Grayscale Q3 Asset Review: What Will Drive Q4 Performance?
10-07 , 20:06
· In Q3 2025, the price returns of all six cryptocurrency sectors were positive, while fundamental changes were mixed. The "cryptocurrency sectors" are a proprietary framework we developed in collaboration with index provider FTSE/Russell to organize the digital asset market and measure returns.
· Bitcoin's performance was below that of other cryptocurrencies, and the return pattern of other cryptocurrencies can be seen as a "Alt Season" — although different from the past.
· The ranking of the top 20 tokens before Q3 (based on volatility-adjusted price returns) highlighted the importance of stablecoin regulation and adoption, the rise in centralized exchange trading volume, and the significance of Digital Asset Treasuries (DAT).
Each asset in cryptocurrency is somehow related to blockchain technology and shares the same underlying market structure — but that's where the similarities end. This asset class covers a broad range of software technologies applied in consumer finance, artificial intelligence (AI), media, and entertainment, among other fields. To organize the data neatly, Grayscale Research uses a proprietary classification and index series developed in collaboration with FTSE/Russell, namely "Crypto Sectors." The "Crypto Sectors" framework covers six different sub-markets (Chart 1). Together, they encompass 261 tokens with a total market capitalization of $3.5 trillion.
Chart 1: The "Crypto Sectors" framework helps organize the digital asset market
Blockchain is not a company, but its economic activity and financial health can be measured in a similar way. The three key metrics of on-chain activity are users, transactions, and transaction fees. Since blockchain is anonymous, analysts typically use "active addresses" (blockchain addresses with at least one transaction) as an imperfect proxy for the number of users.
In Q3, the fundamental indicators of blockchain health fluctuated (Chart 2). On the negative side, the number of users, transaction volume, and fees for the currency and smart contract platform cryptocurrency sectors all decreased compared to the previous period. Overall, since Q1 2025, speculative activity related to Meme coins has declined, leading to a decrease in transaction volume and activity.
What is even more encouraging is that the fee revenue of blockchain-based applications has grown by 28% quarter-over-quarter. This growth has been primarily driven by the activity of a few top-ranked applications in terms of fee revenue: (i) Jupiter, a decentralized exchange based on Solana; (ii) Aave, a leading cryptocurrency lending protocol; and (iii) Hyperliquid, a leading perpetual futures contract exchange. On an annualized basis, application layer fee revenue has now exceeded 10 billion US dollars. Blockchain serves as both the network for digital transactions and the platform for applications. Therefore, higher application fees can be seen as a sign of the increasing adoption of blockchain technology.