IN THIS ISSUE

💰 20x Hermetica Points on Velar
📜 How to use USDh to long BTC on Velar
💵 Stablecoins lead mindshare growth
💸 USDh yield recap
☎️ Hermetica Hangout: Longstreet.btc
📈 Weekly market review

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20x Hermetica Points on Velar

To celebrate Velar PerpDEX launching with sBTC/USDh as its first trading pair, we're offering a 20x Hermetica Points multiplier.

Start stacking 20x more Hermetica Points when you provide sBTC/USDh liquidity on the Velar perpDEX.

This is the first step in a new era of Bitcoin-native trading—you should make it count.

How to Use USDh to Long BTC on Velar

The first Bitcoin-native PerpDEX is live! In our latest blog we break down how to open your first long position with USDh on the Velar perpDEX.

From funding your wallet to managing risk, this step-by-step guide makes it easy, even if you're new to Bitcoin DeFi.

Ready to explore leverage or just get familiar with the platform? Dive into the full walkthrough now.

Stablecoins Lead Mindshare Growth

A new report from Kaito shows DeFi and stablecoins have seen the largest growth in mindshare over the past three months, outpacing all other crypto sectors.

Meanwhile, IntoTheBlock reports steady inflows into stablecoins and RWAs as investors seek safer, yield-bearing assets.

At the intersection of these trends is USDh—a Bitcoin-backed stablecoin built for DeFi. As capital and attention shift toward assets that blend stability with utility, it’s clear that the future is being built right here.

USDh Yield Recap

This week’s 18% APY means if your USDh were a coworker, it just pulled overtime, skipped lunch, and didn’t even ask for a raise.

It’s not a meme. It’s math. And it’s quietly working harder than most portfolios right now.

Hermetica Hangout: Longstreet.btc

Earlier today, we hosted a special Velar panel to celebrate the launch of their PerpDEX. The discussion explored the impact of the sBTC/USDh trading pair and the future of Bitcoin-native leveraged trading. Listen to the recording — this is one you don’t want to miss.

For the coming week, we’ll be joined by Longstreet.btc from Leather Lounge, a veteran artist and music creator with over four years of experience, as well as host of the Leather Lounge. Don’t miss the chance to hear from a true OG in art and music. Follow our channel to stay up to date.

Market Review

Bitcoin slipped this week, dropping from $87,000 last Friday to $83,000. Market carry rates, including funding rates, basis spreads, and options premiums, remained flat. On balance, funding rates were negative, with rates particularly low on Sunday evening and Monday morning as Bitcoin approached the $82,000 level. If Bitcoin revisits the $82,000 to $80,000 range, increased volatility is likely. The average (equal-weighted) basis spread stayed steady at 5%. Bitcoin’s implied volatility (DVOL) dropped to a multi-month low of 45.42% at noon UTC on March 27th, then rose to 52% by the following Saturday, where it remains.

Aggregated altcoin market caps fell slightly week-over-week from $1.03T to $972 million. Bitcoin dominance rose 0.78% this week to 62.83% of total crypto market cap, a high not seen since March 2021. Bitcoin dominance has continuously been trending higher since December 2022. The long Bitcoin and short Ethereum trade has been one of the best performing and lowest volatility trades in the last two and a half years.

The moving averages (MA) in Figure 1 are:

• 7-Day MA: $83,048

• 30-Day MA: $84,250

• 180-Day MA: $89,153

• 360-Day MA: $76,091

• 200-Week MA: $45,450

Bitcoin remains 7.06% below its 180-day (6-month) moving average (MA), having broken below this key long-term indicator a month ago. It is currently trading 0.23% below the 7-day MA and 1.65% below the 30-day MA. However, it continues to hold above both the 1-year (360-day) and 200-week MAs. The downtrend remains intact until Bitcoin reclaims both short-term MAs and the 180-day MA from below.

Bitcoin downside levels: $82,500, $78,500, $76,000, $67,000, $65,000

Bitcoin upside levels: $109,500, $105,000, $102,000, $99,500, $98,000, $96,000, $92,000, $88,000, $84,000

Trend Following

Returns for Bitcoin 7-day and 30-day long trend-following portfolios are down 20.81% from local highs set in late January. This marks the steepest drawdown since April 2024, when losses exceeded 25%.

The sustained decline in long-trend strategies signals a broader deleveraging phase across crypto markets. The drawdown, now nearing two months, has flushed out significant leverage in Bitcoin. A bullish macro catalyst could revive risk appetite, as sidelined traders begin to re-enter and re-leverage.

If the downturn persists, some larger funds may be forced to unwind, potentially triggering additional liquidation cascades. While a turnaround remains possible so long as major players stay afloat, signs of stress are emerging—FalconX, the largest OTC market-making firm, recently saw senior departures amid speculation of significant losses from long trend-following altcoin positions. Their potential unwind may have contributed to the broader altcoin selloff.

Liquidations

Despite Bitcoin revisiting recent lows this week, long liquidations across all exchanges remain relatively muted, totaling $274.46 million—up from a revised $215.11 million last week.

BTC ETF Flows

Net outflows since Friday, March 28th totaled $193.3 million, a sharp reversal from the $372.7 million in net inflows recorded the previous week.

Volatility

Bitcoin’s implied volatility (DVOL) currently sits at 52.14%, placing it in the 24.9th percentile relative to its average level over the past year. For most of the last eight months, DVOL has ranged between 50% and 70%, and it now hovers near the bottom of that range—despite ongoing market turbulence. Historically, DVOL has shown a strong tendency to mean-revert when nearing the extremes of this established nine-month range.

Basis Spread

The basis spread, the premium of futures prices over spot, remains positive across all maturities. The average annualized basis declined 0.36 percentage points week-over-week, from 4.99% to 4.63%.

The futures curve remains in a normal contango, with the front-week contract (April 11th) yielding the lowest APR at 2.56%. Yields rise steadily across maturities, with a 3.58% spread between the highest and lowest yielding contracts—up from 3.24% last week.

The current futures curve remains bearish in the near term. An upward-sloping contango, where front maturities yield less than longer-dated ones, signals weak spot demand. In contrast, January's steep downward-sloping contango (Figure 10) reflected strong short-term demand.

The ideal bullish curve is a downward-sloping contango, where front-month futures trade at a premium due to market makers hedging near-term exposures (e.g., options, perps, spot). Higher front-end APRs relative to longer maturities indicate stronger near-term bullish sentiment.

Macro

Since taking office on January 20th, Trump has shifted U.S. geopolitical policy to emphasize domestic production through tariffs and a reallocation of military assets. This week, markets were jolted by higher-than-expected tariffs imposed on all countries except Canada and Mexico.

The administration’s tariff rates are roughly half of what it claims are the effective rates faced by U.S. exports—though these foreign "rates" are calculated unconventionally by dividing the U.S. trade deficit with each country by the value of its exports to the U.S. For example, using 2024 data, the U.S. trade deficit with China was $295.2 billion against $462.5 billion in imports, yielding an implied 63.8% rate—close to the administration’s published 67%. A minimum 10% tariff was applied to all countries, regardless of their trade balance with the U.S.

Markets reacted sharply. The S&P 500 fell 4.84% and the Nasdaq dropped 5.41% on Thursday—one of the 30 largest one-day declines in the S&P 500 over the past three decades. Bitcoin, by contrast, declined just 3.5% from the Thursday open, reflecting relative resilience. While crypto assets aren’t directly affected by tariffs, they are sensitive to shifts in investor sentiment and global liquidity. Since February, investors have been rotating out of speculative assets like tech and crypto in response to the evolving tariff regime. However, crypto has fared better than equities in the latest downturn, likely due to earlier positioning.

On March 19th, the Federal Reserve held its second FOMC meeting of the year. While rates remained unchanged, Chair Powell announced a fivefold reduction in quantitative tightening (QT), cutting monthly Treasury redemptions from $25 billion to $5 billion starting in April. His tone was generally dovish, citing a strong economy and job market, alongside moderating inflation. JP Morgan Chase estimated this week that Trump’s tariff policy could raise inflation by 1–1.5 percentage points. If realized, this would limit the Fed’s room to cut rates or further ease QT, potentially dampening risk asset performance.

Treasury markets reflected the policy shift. Since peaking at 4.97% on January 10th, 30-year yields have declined to 4.43%. Last Thursday, yields fell sharply from 4.7% to 4.43% as investors moved into bonds. The Dollar Index (DXY) dropped 1.7% on Thursday following Trump’s after-hours tariff announcement, signaling a shift toward safe-haven assets amid policy uncertainty.

Volatility surged across markets. The VIX rose to 30.02 from 20.09, and the MOVE index climbed to 112 from 106.19—its highest equity volatility reading since August 2024.

Sincerely,
The Hermetica Team