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. 

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).

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.

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). 

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).

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.

In some respects solana is very different from bitcoin and ether. With 112 trillion calculations necessary to create a new bitcoin, the bitcoin block chain can support only about seven transactions per second. Unlike bitcoin, ether and solana do not require such energy intensive proof of work. Rather, ether changed to proof of stake, and it can handle up to 30,000 transactions per second. Solana requires proof of history + proof of stake and is more than twice as fast as ether and nearly 10,000 times as fast as bitcoin with as many as 65,000 transactions per second.

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).

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.