Hello readers,

A mini altseason just played out. It started with ETH pulling liquidity from BTC as the market front ran the DATs.

Then we saw altcoins pull liquidity from ETH. Assets such as ENA, WLD, HYPE, PUMP, SOL, BNB, and AVAX all outperformed.

We’re now seeing liquidity rotate back to BTC.

But what is the probability that the top is in? That’s the question on everyone’s mind.

We seek to answer it in today’s report.

Disclaimer: Views expressed are the author’s personal views and should not be relied upon as investment advice.

The DeFi Report is powered by BIT Digital, the leading global platform for high-performance computing infrastructure and one of the largest ETH treasury firms. NASDAQ: BTBT

Let’s go.

Bitcoin

As noted in the intro, a mini “altseason” unfolded over the summer months.

During this period, BTC dominance dropped from 65% to 57%.

Data: Glassnode

ETH ran first, with the ETH/BTC ratio rising to 0.042 (off the April low of 0.018) as liquidity shifted away from BTC.

Data: The DeFi Report, Dune

The ETH/BTC ratio is now rolling over, and the BTC dominance chart looks poised to consolidate in the 57% range (we still think its ultimately going lower).

Onchain Data

Long-Term Holders

After taking profits in July & August, long-term holder supply is starting to level off — a positive sign.

Data: Glassnode

ETF Flows

Meanwhile, flows into the ETFs have waned.

On the bright side, outflows from the ETFs have also declined.

Data: Glassnode

Spot Volumes

Trading volumes remain subdued after peaking earlier this year — signaling a lack of significant “new $” coming into the markets over the last six months.

Data: The DeFi Report, Glassnode

What’s next for BTC?

At the time of writing, BTC is currently trading at $109k, below both its 50-day ($114.3k) and 100-day ($113.8k) moving averages. It still trades above its 200-day simple moving average of $103.8k.

We’ve certainly lost momentum.

However, when we’re looking for signs that we’ve peaked, we prefer the longer-term 50-week moving average.

50-Week Moving Average

Data: The DeFi Report

Why the 50-week?

In the past three cycles, when BTC had a weekly close below the 50-week SMA (in the 4th year of the cycle), it marked the start of the bear market.

Bitcoin’s 50-week moving average is currently $99k.

Altcoins

Altseason Index

Data: Coinglass

We can visualize the “summer altseason” here.

It may not feel like “altseason” if you’re expecting the ‘21 variety where a rising tide lifted all boats.

That’s not going to happen this cycle. It’s all about selecting the right assets and finding the optimal entry points now.

What are the “right” assets? Those with strong fundamentals, token economics, and mindshare/narratives (treasury firms).

We were fortunate to book healthy profits on some of the altcoin runners in our portfolio before the correction. If you missed it or were in the wrong assets, it might be time to level up. We share our portfolio with TDR Pro members for $25/month. If interested, you can sign up here.

ETH

ETH has dipped below its 50-day moving average and is currently trading below the all-important $4k line.

A further dip could take us to the 100-day moving average, $3.7k. But at the end of the day, ETH needs BTC to hold critical support levels if it’s going to durably break out to new all-time highs.

Data: The DeFi Report, Dune

“Blue-Chip” Memes

Memecoins are currently being hit the hardest as liquidity pulled out of the long end of the risk curve.

Data: The DeFi Report, as of 9.25.25

If we assume the cycle still has legs (more below), some of these names could be setting up for nice entry points.

Funding Rates

As momentum wanes, ETH funding rates in the futures market have flipped negative.

The ideal setup from here is for further bearish positioning among traders before a shift in sentiment and a short squeeze to re-ignite the bulls.

Data: Glassnode

Closing Thoughts

Does the probability point to the “top being in?”

It’s certainly possible, but that’s not how we’re playing it. In our view, the recent sell-off is a healthy correction/cleanse, with the bull market structure still intact.

Over-leverage and complacency in the perp markets (particularly alts) are to blame, in our opinion. ETH had $480m of futures long liquidations over the last few days across centralized exchanges — the most since April of ‘21. Billions more were lost on Hyperliquid and other perps DEXs.

When it happened in ‘21, it proved to be a stumble on the way to all-time highs.

Data: Glassnode

In many ways, we’re seeing a lot of similarities to last year — when the market briefly ran up after the Fed cut in September, corrected, and then made a larger move into October and November.

From a macroeconomic and business cycle perspective, the setup looks positive in our opinion.

Earnings are rising
Banks are lending
The Fed is cutting rates
Capital is still shifting out onto the risk curve (small-cap equities are now outperforming)
Long-end yields are rising moderately (as they should, given that growth is still strong)
Initial unemployment claims data that came in yesterday suggest that layoffs are still low
The ISM appears poised to break into expansion territory

With that said, we’ve seen some liquidity get pulled out of the market as the Treasury refills its “checking account.” This was a risk that we shared in our note to TDR Pro members on 8/13.

Data: FRED

Roughly $500b was added back to the TGA over the last few weeks.

We think this is contributing to the sell-off in crypto (as well as excessive leverage).

The good news?

This is behind us now, as the TGA is back to target levels.

Looking Forward

To confirm a continuation of the bull market, we’re looking for the following:

BTC to hold its prior highs in the $105-$107k range. If it breaks this zone, the final level to hold is the 50-week moving average (currently $99k). If we see it break this level, a bear market becomes more probable than not.
ETH to bounce and regain the $4k level. If it breaks, we’re looking for a bounce around the 100-day SMA ($3.7k).

Generally speaking, the market caught many investors off guard at the end of the ‘21 cycle. This “trauma” is evident in the current market sentiment, in our opinion.

Data: Glassnode

Not only are we currently at a level of fear, but we are also seeing a lot of “top callers” on social media.

The reality is that very few people will be calling the top when it’s the actual top.

That’s just how market psychology works.

We’ll have further updates as conditions evolve.

If you’d like to receive a weekly email with access to our portfolio and any changes we are making, you can sign up here.

Take a Report.

And Stay Curious.

Disclaimer: Individuals have unique circumstances, goals, and risk tolerances, so you should consult a certified investment professional and/or do your own diligence before making investment decisions. The author is not an investment advisor and may hold positions in the assets covered. Certified professionals can provide individualized investment advice tailored to your unique situation. This research report is for general educational purposes only, is not individualized, and as such should not be construed as investment advice. The content contained in the report is derived from both publicly available information as well as proprietary data sources. All information presented and sources are believed to be reliable as of the date first published. Any opinions expressed in the report are based on the information cited herein as of the date of the publication. Although The DeFi Report and the author believe the information presented is substantially accurate in all material respects and does not omit to state material facts necessary to make the statements herein not misleading, all information and materials in the report are provided on an “as is” and “as available” basis, without warranty or condition of any kind either expressed or implied.

Is the Top In?

An update on our market outlook

Topics Covered