But crypto’s struggles to surpass record highs appear to go further than recent news events. Ether and SOL prices appear to key off of bitcoin, with both showing a very high correlation to the most venerable of the crypto assets (Figure 2). Take bitcoin for example. On April 20 last year, bitcoin underwent its latest quadrennial halving, with the new supply of coins dropping to approximately 165,000 per year from a previous level of just over 330,000 per year (Figure 3). In the past, quadrennial halvings tended to precede tremendous rallies, with bitcoin prices rising anywhere from a few hundred percent to many thousand percent in the 12 months after new supply is further restricted (Figure 4). This time around, bitcoin prices have continued to gain (+30% since April 20, 2024, as of this writing), but the rally has been comparatively modest (Figure 4). This could be because the market has done a better job of anticipating the impact of the halving, with bitcoin having risen in 2023 and early 2024.
Figure 2: Correlations among bitcoin, ether and solana have been in the +0.7 to +0.8 range
Figure 3: Bitcoin underwent its quadrennial halving on April 20, 2024
Figure 4: Bitcoin prices are up about 30% since the latest supply halving as of March 17
The modest rally in bitcoin came despite relatively low levels of miners’ revenue per transaction. In the past, following the quadrennial halvings and often coinciding with large price gains in bitcoin, miners’ revenue per transaction spiked, heralding bitcoin bear markets that took prices down by 70% or more. That hasn’t happened this time around. The amount paid to miners validating transactions on the bitcoin blockchain has been relatively modest, with just two minor spikes that appear to signal smaller corrections in bitcoin prices (Figure 5).
Figure 5: Miners’ revenue per transaction has not yet signaled a major bear market
In fact, when one looks at the long-term price chart in logs, it’s apparent that bitcoin prices’ upward momentum has slowed over time. Part of the reason may be that crypto markets are maturing. Another reason may be that the user network is no longer growing as quickly as in the past. If one looks at the number of transactions per day, the exponential growth took place mainly in the early days of bitcoin before becoming more linear and then more cyclical. Following the approval of spot bitcoin ETFs in 2024, there was a modest pick up in daily trading volumes on the bitcoin blockchain, but that appears to have faded in recent months. For much of 2024, the number of transactions per day on the bitcoin blockchain ranged from 400,000 to 800,000. Thus far in 2025, the range has dropped to 300,000-500,000 per day (Figure 6). Futures volumes have remained robust.
Figure 6: Growth in the number of transactions on the bitcoin blockchain has slowed
The number of calculations (or “difficulty”) of minting new bitcoins has also slowed over time. Currently, it takes 112 trillion calculations to create a new bitcoin. The pace of increase in “difficulty” relates to bitcoin’s cost of production has also slowed with the growth in the user network (Figure 7).
Figure 7: Mining difficulty has seen its pace of increase slow as well
SOL was the big outperformer for much of the past year, but fell further than either bitcoin or ether recently. SOL has generally been more volatile with a realized volatility near 80%, twice as high as bitcoin and nearly one third higher than ether (Figure 8).
Figure 8: Over the past year, solana prices have been more volatile than bitcoin and ether
Solana helps to support the lending, borrowing and trading platforms of decentralized finance, NFT marketplaces as well as gaming and Web3 apps. While ethereum remains the dominant smart contract platform, solana focuses on high speed, low-cost transactions and real time applications. Bitcoin, by contrast, doesn’t have specific use cases beyond being a store of value and unit of exchange.
Despite these differences, all three assets show a similarly positive correlation to the Nasdaq 100 that ranges from +0.2 to +0.6 on a one-year rolling basis, with ether slightly more strongly correlated than solana or bitcoin. While the prices of crypto assets tend to rise and fall with the fortunes of technology stocks, the correlation is far from perfect (Figure 9).
Figure 9: Crypto assets have had a positive correlation with Nasdaq 100 since 2020
Compared to precious metals, all three have shown weak and inconsistent positive correlations to gold and negative correlations to the U.S. dollar (USD). Bitcoin is sometimes referred to as “digital gold,” an apt analogy given the strict limits on its supply. That said, its trading relationship to the yellow metal is not particularly strong and bitcoin’s relationship with gold is not much different than the other crypto assets’ (Figure 10). Similarly, crypto assets are sometimes seen as an alternative to USD, but they have only a weak negative correlation to the Bloomberg U.S. dollar index (Figure 11). During the past year the correlations to gold and to BBDXY were close to zero.
Figure 10: Crypto assets have a weak to slightly positive correlation with gold
Figure 11: Crypto assets often have a weak to slightly negative correlation with USD
