"How sustainable is a crypto rebound? We believe it has potential," wrote analyst John Todaro, highlighting three key arguments in favor of this thesis.
Needham & Company advised clients in a note on Monday that the recent recovery in the digital asset market appears sustainable and raised its estimates for cryptocurrency trading volumes on the exchanges and platforms it covers.
The first is capital rotation. According to Needham, artificial intelligence stocks, which attracted retail investors, have cooled amid regulatory pressure during the midterm elections, while retail trading in commodities such as oil and metals has also declined.
This allows capital and investor attention to return to cryptocurrency, which, according to analysts, is once again looking comparatively attractive.
The second argument is that the main wave of selling is already over. Along with the outflow from ETFs and retail, public companies have reduced their holdings: digital asset treasuries and Bitcoin miners sold a record 57,000 Bitcoin, worth approximately $4.2 billion, in the first half of 2026.
Since the start of Q4 2025, public companies holding Bitcoin have collectively sold approximately 69,500 Bitcoin.
The third argument is market sentiment. Needham's proprietary indicator, the Crypto Euphoria Needham Diagram, recorded a reading of 13, which is classified as "maximum indifference" and is the lowest reading since the 2022 bear market. Analysts believe this level typically signals a bottom. By comparison, in January 2025, during the meme coin surge, the indicator reached a euphoric level, coinciding with the cycle's peak.
Needham noted that miners shifting their focus to artificial intelligence now have approximately 70,000 bitcoins remaining in their balances, down from a previous record 100,000.