The Coinbase Report That Could Change Everything for Q1

A Coinbase and Glass Node report on Q4 2025 crypto sentiment indicates cautious optimism among investors, with strong conviction to hold or buy dips, especially for Bitcoin, while Ethereum matures and aims for institutional adoption with reduced fees.

• Most investors believe Bitcoin is undervalued and show strong conviction to 'buy the dip'.

• Ethereum's increasing transaction volume and falling fees boost its institutional adoption prospects.

• Despite Q4 2025 market challenges, overall investor sentiment indicates cautious optimism for 2026.

A joint report by Coinbase and Glass Node surveyed 148 investors (75 institutional, 73 retail) to gauge crypto market sentiment for Q1 2026. Despite a challenging Q4 2025 characterized by market downturns, investors largely maintained conviction, with a significant majority viewing Bitcoin as undervalued and expressing intent to hold or buy the dip in future downturns. Ethereum shows signs of market maturation, with falling user fees enhancing its institutional appeal.

Investor Sentiment & Risk

• 00:01:28 A survey of 148 investors revealed a shift in sentiment between Q3 and Q4 2025, with more investors, especially retail, taking on higher risk despite market drawdowns. Views on the market cycle became more mixed, with a notable increase in investors believing we are in a bear market by Q4. The top tail risks identified were the macro backdrop, declining liquidity, and underwhelming crypto regulation, concerns that remained consistent.

Bitcoin's Valuation & Dominance

• 00:04:36 In December, a strong majority of investors (71% of institutions, 60% of retail) considered Bitcoin undervalued, indicating a bullish outlook. Expectations for Bitcoin dominance shifted in Q4, with fewer institutions predicting an altcoin rally and 40% expecting BTC dominance to rise above 60%. Most investors, 80% of institutions and 85% of retail, showed strong conviction to hold or buy the dip if crypto prices fall 10% or more.

Market Performance & BTC Metrics

• 00:06:12 Q4 2025 saw a 'bloodbath' for altcoins and ETH, with Bitcoin hitting an all-time high of over $125K before an October liquidation event. Bitcoin's correlation with the M2 money supply remains positive, suggesting caution if M2 tightens, though modest growth is expected. Metrics like Entity Adjusted Net Unrealized Profit and Loss (NUPL) shifted from 'belief' to 'anxiety', and MVRV at 2.2 suggests most BTC holders are up 2x, potentially contributing to selling pressure.

Ethereum's Evolution & Outlook

• 00:13:18 Ethereum's NUPL sentiment swung from capitulation to optimism and back to fear throughout 2025. ETH's MVRV is also around 2.2, implying many holders are in profit and could be selling. The most encouraging sign is the rise in transactions on Ethereum and its Layer 2s since January 2023, coupled with falling user fees, largely thanks to the Denune upgrade, enhancing its institutional appeal.