Needham & Company believes the digital asset recovery is showing signs of durability, prompting the firm to raise its crypto volume forecasts across the trading exchanges and platforms included in its coverage.
“How sustainable is the crypto rebound? We believe it has legs,” analyst John Todaro wrote, pointing to three developments that could support further improvement in the market.
Rotation from AI and commodities could benefit crypto
One potential catalyst is a change in where retail investors are directing their capital.
Needham said enthusiasm around artificial intelligence stocks has moderated as the sector faces increased regulatory pressure ahead of the midterm elections. Retail participation in commodities such as oil and metals has also cooled.
With some competing trades attracting less attention, the firm believes crypto could once again stand out as a comparatively appealing destination for speculative capital.
Record selling could reduce future supply pressure
Needham’s second argument is that the market may already have absorbed a substantial amount of selling.
In addition to outflows from ETFs and retail investors, public companies have reduced their bitcoin positions. Digital asset treasury businesses and bitcoin miners collectively sold a record 57,000 bitcoin, valued at roughly $4.2 billion, during the first six months of 2026.
Total disposals by publicly traded bitcoin companies have reached approximately 69,500 bitcoin since the fourth quarter of 2025 began.
If much of that selling has already occurred, Needham’s analysis suggests that one source of supply pressure could become less significant as the market attempts to recover.
Crypto sentiment returns to 2022 levels
Needham’s final argument comes from investor sentiment, which has fallen to levels last recorded during the previous major crypto downturn.
The firm’s Crypto Euphoria Needham Diagram currently stands at 13, which Needham categorises as “max disinterest.” It is the lowest reading since the 2022 bear market, and the firm said such extreme levels have historically been associated with market bottoms.
The indicator provided a contrasting signal in January 2025, reaching euphoric territory as meme coins surged. That period subsequently proved to be the peak of the cycle, according to Needham.
There remains a potential source of bitcoin supply. Miners that are pivoting towards AI infrastructure still hold around 70,000 bitcoin on their balance sheets, although that has fallen considerably from a record level of approximately 100,000.
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