Welcome to the institutional newsletter, Crypto Long & Short. This week:
- The top headlines institutions should read by Francisco Memoria
- Insights and analysis on global exchanges by Joshua de Vos
- Crypto’s “hopeful signals” as we end out the year by Andy Baehr
- Bitcoin’s 2025 weekly returns in Chart of the Week
Thanks for joining us!
Headlines of the Week
– By Francisco Memoria
Cryptocurrency prices dropped more than 13% over the past week, as measured via the performance of the CoinDesk 20 (CD20) index, with bitcoin losing 12.6% of its value in the period. Yet, headlines tell us institutions aren’t backing away.
Expert Insights
Licences, Liquidity and the Shifting Geography of Exchange Quality
– By Joshua de Vos, research lead, CoinDesk
For years, Europe looked like the natural centre of gravity for crypto regulation. Clearer frameworks, early VASP regimes and a maturing supervisory environment made the EU feel like the region ready to dominate licensing and registration. But as MiCA moves deeper into its implementation phase, we’re seeing a new trend in the underlying registrations.
The centre of gravity is shifting, and it is shifting towards the U.S.
The latest edition of CoinDesk’s Exchange Benchmark makes this clear. For the first time in several cycles, courtesy of data from VASPnet, North America has overtaken Europe as the top licensing region for digital asset exchanges (based on the number of benchmarked exchanges duly licensed/registered under these jurisdictions). The U.S. regulatory model is often described as fragmented or slow, but it is proving to be more stable and functional than many expected. Exchanges are now treating FinCEN registration and a network of money transmitter licences as a workable route to legitimacy.
Europe is moving in a different direction. Increasingly strict rules are creating difficulties for some of its own VASPs. VASPnet’s data suggests that the end of the MiCA grandfathering periods is putting pressure on mid-sized firms that were comfortable under previous national regimes. The result is consolidation, and in some cases, a shift of business operations toward more permissive jurisdictions.
The data reinforces the trend:
- EU registrations fell 33 percent since April.
- The Netherlands saw an 83 percent drop after its transition period ended.
- Only 16 exchanges currently hold MiCA authorisation.
- Meanwhile, 59 percent of global exchanges are now regulated under a broader virtual asset or market regime, up from the last cycle.
The direction of travel is becoming clearer. Exchanges are concentrating in regions where licensing is still practical and commercially viable for them.
Liquidity: why execution has become the real signal
The Benchmark also introduced the most significant market quality update since its launch. Historically, liquidity assessments have relied heavily on static order book depth. While simple to measure, displayed depth is often divorced from real execution conditions. Stale liquidity, spoofing and inconsistent refresh rates limit its usefulness as an indicator of market quality. This year’s framework shifts the analysis toward executed trades rather than displayed orders.
The new Composite Liquidity Score draws on:
- realised slippage
- an execution-based depth proxy
- trade density
- sustained trading activity
- activity across the top 25 pairs
The principle is straightforward. Liquidity should reflect actual execution conditions, not what appears in the order book.
This shift happens at a moment when market structure itself is changing. Top-tier exchanges no longer dominate global spot volumes the way they did over the last few years. In Q1 of this year, the top-tier captured nearly 60 percent of market share of volumes. In Q3, that figure is 41 percent. Liquidity is becoming more distributed, and execution quality is now a clearer differentiator than raw size.
The exchanges that rise to the top under this more rigorous, execution-driven approach are also strengthening their regulatory footprints. Binance, Bitstamp, Coinbase, Kraken and Crypto.com all score highly here. Regulation and genuine execution quality are becoming increasingly aligned.
Where exchanges are still lagging
Despite clear progress, the Benchmark highlights several areas where the industry continues to fall short:
- Only 34 percent of exchanges publish audited financial statements.
- Only 49 percent provide Proof of Reserves and 35 percent provide Proof of Liabilities.
- Security losses reached $62M during the assessment period, although more exchanges now operate formal bug bounty programmes.
Overall, the exchange landscape is becoming more mature and more execution-focused, while also becoming more uneven. Regional licensing standards are diverging. Liquidity is fragmenting. Transparency is progressing in some areas and stalling in others.
The Benchmark shows what high-quality now looks like:
- licensing that enables access to markets
- liquidity that reflects genuine execution conditions
- transparency that supports institutional-grade expectations
Exchanges that get these right are driving the continued divergence amongst our Benchmark universe.
Vibe Check
What Did We Expect?
– By Andy Baehr, CFA, head of product and research, CoinDesk Indices
With precious few weeks left, what will the digital asset class deliver in 2025?
Over the weekend, bitcoin plummeted below its year-open price of around $93,400. Of course, we remain far from 2025’s lows (below $75K in early April), but with fewer than seven weeks remaining, we wonder what message 2025 will end up delivering. This was meant to be (and in many ways, has been) the year when crypto got permission. We think it’s fair to say that the U.S. administration has done its part, both in terms of prompting regulatory progress and (some) legislative results. Wells Notice futures tanked. Most observers agree that it’s “the markets” that have erased crypto’s impressive gains in Q2 and Q3. Lack of certainty, lack of liquidity and lack of catalysts. Even lack of data.
There is some irony that the U.S. government did more to depress crypto prices by being shut than by being open.
And let’s make no mistake — crypto has more to prove. If a sour market takes the shine off of growth equities in 2025, well, such is the game. There’s always next year. For the young digital asset class, striving to earn allocations by global investors, a bad year is more off-putting.
Crypto risks delivering poor 2025 results
A few hopeful signals
There is no lack of good news about the adoption of blockchain technology and its integration into the global financial system. (We have referred to this as the “Slow Money” — M&A, new launches, IPOs, etc.) Yet, we don’t see consistent conversion of that progress in digital asset market returns. Where we do see encouraging signs is in the quality of those trading markets.
Breadth, as always, is key. When we look at our two flagship market indices (CoinDesk 5 and CoinDesk 20) we see that they have held on relatively well in bitcoin terms.
- CoinDesk 5 is just about flat in bitcoin terms, down < 2% YTD.
- CoinDesk 20 is only down 8.4% YTD in bitcoin terms (and is dead even year-on-year).
We observe a cull of “distracting” assets. Smaller names and frenzy-era memecoins subsided steadily in 2025, allowing the market to train its focus on a more reasonable beta.
- The CoinDesk 80 (80 names outside the CoinDesk 20) lost half its value in CD20 terms.
- The CoinDesk Memecoin Index (CDMEME), which tracks 50 memecoins equally weighted, lost more than 60% of its value in CD20 terms.
Chart of the Week
Bitcoin closed last week down 10.0% at $94,244. This marked the largest weekly decline in the BTC price since the week ending March 9th. This also recorded a third consecutive week of negative bitcoin price action. Bitcoin has since traded below its yearly open and is on track to record four consecutive weeks of negative price action, which would be the first time since the first week of July 2024.
