IN THIS ISSUE

🔌 USDh powers first Bitcoin PerpDEX
💵 Fresh stablecoin liquidity
💸 USDh yield recap
☎️ Hermetica Hangout: Velar
📈 Weekly market review

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USDh Powers First Bitcoin PerpDex

The first-ever Bitcoin-native perpetual DEX is here! Built by Velar, entirely on Stacks, settled into Bitcoin.

We are excited to announce that sBTC/USDh is the first pair on the Velar PerpDEX!

Now  users can trade Bitcoin with leverage, fully on-chain, using USDh as collateral.This integration brings a new level of efficiency and decentralization to Bitcoin DeFi, giving users the ability to access leveraged positions while staying completely within the Bitcoin ecosystem.

Trading is live. Jump in early and trade the sBTC/USDh pair on Velar to start earning.

Fresh Stablecoin Liquidity

Stablecoins are bigger than ever. According to a new report by Insight4VC, global stablecoin supply has hit $215 billion as of Q1 2025, with on-chain transactions surging to $5.6 trillion in 2024—nearly 40% of Visa’s annual payments volume.

Beyond trading, stablecoins are becoming real-world money in places like Nigeria, Argentina, Mexico, and Turkey, powering remittances, payroll, and savings where stability matters most.

Institutions are also taking note. Visa, Stripe, and BlackRock are pushing major stablecoin settlement integrations to complement their traditional rails with more development expected in the near term.

The stablecoin era isn’t coming—it’s already here. Find out what could be next in the full report.

USDh Yield Recap

This week’s USDh APY came in at 3%, not the flashiest number, but steady hands know the game. Sometimes the printers whisper… sometimes they roar. Let’s see what next week brings.

Hermetica Hangout: Jackbinswitch

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 traded sideways for most of the week before breaking its short-term range on Friday, dropping from $97,000 to $95,000. Market carry rates (funding rates, basis spread, options premium, etc.) remained flat overall. Funding rates were negative on net, with particularly bearish sentiment during Asian trading hours. The equal-weighted basis spread held steady at 5%.

Bitcoin’s implied volatility (DVOL) hit a multi-month low of 45.42% at noon UTC on Thursday before reversing sharply on Friday morning, spiking to 52.25%.

The total altcoin market cap declined slightly week-over-week from $1.04T to $1.03T, while Bitcoin dominance increased by 0.75% to 62.05%, continuing its upward trend since December 2022. Meanwhile, the long Bitcoin, short Ethereum cross-trade has remained one of the best-performing and lowest-volatility trades over the past two and a half years.

The moving averages (MA) in Figure 1 are:

• 7-Day MA: $86,295

• 30-Day MA: $85,345

• 180-Day MA: $88,330

• 360-Day MA: $75,815

• 200-Week MA: $45,219

Bitcoin remains 3.64% below its 180-day (6-month) moving average (MA) after breaking below this key long-term level three weeks ago. It currently sits 1.37% below the 7-day MA and 0.27% below the 30-day MA, while remaining above both the 1-year (360-day) and 200-week MAs. The downtrend persists until Bitcoin reclaims both short-term MAs and the 180-day MA from below.

Bitcoin downside levels: $84,000, $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

Trend Following

Bitcoin trend-following portfolios, based on 7-day and 30-day strategies, are down 15.43% from their local highs in late January, marking their steepest decline since April 2024, when losses exceeded 25%.

Traders often leverage their trend portfolios to maximize gains during strong rallies, which reinforces upward momentum. However, these leveraged positions unravel when Bitcoin’s returns fall below the interest cost of leverage for an extended period. As traders struggle to cover interest expenses, forced liquidations drive prices lower, triggering further unwinding in a self-reinforcing cycle. This process continues until an equilibrium is reached, with new or non-leveraged buyers stepping in to absorb liquidations.

The prolonged drawdown in trend strategies signals an ongoing deleveraging phase across crypto markets. After nearly two months of liquidation-driven declines, much of Bitcoin’s excess leverage has been cleared. With the market now carrying minimal debt overhang, a releveraging catalyst like a bullish macro event or positive signals from the White House could restore confidence and fuel a price recovery.

Liquidations

Bitcoin long liquidations across all exchanges remain low at $144.48 million this week, falling from $205.04 million last week.

BTC ETF Flows

Net inflows since Friday, March 14, totaled $372.7 million, down from $702.5 million the previous week.

Volatility

Bitcoin’s implied volatility (DVOL) currently stands at 49.74%, placing it in the 12.6th percentile relative to its average level over the past year. For most of the last eight months, DVOL has ranged between 50% and 70%, but it has now dipped below the lower bound of this range despite a volatility spike earlier today. Given DVOL’s strong mean-reverting behavior near the extremes of its nine-month range, yesterday’s low levels made a volatility shock likely.

Additionally, today's quarterly expiration of Deribit futures and options contracts may have contributed to the rise in volatility. Liquidity has likely been spread across a larger number of contracts, as market makers redirected liquidity away from existing pools to accommodate the launch of May 2025 and March 2026 options. Since options volatility is a function of option prices, reduced liquidity can drive up prices, which in turn increases implied volatility.

Basis Spread

Today marks the quarterly expiration for Deribit futures and options contracts, with several new contracts, including May 2025 and March 2026, launching. With liquidity now distributed across a broader set of contracts, individual contract liquidity is likely to remain lower in the short term.

The basis spread, the premium of futures contracts over spot prices, remains positive across all maturities. However, the average basis spread declined 0.34% week-over-week, from 4.97% APR to 4.63% APR. Since the start of the month, the basis spread has fallen by 3.4% APR.

The futures curve is in a normal contango with only the back week contract (April 11th) APR slightly above the front month (April 25th) APR. The futures curve declined by an average of 0.34% across all maturities, maintaining its shape week-over-week. The spread between the lowest and highest yielding maturities has increased to 3.24%, up from 2.54% last week. This spread expansion is partly due to the 0.3% premium of the March 2026 contract over the highest APR.

The current futures curve remains relatively bearish in the near-term. An upward-sloping normal contango, where the front part of the curve is below more distant maturities, signals weak demand for spot buying. In contrast, the futures curve from a month ago (Figure 10) was in a steep downward-sloping contango, indicating strong demand.

The ideal futures curve is a downward-sloping contango, where demand for shorter-term maturities exceeds the supply that market makers can obtain in the short run. Market makers use front-month futures to hedge short or current-duration assets, such as front-week options, perpetuals, or spot. By utilizing front-month maturities, market makers can manage larger positions while maintaining delta neutrality. The more bullish the market is in the near term, the higher the APR for front-month futures relative to longer maturities.

Macro

Since taking office on January 20, Trump has reshaped U.S. geopolitical policy, emphasizing domestic production through tariffs and shifting military priorities. While tariffs are the most visible aspect of this strategy, their actual increases may be lower than initially discussed. In a Newsmax interview this week, Trump suggested he would take a more lenient approach, but later reaffirmed a 25% tariff on cars, set to take effect next Wednesday.

On the monetary front, the Federal Reserve held its second FOMC meeting of the year on March 19. While rates remained unchanged, the Fed announced a significant reduction in quantitative tightening (QT), lowering monthly Treasury redemptions from $25 billion to $5 billion starting in April. Fed Chair Powell struck a dovish tone, highlighting economic strength but acknowledging inflation’s uncertain trajectory. He reiterated that the Fed would adjust policy as needed if economic indicators weakened.

Markets reacted positively to the Fed’s stance, with the S&P 500 gaining 1% and Bitcoin rising 5% on the day. Equity volatility (VIX) has retraced half of its recent breakout, while Treasury bond volatility remains in a long-term downtrend. Treasury yields, which surged from 4.31% to 4.97% after December’s FOMC meeting, have since settled at 4.68%, reflecting ongoing demand pressures from Europe and the unwinding of the yen-dollar carry trade.

The VIX and Treasury bond volatility (MOVE) indices now stand at 20.09 and 106.19, respectively, with VIX finding support at current levels and beginning to trend higher again.

Sincerely,
The Hermetica Team