The recent recovery across digital assets could have further room to run, according to Needham & Company, which has increased its crypto trading volume forecasts for the exchanges and platforms covered by the firm.
“How sustainable is the crypto rebound? We believe it has legs,” analyst John Todaro wrote in a note to clients, identifying three factors supporting the firm’s assessment.
Investor capital could rotate back into crypto
The first factor is a potential rotation in investor attention and capital. Needham said artificial intelligence stocks, which previously attracted significant retail participation, have cooled as regulatory pressures increase ahead of the midterm elections.
Retail trading activity in commodities, including oil and metals, has also moderated.
Against that backdrop, Needham believes digital assets could become relatively more attractive to investors again as competing speculative trades lose some of their momentum.
Heavy bitcoin selling may already have taken place
The second factor centres on selling pressure. Needham believes a substantial amount of potential supply has already been absorbed by the market following ETF and retail investor outflows alongside reductions in holdings by public companies.
Digital asset treasury companies and bitcoin miners sold a record 57,000 bitcoin during the first half of 2026, representing approximately $4.2 billion in value.
Since the beginning of the fourth quarter of 2025, publicly traded bitcoin companies have disposed of around 69,500 bitcoin in total.
The scale of those sales could mean that one significant source of downward pressure has already diminished, potentially creating a more supportive environment for the cryptocurrency market.
Needham sentiment indicator reaches ‘max disinterest’
Investor sentiment provides Needham’s third reason for expecting the recovery to persist.
The firm’s proprietary Crypto Euphoria Needham Diagram produced a reading of 13, a level it classifies as “max disinterest.” It was the indicator’s lowest reading since the 2022 crypto bear market and, according to Needham, readings at these levels have typically been associated with market bottoms.
That contrasts with January 2025, when the indicator entered euphoric territory during the surge in meme coins. Needham said that period ultimately coincided with the top of the cycle.
The firm also noted that bitcoin miners shifting their businesses towards artificial intelligence still hold approximately 70,000 bitcoin on their balance sheets. That figure has declined from a record of around 100,000 bitcoin.