Q2 was a rougher month overall for the crypto markets as a whole, and this is reflected, actually, in this chart here. We can see that June was actually the worst month on record since their inception in terms of net outflows. We’ve since seen that return positive again. But I think that kind of gets to Max’s question a little bit, too, of the time horizons. So it’s really important that in the short term, we can understand how something like these ETPs might affect prices along with momentum, news, developments, things that are happening in real time but in a shorter-term basis.
But when we look at a chart like this over the longer term, you get a much better feel for the overall demand for something like bitcoin over time. And this chart, I think, does a good job of creating a visual for that so we can see how that demand is flowing into it real time. So, I think another way kind of trying to quote-unquote “get ahead” is just buy and hold is usually, historically speaking, a better strategy in terms of trying to trade your way through an asset, trying to outperform that way. Historically speaking, holding assets has performed better.
JIM: And not to put too fine a point on it, though. From the perspective of Donna’s question as a retail investor, if you purchase an ETP, you have indirect exposure to bitcoin. You’re not any more likely or less likely to get boxed out by the fact that ETPs, as of 2024, have become more mainstream, or even allowed by the SEC. There’s still the access available to a retail investor, whether they’re buying spot directly or they’re buying an ETP.
MAX: Exactly. Well said, Jim.
JIM: Then let’s not say anymore. Let’s move on. Let’s talk about Ethereum. We’ve got some other charts here, and I think maybe I’m not sure who will take the lead. I think maybe, Max, you can walk us through NUPL on Ethereum. What’s different about this chart than NUPL globally that we looked at a few minutes ago?
MAX: Great question. So the weighted kind of market overview segment of NUPL that we saw before, that included Bitcoin, ETH, and Solana, basically aggregated all of the profits and all of the losses across all of those networks here. We’re in that latter section of our report where we’re drilling in to each asset, specifically. The NUPL score here for Ethereum is one of the market-based or price-based metrics that we’ll use to get a sense of where we’re at in the cycle. And then we’ll pair that with our fundamental analysis to paint that holistic view, give investors more useful information aside from just price.
But that’s what we’re looking at here, and I think the thing to glean from this chart and going back to the original question of, hey, are we maybe—has the bull market started? Have we bottomed? I think this is a reasonable guideline to start answering that question. We’ve seen ETH exit the capitulation phase, which is typically associated with cycle bottoms.
JIM: That’s the dark red.
MAX: That’s the dark red. And now we’re in the hope and fear phase, which is one zone above the capitulation phase. So, we’re closer to the middle of the probable range, but certainly closer to the bottom than the top. As you see, we have a lot of blow-off tops when it comes to ethereum. And really, as it results in this chart, you’ll just see billions and billions of dollars of net unrealized profits typically marking cycle tops. So, we can clearly see that that’s not the case.
I think safe to say, we have room to run on either side. We’re well off the bottom, but firmly in the middle of the range.
JIM: How about the usage metrics chart? Walk us through what you see there.
MAX: OK.
MATT: Yeah, I think it’s really helpful to look at all of these in isolation, as we’re doing, within a broader context as well. Here, what’s really actually impressive about the Ethereum usage metrics is that within this time frame, 2026, we’ve actually seen some meaningful growth to start this year across the board. So we saw for the last several years, a lot of sideways action here, but we have seen some meaningful growth here to start this year.
You might not know it when you look at simple price or headlines. NUPL sometimes it can be a little frightening when the market as a whole is behaving a certain way. Now, everything is within a certain time frame and a certain context. So we have seen some of it taper off a little bit recently here. But if we expand that time frame a little bit longer, Ethereum as a whole has been expanding.
JIM: How about the next chart, the stablecoin transfer value? What story is that telling us?
MAX: If we could actually go back to the previous chart—
JIM: Yeah, for sure.
MAX: I have a little bit to add there. I think going back to our previous example of why ETH may have been an outlier and then given up some of the gains, I think some answer might be in here somewhere to glean. And a really good example, if I were to break down this chart, is that total transactions occurring on Ethereum have experienced significant gains over the past year. The Ethereum network was averaging roughly 1 million transactions per day, and now it’s solidly doing 2-plus in terms of million transactions per day.
But what I think might be an interesting answer to our previous questions is looking into what those transactions are. And we have data here to suggest that a lot of those transactions are not actually economically relevant. So, we have Ethereum being able to process more transactions, but as we see in the chart, the red line is total addresses, so all the users that use the network. And if we compare that with the blue line just underneath it, the blue line is economically relevant addresses.
So those are addresses or users that have sent or received more than $1. So, Jim, if we take the difference between the red line and the blue line here, those are essentially all spam transactions that don’t really make a meaningful impact to the bottom line for ether token holders or investors.
JIM: So, what’s happening with those? Who’s doing them, and why?
MAX: So, there’s a trade-off. ETH got really cheap to use. Transactions are sometimes sub-cent, often less than 10 cents to send a transaction. That’s a new kind of paradigm shift that we saw investors react to in the previous chart. It was the positive upside news, like, hey, things are really cheap. The trade-off there is hey, now we can send whatever we want on the blockchain for a really low cost, and that’s the dynamic we’ve seen.
So, there’s a lot of nuance here that we’ve just unpacked that you can’t really glean from price. We can assume this might be baked into price and why ether may have given up some of those gains we saw earlier in the year, but I think we at least have one of many possible answers as a result of this.
JIM: Cool. All right, I appreciate that. How about the stablecoin transfer value now? I’m a bit confused about what this chart is telling me.
MATT: Yeah.
MAX: There’s only one line on this chart Jim.
JIM: Still. Still.
MATT: Max, I think this is relevant to what you were saying as well, too. So when we look back here, we have a few years of history to look back here. Stablecoins really didn’t gain a huge amount of meaningful traction until the last few years or so. We actually see that reflected in some of these huge spikes as well. Overall transfer value, it’s one of those things that—
JIM: Some regulatory tailwinds getting some support there.
MATT: Yeah, sure. That’s absolutely a consideration as well. And I think it’s also relevant to put this into the context of, you have the headlines maybe affecting markets. We’re looking at it all day, but you might not see some of the underlying activity happening. And we did see that meaningful expansion reflected in this chart with stablecoin transfer value. We had tens of billions of dollars being transferred on Ethereum in stablecoins alone, which are really just digital dollar access.
So when you think globally, whether it’s trading, or payments, remittances, whatever have you be the underlying use case, we are seeing this reflected in Ethereum. Now, it has since tapered off a little bit recently, and I think that’s important context as well. But when you consider the actual baseline here, we’re still talking tens of billions of dollars in transfer value, which can often rival some of the major financial or payment networks of today.
JIM: That’s crazy when you think about it.
MATT: And you wouldn’t really think about it.
JIM: In the interest of time, I want to hop to the Ethereum chart, which I think just doubles down on that fee story that, Max, you were talking about before. What’s the forward-looking takeaway from this “down and to the right” fee story?
MAX: Yes, good explanation of the chart. I think it’s the trade-off that investors have been pretty aware of for some time now where Ethereum, the community, developers have made the decision to prioritize scalability, which is essentially them saying, hey, we want as many people using Ethereum as possible. And we’re basically going to worry about the value accrual or making any money part of the picture later.
Once we have everyone on the network, then maybe we can think about monetizing that down the line. That’s a common corporate strategy that we’ve seen time and time again.
JIM: In the product.
MAX: Exactly. So it’s the strategy they’ve gone with, and it’s unclear when that will change going forward. But typically, they’ve done a good job of being transparent in what their priorities are for the next year or so. We know right now what the priorities are.
JIM: All right. Let’s head over to Solana. We’re going to go back to our final NUPL chart. And Matt, take us off.
MATT: Sure, yeah. I think it’s nice to round it out here, going back to familiar chart here, the NUPL score. Solana has a little bit more of a limited history, so I think that’s important background here and good framing here. Also, if we put things into a broader context of going back to bitcoin being that benchmark leading asset, bitcoin moves first, you have ether maybe move after that, maybe a higher beta on top of bitcoin, and then solana might be a higher beta on top of ethereum.
And so I think that is reflected here. We do see sharp drops in value here, a little bit more volatility. And so when you have that market holistically at a larger loss with Solana, we do see a lot more of that deeper red capitulation phase, as most of the market is holding at a loss. Again, we have started to see that materially improve over the last quarter or so, so there is a little bit more optimism here as that starts to improve. And there’s more momentum there, perhaps a little bit more of a tailwind there.
But largely speaking, I would say this NUPL score is a bit more exaggerated or a bit more amplified sometimes with not only that limited history, but most of the holders being at a loss.
JIM: Same story with usage metrics too, or not?
MAX: Actually, a pretty different story. So I think it was probably similar to ETH in the price component, kind of a wonky situation, kind of an oddball, but largely in the middle of the range, even though we were in the capitulation zone. But I think there are some notable differences when we look at the usage. We see in the yellow, the transaction count just rocketing up and to the right at a steady pace that’s been consistent for the past two years.
And what’s different and that I’d like to point out, that difference between the red line and the blue line is kind of maintaining. It’s not widening. So that means as transactions are increasing, as more and more people are using Solana, the share of economically relevant activity is also increasing, or at least remaining the same. So this increase in transaction count seems relatively organic, and that’s a positive sign from our point of view.
JIM: And the stablecoin transfer value, but looking at solana, what’s different here versus ETH?
MATT: Yeah, I would say, perhaps solana wants a seat at the table.
JIM: Yeah.
MATT: It’s starting to warm up a little bit. Again, when we think about nominal values, perhaps Solana isn’t necessarily competing at the same level of Ethereum here. But when we think of the broader stablecoin market expanding within the last few years, again, within that context, Solana has actually materially improved alongside that as Ethereum, actually, some of those transfer values have come down. It is still far and away the largest blockchain where stablecoins are sitting and transacting on.
But we are starting to see Solana come into the fold a little bit more there. And again, we’re talking about tens of billions of dollars here. Again, maybe Solana doesn’t compete on that same level of Ethereum there. Smaller and smaller amounts, but they are starting to get a larger share of that pie.
JIM: And a very different story on the network fees chart. It looks very different than it did for ETH.
MAX: It certainly does. This is still an oddball. A lot of the Solana metrics are oddballs, just given the volatile history we’ve seen.
JIM: Yeah.
MAX: I think the true difference that we’ve identified lately is the—aside from the rampant trading that was going on at the end of 2024 and beginning of 2025, fees have roughly remained more steady over time. And based on the last quarter’s analysis, when you annualize the money that Solana made over the last quarter, it’s actually just above that $200 million mark on an annualized basis, which would suggest that it’s roughly bottomed in terms of the fees, assuming the activity that we’ve seen from the previous slides either continues or stagnates.
JIM: Got it. So, in the interest of time, I want to hop right to some live viewer questions because a lot of them are coming in, and I want to leave time to do that. Alphonse has a question. How do you determine real adoption from speculation?
MAX: I think we gave a pretty good example today of how one might pair both the price action that you’re seeing with on-chain fundamentals and try to get a story of whether this—try to get a sense of whether there’s real legs behind maybe this speculative fervor that you’re seeing in price, or vice versa.
A lot of times when we run the Signals Report, we’re looking for clear divergences between sentiment and the underlying network’s investment thesis. We’ve seen time and time again where sentiment might be bad, but people are still using the networks for whatever, trading, payments. So those are just a couple examples of how we might pair both price and fundamentals to try to paint a clearer picture, when oftentimes, if you’re just looking at price, it can paint a speculative picture without the underlying fundamentals being there to support it. Hope that helps.
JIM: Matt, I want to give you David’s question here. And I’m laughing. Are we likely entering another four-year wave or cycle of upsurge in bitcoin? So it’s like an echo of Lenny’s question.
MATT: Upsurge.
JIM: Upsurge. Yeah.
MAX: That’s what I’m looking for.
MATT: So that’s why we have these signals perhaps. We’re always looking to be able to find out where we’re at in the cycle. I think, again, thinking about the NUPL is a really good example of this, where we do see historically those deep red capitulations are those market bottoms. Now, we’ve since started to climb out of them.
JIM: And past performance is no guarantee of future—
MATT: Exactly.
JIM: I have that tattoo. Yeah.
MATT: Exactly. And there are other metrics that we actually don’t include in this report that might point to the fact that we didn’t see historical market bottoms in the same way that we might have had previously. Now, this can be attributable to a bunch of different reasons. Maybe it’s a different regime. We’re seeing more institutional adoption start to take place. Bitcoin and digital assets are maturing a bit more as an asset class.
But I will say, in terms of four-year cycles, we have been remarkably intact. We saw an all-time high in November of ‘21. I think it was October of ‘25, almost four years later that we saw new cycle highs there. And then we’re seeing similar price action following that. So I think we’re always looking at these indicators to always put them together and have somewhat of an accurate, or hopefully something that will give us a little bit more signal on momentum and direction there. But hopefully, we are.
JIM: And Matt has a question for either Matt or Max.
MAX: Really quick, I just wanted to add on top of Matt’s. The goal of this type of analysis and the Signals Report isn’t to become all of a sudden 100% certain of one outcome.
JIM: That would be amazing. I would love that.
MAX: But what we’re hoping is that it leans investors towards a higher degree of confidence among the range of probable outcomes. There’s always a wide range. You could argue it’s a wider range now than ever, in terms of the uncertainty that we have, with the technology. And just a lot of things have rhymed when we look historically, but there’s a lot of new things on the horizon. So I would frame our Signals Report in that way as maybe guiding your intuition in terms of what your degree of confidence is among the many possible options.
JIM: And that idea of change in multiple options is the perfect segue to Matt’s question here. Are crypto markets becoming more or less sensitive to traditional economic cycles over time?
MATT: Oh.
MAX: It’s a really good question.
MATT: I mean, I think I would lead with—that is a really good question. Maybe as they have become more institutionalized, more mature, we have seen them less reactive and less volatile to some of these outside forces. However, as they are also growing and starting to get allocated into institutional and retail portfolios, you start to actually pay attention to some of these other factors, other economic data. Bitcoin, again, compared to the M2 there, over the long term, very reactive to overall liquidity conditions.
So it is something that’s definitely important. We see rising yields today. It’s really thinking about bitcoin and digital assets within the framing of a broader portfolio in different sizing, which I don’t think was necessarily there in some of those prior cycles. It was more of those speculative assets that were much more volatile in nature.
JIM: Yeah, anything you would add?
MAX: Yeah, I would argue it’s a little bit of both. To Matt’s point, maybe the volatility has come down as a result of the maturation of this asset class. But now that kind of integration, we’re seeing greater intertwining of the market dynamics that maybe weren’t there before. We have stronger ties to possibly the macro economy than certainly was the case in the early 2010s. So I think it’s a bit of a push and a pull here.
JIM: I think you’ll both be thrilled to know that we got a bunch of questions along the lines of, you guys keep talking about this Signals Report. How can someone see this darn thing? So where does someone find the Signals Report?
MAX: We’ve done our job, Matt.
JIM: Yeah.
MAX: You can find the Signals Report at FidelityDigitalAssets.com. We have our Research tab where all of our publicly available research is available. It spans the 101 all the way to 401. It can get a bit wacky and wild, which I love. It’s all there. Signals Report, you can find it there. It should be coming out shortly, in terms of our Q4 numbers, which we got a sneak peek of today.
JIM: Yeah, so that’s FidelityDigitalAssets.com. Again, Q3 report is up if you want to look backwards a little bit. Q4 is forthcoming. If you’re watching this as a replay, it might be available now. Yeah, guys, thank you so much for spending time with us. I really appreciate it.
Meantime, we promise we wrote down all of your questions, and we’re going to be adding a bunch of them to future episodes. So if yours didn’t happen to get answered today, we hope to see you again next time. If you do have more immediate questions, though, that you want help with, we would definitely suggest you join the ongoing and excellent conversation over on Reddit at r/FidelityInvestments. There’s an amazing team of very, very helpful folks there as part of a great community to get your questions answered.
Thanks again. Thank you for making time to be with us today, and we hope to see you again very soon
