The recent recovery across digital assets could have further room to run, according to Needham & Company, which has increased its crypto trading volume forecasts for the exchanges and platforms covered by the firm.

“How sustainable is the crypto rebound? We believe it has legs,” analyst John Todaro wrote in a note to clients, identifying three factors supporting the firm’s assessment.

Investor capital could rotate back into crypto

The first factor is a potential rotation in investor attention and capital. Needham said artificial intelligence stocks, which previously attracted significant retail participation, have cooled as regulatory pressures increase ahead of the midterm elections.