VanEck Crypto Monthly Recap for December 2025

Please note that VanEck may have a position(s) in the digital asset(s) described below.

Key takeaways:

• Year-end risk appetite faded: Crypto markets declined broadly in December with volatility compression and subdued institutional activity, reflecting caution rather than disorderly selling.
• Fundamentals diverged from price: Ethereum and Solana continued to demonstrate strong onchain usage, particularly in stablecoin settlement, Layer-2 throughput, and revenue tied to real economic activity.
• Token design remains a key risk: The AAVE episode highlighted ongoing challenges around tokenholder value capture, reinforcing the need for clearer alignment between governance and economic control.

December delivered muted price action across crypto markets. Bitcoin fell (-4%), Ethereum fell (-3%), and altcoins as proxied by MVSCLE (MarketVector Smart Contract Leaders Index) dropped 8%. Of the 35 smart contract platform tokens we track, 33 posted negative returns. Hopes for a seasonal “Santa Claus rally” failed to materialize.

Price Returns

Source: Bloomberg as of 12/31/2025. Index performance is not representative of fund performance. It is not possible to invest directly in an index. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

The selloff was gradual rather than disorderly. Volatility declined 8% for BTC and 15% for ETH. Bitcoin’s 30-day volatility ended the month at 40%, roughly the 52nd percentile for the year, while ETH volatility fell to 59%, placing it in the 14th percentile of 2025. Historically, December tends to see volatility compression: BTC volatility has declined in 7 of the last 11 Decembers, with prices rising in 6 of those years.

Digital asset treasury (DAT) activity was subdued. Public companies we track purchased just 22.2k BTC and 414k ETH, marking the second-lowest monthly total for both BTC and ETH DATs in 2025 since the ETH accumulation cycle began in July 2025. Investor fatigue also showed up in ETP flows, with December outflows of 12.5k BTC (-1% AUM) and 212k ETH (-3% AUM).

Onchain data echoed this caution. Bitcoin long-term holders reduced positions every day in December, while Ethereum long-term holders modestly increased balances during the final four days of the month.

Long-Term ETH Holders Turned to Accumulators After Long Distribution

Source: Artemis XYZ as of 12/29/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.
Note: “LT Holder” is considered an address that has held ETH > 155 days

DEX spot volumes declined 22% m/m, though Solana remained dominant, accounting for 35% of total DEX spot volume. Notably, Solana’s DEX share exceeded that of Ethereum and all Ethereum L2s combined for the first time since June 2025.

From a revenue standpoint, Hyperliquid again led L1s, generating approximately $45M in revenue through December 28. Stablecoin supply edged slightly lower to $285B, down from $286B in November, while transfer volumes increased 12% m/m. Base continued to lead stablecoin transfer activity, capturing an estimated 41% market share in December.

Tokenized real-world assets (RWAs) onchain totaled $18.7B, up 2.5% m/m. Private credit assets not included in this figure, such as Figure Technologies’ HELOCs, grew 4%, from $18.8B to $19.8B.

Major news in December:

1. Ethereum activated the Fusaka upgrade, increasing blob capacity via the BPO-1 fork on December 17 and setting the stage for a further increase with BPO-2 on January 7, 2026.
2. China’s PBOC intensified scrutiny of digital assets, citing KYC/AML concerns, prompting Ant Group and JD.com to pause stablecoin initiatives. 400,000 Bitcoin mining machines were reportedly disconnected in China, leading to the biggest overall decline in the Bitcoin hashrate since 2024, before recovering at month-end.
3. Circle and Ripple were granted preliminary approvals to establish national trust banks, while BitGo, Paxos, and Fidelity began converting state trust charters to national trust charters.
4. Vanguard, long an anti-crypto advocate, allowed trading of crypto ETPs on its platform despite continuing to avoid launching proprietary products.
5. Hong Kong’s insurance regulator proposed rules that would allow insurance capital into crypto/infrastructure, with a 100% risk capital charge for crypto assets.
6. Visa expanded USDC settlement for B2B payments through its pilot with Lead Bank and Cross River.
7. SoFi launched its stablecoin SoFiUSD.
8. Klarna announced plans to partner with Coinbase to launch a stablecoin.

Ethereum Technical Developments and Outperformance

Ethereum L2 Blob Count is +30% Y/Y in December 2025

Source: Dune, @Hildobby as of 12/29/2025. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.

Although ETH underperformed on price in December, the network made meaningful technical progress. The Fusaka upgrade, initiated on December 3, improves the user experience, makes the network more resilient to spam and abuse, and boosts throughput across both L1 and L2.

Key changes include:

• EIP-7951, enabling simpler wallet authentication via precompiles.
• Improved gas pricing and transaction limits to reduce attack surfaces.
• An increase in the L1 gas limit to 60M from 45M.
• A 66% increase in blob throughput on December 17, with another increase scheduled for January 7, bringing total L2 transaction capacity up 133%.

Ethereum fees have already declined roughly 25% since the upgrade. The network is also advancing toward data sampling, reducing node storage requirements. With the Ethereum blockchain now exceeding 1.4 TB and growing at approximately 21% CAGR, these optimizations are critical for preserving decentralization and lowering participation costs.

We view Ethereum’s relative resilience versus Bitcoin in December as early positioning for 2026 narratives, particularly around tokenization, settlement, and institutional blockchain adoption. Unlike Bitcoin, Ethereum’s programmability enables use cases such as asset tokenization, collateral management, and onchain recordkeeping. These applications increasingly drive adoption independent of speculative trading.

Token vs Equity: A December Case Study

AAVE is Earning $720M in Annualized Revenue

Source: Artemis XYZ as of 12/30/2025.Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities named herein.
Note: AAVE DAO received ~14% of Revenues in cashflows in 2025

Crypto tokens continue to straddle an ambiguous space between commodity and quasi-equity. While teams seek to create tokenholder value, legal uncertainty often leads to unclear or fragile value-accrual mechanisms. Tokens may capture fees, enable governance, or function as payment units, but they frequently lack enforceable claims on underlying cash flows.

This tension surfaced prominently at AAVE in December. Although the AAVE DAO governs protocol parameters, a separate for-profit entity, Aave Labs, controls key commercial relationships, including front-end distribution. A new arrangement with CoW Swap redirected certain fees away from the DAO and toward Labs, reversing the prior precedent set with partners like ParaSwap.

Community estimates suggest the CoW Swap integration could generate up to $200k in fees per week. In response to backlash, AAVE founder Stani Kulechov purchased approximately $15M of AAVE tokens. A subsequent DAO vote to transfer brand assets from Labs to the DAO failed. Despite protocol TVL increasing 4.2% in December, AAVE’s token price fell 15%, reaching levels last seen during the April 2025 tariff selloff.

This episode highlights a broader risk across crypto: tokenholders may exert governance influence without controlling the economic surface area that determines value. Unless clearer alignment mechanisms emerge, tokens risk being structurally subordinated to equity interests.