IN THIS ISSUE

🔎 USDh deep dive
💱 How to buy USDh
💰 USDh yield recap
📈 Weekly market review

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USDh Deep Dive

Join Jax Dwyer, host of the Building Web3 Podcast, and Jakob, our Founder and CEO, as they do a deep dive into USDh. Watch as they discuss:

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How to Buy USDh

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Learn how to buy USDh on Stacks and Runes in our step-by-step guide. Once you have USDh in your wallet, the opportunities are endless.

USDh Yield Recap

The yield that keeps on giving - week #50 brings sUSDh holders 18% APY.

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Market Review

Bitcoin remains in an uptrend, having surpassed the $100,000 mark on Tuesday morning. This key level has been tested multiple times over the past two weeks, with each retest increasing the likelihood of a decisive breakout on the next attempt.

The moving averages (MA) in Figure 1 are:

• 7-Day MA: $99,482

• 30-Day MA: $95,984

• 180-Day MA: $68,928

• 360-Day MA: $63,594

• 200-Week MA: $42,091

Moving averages, particularly the 7-day and 30-day MAs, continue to provide critical support in this bull market. These levels often serve as local nadirs before price resumes upward movement. Last week demonstrated this, as the 30-day MA acted as support during the liquidation cascade from $100,000. Short-term moving averages have compressed around the current price, allowing traders to consolidate positions, further increasing the probability of a breakout.

The current price structure is highly bullish. Bitcoin remains in price discovery until one of the following support levels is breached: $92,000, $90,000, $88,000, $74,000, $72,000, $70,000, or $68,000.

Last week’s breakout and subsequent pullback were driven by short covering and long liquidations, resulting in significant price volatility. The large sell orders that had been capping Bitcoin at the psychologically significant $100,000 level have now been cleared, setting the stage for a potential breakout in the near term.

The Bitcoin returns are as follows:

• 1 month: 10.51%

• 3 months: 66.66%

• 6 months: 50.12%

• 12 months: 132.51%

Bitcoin's annual return is currently 132.51%, though it has begun to decline as December 2023 prices roll off the trailing 1-year calculation. With an average annual return of 56% since 2015, the current figure remains well above historical norms and is expected to stay elevated until February 2024—barring additional rallies.

Bitcoin's annual return currently stands at 132.51%, but it is beginning to decline as we move into December, with prices from December 2023 rolling off the trailing 1-year return. Since 2015, Bitcoin's average annual return has been around 56%, meaning the current trailing 1-year return remains significantly above average. This return will stay elevated until February 2024, assuming there is no further rally in the meantime.

Historically, periods of above-average returns are often followed by below-average performance, and vice versa. After a gradual downtrend from the BTC ETF launch in Q1 2024 to Donald Trump’s reelection on November 5th, Bitcoin's 1-year return is now indexed to a higher starting price. This elevated return should not be misinterpreted as signaling a market top.

BTC ETF Flows

ETF Inflows remained strong this week, totaling $2.115 billion. Over the past six weeks, net inflows were $2.5 billion, $2.67 billion, $1.37 billion, $0.66 billion, $0.035 billion, and $1.066 billion, respectively, with an average daily flow of $217.18 million this week. If inflows continue at this pace, they are likely to provide strong support for Bitcoin's price.

Volatility

Bitcoin's implied volatility (DVOL) currently stands at 58.62%, placing it in the 67.8th percentile compared to levels observed over the past year.

DVOL has been consolidating around 58% as Bitcoin's price stalls near $100,000. Market makers tend to benefit when volatility returns to the center of a long-term range, as their short option positions move further out of the money. However, if Bitcoin breaks above $100,000 on high volume, DVOL is likely to spike sharply.

Basis Spread

The basis spread, or the price of a futures contract over its spot price, is positive across all maturities. The average spread of all maturities is about 16% over the last week, flat from the week prior.

The futures curve is in an inverted contango from the week (December 20th) onward. The basis falls continuously from the front week to September 2025’s maturity in a smooth curve. There is about a 2% difference between the lowest and highest yielding maturities, down from 13% last week.

A steep downward sloping contango indicates that demand for closer maturities is outstripping supply and becoming detached from Bitcoin’s long run APR. The more detached close maturities become the more bullish the market is on near term price action.

Bullish Bitcoin futures curves are typically special inverted contangos where the front month has the highest APR, and APR falls every maturity thereafter, but APR remains positive along the whole curve. This week’s futures is a good example.

This is the most bullish curve in the short term because market makers use the front month to hedge short perp and spot positions during periods of high demand.

Macro

Market volatility has responded predictably. Equity implied volatility (VIX) hovers near a five-month low of 12.83, while U.S. Treasury volatility recently dropped to 91.47, nearing a break in its upward trend. Both equity and bond market volatilities spiked pre-election but have since declined sharply, with market makers resuming liquidity provision. This stabilization reflects the interplay of fiscal, monetary, and political factors shaping the post-election landscape.

Sincerely,
The Hermetica Team