This article is reprinted with permission from Tiger Research Reports, authors: DANIEL KIM, RYAN YOON, JAY JO, ELSA, copyright belongs to the original authors.
Institutional investors continue to increase their holdings amid volatility—net inflows into ETFs remained stable in the third quarter, with MSTR adding 388 bitcoins in a single month, reinforcing their long-term investment belief;
Overheated but not extreme—The MVRV-Z index is at 2.31, indicating that valuations are high but not at extreme levels. The clearing of leveraged funds has eliminated short-term traders, creating space for the next wave of increases;
The global liquidity environment continues to improve—broad money supply (M2) has surpassed $96 trillion, reaching a historic high, and expectations for interest rate cuts by the Federal Reserve are rising, with 1-2 more cuts expected within the year.
In the third quarter of 2025, the bitcoin market slowed from a strong increase in the second quarter (quarter-on-quarter growth of 28%) and entered a volatile sideways phase (quarter-on-quarter growth of 1%).
On October 6, bitcoin reached an all-time high of $126,210, but the Trump administration again exerted trade pressure on China, causing the bitcoin price to pull back 18% to $104,000, significantly increasing volatility. According to Volmex Finance's Bitcoin Volatility Index (BVIV), as institutional investors steadily increased their holdings, bitcoin volatility narrowed from March to September, but surged 41% after September, exacerbating market uncertainty (Chart 1).
Driven by the resurgence of US-China trade frictions and Trump's tough rhetoric, this pullback appears to be temporary. The strategic accumulation led by Strategy Inc. (MSTR) is actually accelerating. The macro environment has also played a supportive role. The global broad money supply (M2) has surpassed $96 trillion, reaching a historic high, while the Federal Reserve lowered interest rates by 25 basis points to 4.00%-4.25% on September 17. The Fed hinted at 1-2 more rate cuts this year, and a stable labor market combined with economic recovery creates favorable conditions for risk assets.
Institutional capital inflows remain strong. In the third quarter, net inflows into bitcoin spot ETFs reached $7.8 billion. Although this is lower than the $12.4 billion in the second quarter, the net inflow throughout the third quarter confirms the stable buying by institutional investors. This momentum continued into the fourth quarter—recording $3.2 billion in just the first week of October, setting a new weekly inflow record for 2025. This indicates that institutional investors view price pullbacks as strategic entry opportunities. Strategy continued to buy during the market pullback, purchasing 220 bitcoins on October 13 and 168 bitcoins on October 20, totaling 388 bitcoins in one week. This shows that regardless of short-term volatility, institutional investors firmly believe in the long-term value of bitcoin.
On-chain analysis reveals some signs of overheating, but valuations are not yet concerning. The MVRV-Z metric (market cap to realized value ratio) is currently in the overheated zone at 2.31, but has stabilized compared to the extreme valuation range approached in July-August (Chart 2).
The Net Unrealized Profit/Loss (NUPL) also shows signs of overheating, but has eased from the high unrealized profit situation in the second quarter (Chart 3). The adjusted Spent Output Profit Ratio (aSOPR) reflects the realized profit and loss of investors, and this ratio is very close to the equilibrium value of 1.03, indicating no cause for concern (Chart 4).
The number of bitcoin transactions and active users remains at similar levels to the previous quarter, indicating a temporary slowdown in network growth momentum (Chart 5). Meanwhile, total transaction volume is on the rise. A decrease in the number of transactions but an increase in transaction volume means that larger amounts of funds are being transferred in fewer transactions, indicating an increase in large-scale capital flows.
However, we cannot simply view the expansion of transaction volume as a positive signal. Recently, there has been an increase in funds flowing into centralized exchanges, which typically indicates that holders are preparing to sell (Chart 6). In the absence of improvements in fundamental indicators such as transaction numbers and active users, the rise in transaction volume more reflects the movement and selling pressure of short-term funds in a high-volatility environment, rather than an expansion of real demand.
The collapse of centralized exchanges on October 11 (down 14%) proves that the bitcoin market has shifted from being retail-driven to being institutionally driven.
The key point is: the market response is markedly different from before. In a similar environment at the end of 2021, panic among retail-driven markets spread, leading to a collapse. This time, the pullback is limited. After large-scale liquidations, institutional investors continue to buy, indicating that they are firmly defending the market's downside potential. Additionally, institutions seem to view this as a healthy consolidation that helps eliminate excessive speculative demand.
In the short term, a series of sell-offs may lower the average purchase price for retail investors and increase psychological pressure, potentially exacerbating volatility due to market sentiment being affected. However, if institutional investors continue to enter during the sideways consolidation, this pullback may lay the foundation for the next round of increases.
Using our TVM method for third-quarter analysis, we derive a neutral benchmark price of $154,000, up 14% from the second quarter's $135,000. Based on this, we applied a -2% fundamental adjustment and a +35% macro adjustment, resulting in a target price of $200,000.
The -2% fundamental adjustment reflects the temporary slowdown in network activity and the increase in deposits to centralized exchanges, indicating short-term weakness. The macro adjustment remains at 35%. The global liquidity expansion and continued institutional capital inflows, along with the Fed's dovish stance, provide a strong catalyst for increases in the fourth quarter.
The short-term pullback may stem from signs of overheating, but this represents a healthy consolidation rather than a trend or a shift in market perception. The benchmark price continues to rise, indicating that the intrinsic value of bitcoin is steadily increasing. Despite temporary weakness, the medium to long-term upward prospects remain solid.
Related: The Federal Reserve hints at the "end of quantitative tightening": What does this mean for bitcoin (BTC) prices?
Original text: “Bitcoin (BTC) Valuation Report Q4 2025”
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