Welcome to our institutional newsletter, Crypto Long & Short. This week:

• Insights by Carter Feldman of Psy Protocol on where investors are hunting for value during bear markets
• A vibe 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 Insights

Investors Are Hunting for Countercyclical Value in Privacy Coins

- By Carter Feldman, CEO and founder, Psy Protocol

The sustained pressure of a bitcoin price decline acts not only as a system-wide depressant, but also as a catalyst for efficiency, forcing both miners and investors 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 agentic-internet transactions.

When bitcoin’s price stagnates, miner margins compress. This economic reality forces miners to become more shrewd as capital allocators, shifting hash power toward more profitable, specialized chains. This is a calculated move toward protocols that reward not just raw energy expenditure, but provide utility that the market desires.

This is where privacy coins enter the conversation. While the broader market consolidated, there was a privacy coin surge spearheaded by Zcash ZEC$439.70, encrypted electronic cash used for private, everyday payments. With price increases of up to 950% from September lows, it far outpaced general market performance. This resurgence is a signal that both retail and institutional actors recognize privacy as a missing piece in the maturing crypto ecosystem.

The adoption metrics confirm this. Zcash’s shielded pool (i.e., tokens held in private addresses) recently hit its highest-ever level of over 4.5 million tokens, signaling growing user demand for true financial autonomy. The market is not just speculating; it is functionally demanding a system that offers accountability without sacrificing confidentiality.

The technology underpinning this privacy, known as zero-knowledge (ZK) proofs, is the real long-term institutional draw, reaching far beyond the crypto world. ZK is fundamentally a computational tool that allows one party to prove a statement is true without revealing the underlying data.

This capability is rapidly moving into real-world applications where data protection is paramount:

• Decentralized identity: Proving you are over 18 without revealing your birthdate or name, crucial for regulatory compliance (GDPR, etc.).
• Supply chain: Verifying the ethical sourcing or origin of a product without revealing sensitive supplier contracts or business relationships.
• Secure voting: Allowing participants to prove their eligibility to vote without revealing their identity or ballot choice.

In this context, ZK-native protocols are merely adapting this universal technology to the hardest, highest-stakes computational problem: internet-scale financial transactions. By performing transaction verification client-side, ZK can scale while retaining 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 quickly becoming mandatory, not just optional, for global digital infrastructure.

While the market fretted about bitcoin price fluctuations, smart investors recognized privacy coins met a real market demand. 

Headlines of the Week

- By Francisco Rodrigues

This week we’re seeing major risk exposure for the world’s largest corporate holder of bitcoin, Strategy, and for the decentralized finance ecosystem if regulatory hurdles increase.

• Strategy Faces Possible MSCI Index Removal, Threatening Billions in Outflows: A potential removal could lead to outflows of up to $8.8 billion if other index providers follow suit as the stock is part of many passive investment products.
• BlackRock's Spot Bitcoin ETF Options Secure U.S. Top 10 Ranking With 7.7M Active Contracts: Options on BlackRock's spot Bitcoin ETF (IBIT) surged to over 7.7 million active contracts, ranking ninth overall in the U.S. (and second among single-stock options). This outperforms gold ETFs and many tech giants.
• Citadel Securities Challenges DeFi Framework in Letter to SEC, Sparking Industry Outrage: Traditional finance giant Citadel Securities has formally challenged the current decentralized finance (DeFi) framework in a letter to the SEC, arguing these platforms work as traditional exchanges and should face similar oversight.
• Kraken Launches High-Touch VIP Program for Ultra High Net Worth Clients: Crypto exchange Kraken has introduced a high-touch service tier specifically designed to capture the growing number of family offices and ultra-wealthy individuals entering the space.
• Yi He, Arguably Crypto's Most Powerful Woman, Becomes Binance’s New Co-CEO: Binance, the world's largest cryptocurrency exchange, has formalized its leadership structure by appointing its co-founder Yi He as co-CEO alongside Richard Teng.

Vibe Check

Smooth the Ride, Part II: ETH's whirlwind year has not been for the faint of heart.

- By Andy Baehr, CFA, head of product and research, CoinDesk Indices

A few weeks ago, we showed how a trend overlay on bitcoin helped salvage 2025 returns. Our Bitcoin Trend Indicator (BTI) signaled the coming "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 folks 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 for blockchain adoption narratives. It is–in the eyes of many–not an “altcoin.” When ETH rallies, it signals something larger is afoot:that stablecoins, DeFi, and tokenization are gaining mindshare in the global consciousness. We noted that the Fusaka upgrade is an embodiment of the kind of progress, focus, and yes – messaging that will foster even greater mindshare.

Still, ETH has been quite a handful in 2025, making conviction--and sizing--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) alongside BTI back in March 2023, using the same quartet of moving average crossover signals. We tested those signals on both assets, liked what we saw, and have not had need to alter them since.

ETH price color-coded by Ether Trend Indicator (greens are uptrend, yellow neutral, reds downtrend)

Source: CoinDesk Indices

If you think about why time series momentum should work–new information prompts 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 breakdown, a Q2-Q3 powerhouse rally, and the heartbreaking Q4 drawdown. We applied a systematic trend strategy (live since Oct 2023) following ETI to ETH and the results are startling.

ETH trend strategy (live since Oct 2023) helped smooth the ride

Source: CoinDesk Indices. "ETIS1" strategy. Methodology here. Hypothetical results ignoring transactions costs. Past performance is no guarantee of future results.

ETI has shown ETH to be in Downtrend for 5 days and in Significant Downtrend for the previous 29. For a marketplace numb from calling bottoms, maybe it’s just better to 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. Before October 2025, rising DAT flows strongly corresponded with the ETH price rally. Since the price of ETH peaked around October 2025, both flows and price have been on a downtrend. 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 major upward price movement.

Listen. Read. Watch. Engage.

• Listen: Did you hear? CoinDesk's Most Influential 2025 is released.
• Read: The November recap on the global crypto markets and ETF/ETP flows, brought to you by CoinDesk Indices, Trackinsight and ETF Express.
• Watch: SGX Group's Laurent Poirot discusses the launch of the first traditional exchange-listed bitcoin and ether perpetual futures in Asia.
• Engage: The Consensus Hong Kong agenda is live – with six stages and hundreds of sessions, get front-row access to conversations driving the digital asset industry forward.