Grayscale Investments, a leading crypto asset manager, publishes regular research reports and market commentaries through its Grayscale Research division.

These often include forward-looking insights on cryptocurrency sectors, price trends, and regulatory developments rather than precise end-of-year price targets for individual assets like Bitcoin (BTC) or Ethereum (ETH).

Based on their most recent analyses as of Q3 2025, Grayscale remains broadly bullish on the crypto ecosystem, driven by institutional adoption, ETF inflows, and potential U.S. regulatory clarity. However, specific forecasts emphasize sector performance and macro catalysts over exact price predictions.

Grayscale’s Q3 2025 Crypto Sectors report notes positive price returns across all six tracked crypto sectors (e.g., Smart Contract Platforms, Layer 1 Protocols), despite mixed fundamentals like varying on-chain activity.

They anticipate continued momentum into Q4 2025, fueled by Bitcoin’s post-halving cycle and Ethereum’s ecosystem growth (e.g., Layer-2 scaling). Overall, Grayscale views 2025 as a year of consolidation and recovery, with the total crypto market cap potentially stabilizing above $2.5 trillion by year-end, assuming no major macroeconomic shocks.

Bitcoin (BTC): Implicitly optimistic, with expectations of BTC holding above $90,000–$100,000 amid ETF demand and corporate treasury adoption. No explicit end-2025 target, but their historical halving cycle analysis suggests 20–50% upside from mid-2025 levels.

Ethereum (ETH): Highlighted as a standout in the Smart Contract Platforms sector, with Grayscale forecasting ETH to benefit from deflationary mechanics and DeFi expansion. They project ETH trading in the $4,000–$5,000 range by December 2025, supported by spot ETH ETF approvals and staking yields.

Grayscale flags the U.S. government’s ongoing shutdown resolution and bipartisan crypto legislation progress as tailwinds, potentially unlocking $10–20 billion in new institutional inflows by year-end.

End of 2026 ForecastMarket Sentiment and Performance

Grayscale is particularly upbeat for 2026, predicting accelerated growth post-U.S. midterm elections, which could usher in pro-crypto policies. Their October 2025 commentary explicitly states optimism that “crypto market structure legislation can become law in 2026,” boosting liquidity and reducing regulatory uncertainty.

Sector-wise, they expect Layer 1s and AI-integrated tokens via Bittensor to lead, with the Crypto Sectors Market Index (CSMI) potentially up 30–60% year-over-year. Bitcoin forecast to enter a “supercycle” phase, with Grayscale eyeing $150,000+ by end-2026, driven by halvings’ supply constraints and global adoption.

Ethereum positioned for outperformance, with projections of $6,000–$8,000 by December 2026, thanks to upgrades like Dencun and rising dApp usage. Grayscale’s Q4 2024 preview extended into 2025–2026 outlooks lists ETH-adjacent assets like Optimism (OP) and Sui (SUI) as high-potential plays.

Emphasis on the 2026 midterms as a “landscape changer,” alongside Grayscale’s own potential IPO targeted for late 2025/early 2026, which could value the firm at $30–$33 billion and signal mainstream crypto integration.

Grayscale’s forecasts assume favorable macro conditions (e.g., Fed rate stability) and no escalation in geopolitical tensions. Downside risks include delayed regulations or equity market corrections spilling into crypto.

For comparison, third-party models aligned with Grayscale’s views per CoinCodex project similar trajectories: BTC ~$140,000 (2026 high) and ETH ~$4,000–$5,000 (mid-2026). These insights are derived from Grayscale’s proprietary Crypto Sectors framework and monthly commentaries.

To standardize the classification of crypto assets, enabling better portfolio diversification, risk assessment, and theme-based investing beyond dominant assets like Bitcoin and Ethereum. It addresses investor demand for clarity in a space with over 40 million tokens.

A market cap-weighted aggregate tracking the total investable crypto universe. Individual sector indices for targeted exposure. Assets qualify based on market cap, liquidity, and data availability.

Quarterly reviews add or remove tokens; for instance, Q1 2025 added 63 new assets, bringing the total to 283. Indices use market cap-weighting and incorporate fundamental metrics like on-chain activity users, transactions, fees alongside price returns to gauge sector health.

As of Q3 2025, the framework organizes assets into six sectors expanded from five with the addition of Artificial Intelligence in Q2 2025. Assets functioning as mediums of exchange, stores of value, or units of account—core to peer-to-peer transactions.

High liquidity; focus on stability and adoption for payments/reserves. Often includes stablecoins and BTC-like assets. Bitcoin (BTC), Litecoin (LTC), stablecoins like USDT/USDC. Baseline blockchains enabling self-executing smart contracts, dApps, and Layer-1/Layer-2 scaling.

Emphasis on throughput, security, and developer activity; hosts DeFi, NFTs, and more. Protocols and networks for decentralized finance (DeFi), lending, trading, and yield generation. Revenue from fees; tied to trading volume and liquidity provision.

Assets supporting consumption-driven activities like gaming, social media, NFTs, and entertainment. User-centric; driven by adoption in media, metaverses, and cultural trends. Render (RNDR) for rendering, gaming tokens like Immutable X (IMX).

Infrastructure tools for interoperability, data storage, oracles, and backend services. Enables ecosystem connectivity; often B2B-focused with steady utility. Tokens powering decentralized AI models, compute, and data marketplaces. Emerging; focuses on AI-blockchain integration for machine learning and inference.

The CSMI saw positive price returns across all six sectors in Q3 2025, with the total crypto market cap rising to ~$3 trillion up from $1T in Q1. However, fundamentals were mixed: Declines in users, transactions, and fees for Currencies and Smart Contract Platforms, offset by gains elsewhere.

Financials led returns, boosted by centralized exchange volumes and stablecoin adoption. Smart Contract Platforms benefited from Layer-2 growth and peer-to-peer payments. Bitcoin underperformed relative to “alt” sectors, signaling an “alt season.”

Q3 highlighted AI’s potential up 10% in Q2, with Grayscale’s “Top 20” list featuring high-potential assets like HYPE, ENA, and GRASS across sectors. The framework underscores ongoing adoption drivers like regulatory clarity and macro demand for scarce assets, despite risks like geopolitical tensions.

Sectors are reassessed quarterly; for example, Mantle joined in Q1 2025 after meeting liquidity criteria. Grayscale uses this framework in research reports, product development and the “Assets Under Consideration” list for future funds. It’s not static—future additions could include emerging themes like real-world assets.

The foreign exchange market, commonly known as Forex or FX, represents the world’s largest and most liquid financial market. With a daily trading volume exceeding $7 trillion, it dwarfs all other financial markets combined. For newcomers, the prospect of entering this dynamic marketplace can seem both exciting and overwhelming. This comprehensive guide will walk you through the essential steps to begin your Forex trading journey with confidence and proper preparation.

Understanding the Forex Market

Before diving into trading, it’s crucial to understand what Forex actually is. The Forex market is a decentralized global marketplace where currencies are traded against one another. Unlike stock exchanges that have physical locations, Forex operates 24 hours a day, five days a week, through an electronic network of banks, corporations, institutional investors, and individual traders worldwide.

Currency pairs form the foundation of Forex trading. When you trade Forex, you’re simultaneously buying one currency while selling another. For example, in the EUR/USD pair, the euro is the base currency and the US dollar is the quote currency. If you believe the euro will strengthen against the dollar, you buy the pair. If you think it will weaken, you sell it.

The major currency pairs include EUR/USD, GBP/USD, USD/JPY, and USD/CHF. These pairs typically offer the tightest spreads and highest liquidity, making them ideal for beginners. As you gain experience, you can explore minor pairs and exotic currency combinations that may offer different trading opportunities.

Building Your Foundation: Education Comes First

The most critical mistake new traders make is rushing into live trading without adequate preparation. Successful Forex trading requires a solid understanding of market mechanics, technical and fundamental analysis, risk management, and trading psychology. Fortunately, numerous educational resources are available to help you build this foundation.

Start by learning the basic terminology. Terms like pips, lots, leverage, margin, spreads, and stop-loss orders are fundamental to understanding how Forex works. A pip, for instance, represents the smallest price movement in a currency pair, typically the fourth decimal place for most pairs. Understanding these concepts will help you communicate effectively in the trading community and comprehend market analysis.

Technical analysis involves studying price charts and using indicators to identify potential trading opportunities. Common tools include moving averages, relative strength index (RSI), Fibonacci retracements, and support and resistance levels. Each indicator offers different insights into market momentum, trends, and potential reversal points.

Fundamental analysis, on the other hand, focuses on economic factors that influence currency values. Interest rates, inflation data, employment figures, GDP growth, and geopolitical events all play significant roles in currency movements. Central bank decisions, particularly from the Federal Reserve, European Central Bank, and Bank of Japan, can trigger substantial market volatility.

Choosing the Right Broker

Selecting a reputable broker is one of the most important decisions you’ll make as a Forex trader. Your broker serves as your gateway to the market, so their reliability, trading conditions, and regulatory status are paramount. When evaluating brokers, consider several key factors.

Regulatory compliance should be your top priority. Reputable brokers are regulated by recognized financial authorities such as the Financial Conduct Authority (FCA) in the UK, the Commodity Futures Trading Commission (CFTC) in the US, or the Australian Securities and Investments Commission (ASIC). Regulation provides a layer of protection for your funds and ensures the broker operates within established guidelines.

Trading costs vary significantly between brokers. Look at spreads, commissions, and any other fees that might apply to your trading. Some brokers offer tight spreads on major pairs but charge higher commissions, while others incorporate costs into wider spreads. Calculate the total cost per trade to make accurate comparisons.

The trading platform is where you’ll spend most of your time, so it should be intuitive, stable, and feature-rich. MetaTrader 4 and MetaTrader 5 are industry standards, offering comprehensive charting tools, technical indicators, and automated trading capabilities. Some brokers, like Dukascopy, provide proprietary platforms with unique features and competitive trading conditions that might suit your specific needs.

Customer support quality can make a significant difference, especially when technical issues arise during active trading. Test the broker’s support channels before opening an account to ensure they’re responsive and helpful.

The Power of Practice: Demo Trading

One of the greatest advantages modern Forex traders have is the ability to practice without risking real money. A forex demo account replicates live trading conditions using virtual funds, allowing you to test strategies, familiarize yourself with the trading platform, and develop your skills in a risk-free environment.

Demo accounts typically offer the same features as live accounts, including real-time price feeds, full access to technical indicators, and the ability to place all types of orders. This makes them invaluable for beginners who need to understand how different order types work, from market orders to limit orders, stop-loss orders, and trailing stops.

Spend at least several weeks trading on a demo account before considering live trading. During this period, focus on developing a trading strategy and testing it under various market conditions. Keep a trading journal documenting every trade you make, including your reasoning for entering and exiting positions, the outcome, and lessons learned.

However, remember that demo trading has limitations. The psychological pressure of risking real money is absent, which can lead to overconfidence or reckless behavior that you wouldn’t exhibit with actual funds at stake. Additionally, demo accounts sometimes offer better execution speeds and fill rates than live accounts, creating unrealistic expectations.

Developing Your Trading Strategy

A well-defined trading strategy is essential for long-term success in Forex. Your strategy should specify when you’ll enter and exit trades, how much you’ll risk per trade, and what market conditions favor your approach. There are several popular trading styles to consider.

Day trading involves opening and closing positions within a single trading day, avoiding overnight exposure. Day traders typically make multiple trades daily, capitalizing on small price movements. This style requires significant time commitment and quick decision-making.

Swing trading targets larger price movements over several days or weeks. Swing traders aim to catch substantial portions of price trends while holding positions through minor fluctuations. This approach requires less time than day trading but still demands regular market monitoring.

Position trading takes a long-term view, with traders holding positions for weeks, months, or even years. This style relies heavily on fundamental analysis and requires patience and conviction in your market outlook.

Scalping involves making dozens or hundreds of trades per day, targeting tiny price movements. Scalpers need excellent execution speeds, tight spreads, and intense concentration. This demanding style isn’t suitable for most beginners.

Choose a style that matches your personality, available time, and risk tolerance. A full-time professional might successfully day trade, while someone with a regular job might find swing trading more practical.

Risk Management: Your Safety Net

Proper risk management separates successful traders from those who blow up their accounts. The golden rule is never to risk more than you can afford to lose. Most professional traders risk only 1-2% of their trading capital on any single trade. This conservative approach ensures that a string of losses won’t devastate your account.

Stop-loss orders are essential risk management tools. These orders automatically close your position when the market moves against you by a specified amount, limiting your potential loss. Always use stop-losses, and never move them further away from your entry point to give a losing trade “more room.”

Position sizing determines how much of a currency pair you buy or sell. Proper position sizing ensures that your predetermined risk percentage translates into an appropriate lot size. Many beginners make the mistake of trading too large, exposing themselves to excessive risk.

Leverage allows you to control large positions with relatively small capital, but it’s a double-edged sword that amplifies both profits and losses. While Forex brokers may offer leverage of 50:1, 100:1, or even higher, using maximum leverage is extremely risky for inexperienced traders. Start with low leverage ratios until you’ve proven your trading strategy is consistently profitable.

Managing Your Trading Psychology

Trading psychology often determines whether traders succeed or fail. Emotions like fear, greed, hope, and regret can cloud judgment and lead to impulsive decisions. Developing emotional discipline is as important as mastering technical analysis.

Fear can cause you to exit winning trades too early or prevent you from taking valid setups. Greed might tempt you to overtrade or risk too much on a single position. Hope can keep you in losing trades far longer than your plan dictates, while regret over missed opportunities can lead to revenge trading.

Establish a pre-trading routine that puts you in the right mental state. Review your trading plan, check economic calendars for important news releases, and analyze current market conditions objectively. Treat trading as a business, not gambling or entertainment.

Accept that losses are part of trading. No strategy wins 100% of the time, and even the best traders experience losing streaks. What matters is your overall performance over many trades, not the outcome of any single position. Focus on executing your strategy correctly rather than obsessing over profits and losses.

Starting with Real Money

When you’ve demonstrated consistent profitability on your demo account and feel confident in your strategy, you can consider live trading. However, start small. Open an account with the minimum deposit and trade micro or mini lots until you adjust to the psychological differences between demo and live trading.

The transition to real money often reveals emotional vulnerabilities that weren’t apparent during demo trading. You might find yourself hesitating on valid setups, exiting winners prematurely, or letting losses run. These reactions are normal, but you must work through them to succeed.

Continue keeping your trading journal with even greater discipline. Review your trades regularly to identify patterns in both your winning and losing positions. Are you better at trend-following or counter-trend trades? Do you perform better during specific market sessions? This self-awareness helps refine your approach.

Continuous Learning and Adaptation

The Forex market constantly evolves, and successful traders commit to lifelong learning. Market conditions change, new trading tools emerge, and economic landscapes shift. Stay informed about global economic developments, follow reputable trading educators, and engage with the trading community.

However, be selective about whose advice you follow. The internet is full of self-proclaimed experts offering get-rich-quick schemes. Stick with established educational resources, regulated brokers, and traders with verifiable track records.

Consider specializing in a few currency pairs rather than trying to trade everything. Deep knowledge of how specific pairs behave under various conditions gives you an edge. Some traders become EUR/USD specialists, while others focus on commodity currencies like AUD or CAD.

Conclusion

Starting your Forex trading journey requires patience, discipline, and dedication to continuous learning. Begin with thorough education, practice extensively on a demo account, develop a robust trading strategy with strict risk management rules, and start small when transitioning to live trading. Remember that Forex trading is not a get-rich-quick scheme but a skill that takes time to master.

Success in Forex comes from making consistent, well-planned decisions over time, not from seeking home runs on individual trades. Focus on protecting your capital, managing risk, and following your trading plan regardless of emotional impulses. With the right approach, mindset, and commitment to improvement, you can work toward becoming a consistently profitable Forex trader.

The journey won’t be easy, and there will be setbacks along the way. However, with persistence and the right foundation, you can navigate the challenges and potentially achieve your trading goals in the world’s largest financial market.

David Hay of Haymarket Capital/David Hay Research has highlighted this counter-intuitive but well-documented phenomenon. Key points from the data primarily based on research covering ~1990–2022, with similar patterns persisting in many later studies.

Stocks that are deleted from the S&P 500 the “black line” in his chart — typically because they no longer meet size, liquidity, or profitability criteria — have historically outperformed the S&P 500 index itself by roughly +3% to +5% per year on average after deletion.

Over the 32-year period he references 1990–2022, this translated into ~400–500% cumulative outperformance versus just staying in the index. Forced selling distortion: When a stock is removed from the S&P 500, index funds and ETFs hundreds of billions of dollars must sell it immediately, regardless of fundamentals.

This creates temporary downward pressure and often leaves the stock undervalued. Mean reversion / value effect: Many deleted stocks are “fallen angels” — former large-cap growth darlings that have underperformed and become relatively cheap low P/E, high dividend yield, etc.. Value and quality factors tend to rebound over time.

After deletion, the average market cap drops dramatically often from >$10–20 bn to <$5 bn. Smaller stocks have historically outperformed larger ones over long periods. The S&P 500 is constantly pruning its weakest members and adding new winners. So by construction it looks better than it actually is for a buy-and-hold investor in the “average” constituent.

The deleted stocks are the ones that got kicked out, yet ironically many recover. Real-world performance approximate, from various studies: 1-year average excess return after deletion: +6–12%. 3-year average excess return: +3–5% annualized.

Long-term (5–10 years): still positive but narrower. A mechanical strategy of buying every S&P 500 deletion equally or float-weighted and holding for 1–3 years has beaten the S&P 500 by 300–600 bps annualized in most backtests since the 1980s, with higher volatility and drawdowns.

Not every deleted stock recovers some go to zero — think Sears, Toys“R”Us, etc. Transaction costs, liquidity risk, and tax implications reduce real-world returns. The edge has narrowed in recent years as more investors quant funds, factor ETFs have started exploiting it.

But the core observation remains valid and is one of the cleaner examples of index mechanics creating exploitable inefficiencies. David Hay is correct: over the long run, the “reject pile” of the S&P 500 has actually been a better place to fish than the index itself.

The Russell 2000 has shown signs of resurgence, with year-to-date (YTD) gains of approximately 9.85–10.45% (based on ETF trackers like IWM and VRTIX), outpacing its historical average but trailing the S&P 500’s stronger tech-led rally.

Over the past six months, it has gained ~17%, matching the S&P 500 more closely, amid expectations of Federal Reserve rate cuts and a shift toward “animal spirits” in the market.

The Russell 2000’s returns are more volatile than the S&P 500’s, with larger drawdowns but potential for outsized gains during rotations. Since 1979, the two indices have had a high correlation ~0.8 on average, but divergences highlight small-cap cycles.

Small caps have outperformed large caps about two-thirds of the time since 1927, per long-term data, though the edge has been negative since 2019 due to the “Magnificent 7” tech dominance.

Russell 2000 beating S&P 500 by notable margins: 1979–1983: +77–80% relative gain amid double-dip recessions, high inflation, and early 1980s recovery. 1990–1994: +49.6% during the 1990–1991 recession and early expansion.

1999–2006: +99% through the dot-com bust 2000–2002 recession and initial 2003–2007 expansion. July 2024: +10 percentage points best monthly relative gain since Feb. 2000, driven by rate cut bets.

Post-2024 Election Cycles: Historically +6–12% relative in the 6–12 months following U.S. elections, due to pro-domestic policies. 1983–1990: -91.4% relative S&P dominated in 1980s expansion with high real rates.

1994–1999: -94.5% amid late-1990s boom and rising rates. 2019–2024: Consistent lag (e.g., -6.8% over 3 years ending 2024), as S&P benefited from ~30% tech weighting vs. Russell’s ~4%.

The S&P SmallCap 600 a profitability-filtered small-cap index has outperformed the Russell 2000 in 14 of 21 years since 1994, highlighting how the Russell includes more unprofitable “junk” stocks that drag returns. Small-cap rallies like the current one are often short-lived but explosive.

~90% of Russell 2000 revenues are domestic, making it a pure U.S. economy bet. It thrives in expansions or post-recession rebounds when risk appetite rises, as smaller firms are nimbler and benefit from catch-up growth.

Small caps are highly leveraged ~50% of debt is short-term/floating rate, so Fed easing reduces refinancing costs more than for large caps. Historically, the first rate cut in a cycle boosts small caps by 5–10% relative to large caps. With markets pricing ~90% odds of a September 2025 cut, this supports further gains.

Russell 2000 trades at a discount (e.g., P/B in bottom decile since 1990; higher dividend yields). After lagging (e.g., due to 671/2,000 unprofitable firms vs. 25/500 in S&P), rotations into “cheap cyclicals” financials, industrials, healthcare—~48% of index drive rebounds.

Less tech exposure ~15–17% vs. S&P’s 30% means outperformance when cyclicals lead like the post-vaccine yield rises in 2020–2021. Value and equal-weight tilts amplify this. +11% in five days in July 2024) reflect “greed” and broad participation, but overbought signals (RSI >79) often lead to pullbacks.

The Russell 2000 hit 2,500 for the first time in October 2025, up ~17% in six months, but trails the S&P 500 YTD due to AI/tech persistence. Bank of America sees continued outperformance through September 2025 absent tariff shocks, tied to earnings recovery Q2 profits beat expectations, ending a “profits recession.

However, October seasonality is weak for small caps, and speculation risks a correction. Compared to the S&P SmallCap 600 +11% in six months, the Russell’s 9% edge signals elevated “animal spirits” but potential froth. If U.S. growth outpaces global peers and rates fall, small caps could extend gains historical post-election edge + recovery regime.