IN THIS ISSUE

📰 Jakob Talks USDh Live
🌏 Global Stablecoin Snapshot
💰 USDh Yield Recap
☎️ Hermetica Hangout: Alpen Labs
📈 Weekly Market Review

Like what you see? Follow us on X so you don’t miss any future announcements:

Jakob Talks USDh Live

Jakob, our Founder and CEO, joined the STX Bitcoin DeFi Basics stream to break down USDh and its role in the growing BTCfi ecosystem.

Watch the replay to learn:

🔸 How USDh works
🔸 Where the consistent yield comes from
🔸 How to track real-time performance in our Transparency and APY dashboards.

Global Stablecoin Snapshot

Global stablecoin supply now exceeds $281B, a new all-time high, according to Artemis.

In LATAM, stablecoins dominate exchange flows, accounting for over 90% of trading volume across major markets.

In Africa, adoption has surged over the past year. Nigeria alone saw nearly $22B in stablecoin transactions.

USDh is part of a larger global trend; a Bitcoin-backed stablecoin that adds yield and transparency to the foundation already being laid.

USDh Yield Recap

USDh paid 7% APY this week.

In TradFi, this would be a dream headline. In BTCfi, it’s just another day of Bitcoin-backed stablecoin delivering yield.

 Hold USDh, earn daily, and let your stablecoin work for you.

Hermetica Hangout: Alpen Labs

This week, we hosted Alpen Labs for a session on their new cryptographic breakthrough, Glock (Garbled Locks for Bitcoin). If you missed the session, catch the recording here. 

Next week, join us for another session spotlighting builders pushing BTCfi forward. Set your reminder so you don’t miss the news.

Market Review

Total crypto market cap fell 3%, with Bitcoin sinking to $113,000, its range low. Bitcoin continues to stagnate this week, even as equities reach all-time highs. It has established a range between $110,000 and $120,000, the previous range high. 

Aggregated altcoin market caps fell from $1.59T to $1.56T this week, while Bitcoin dominance rose 0.54%.

• DVOL ranges between 34 and 40

• The average equal-weighted futures basis spread is down 1.51% APR to 6.3% APR

• The futures curve remains relatively flat, though it steepened over the last two weeks

• Perpetual futures (perps) funding rates were positive throughout the week, peaking at 11% on Wednesday, but remained near zero for most of the period

The moving averages (MA) in Figure 1 are:

• Current Price:  $111,500

• 7-Day MA:  $110,200

• 30-Day MA: $114,300

• 180-Day MA:  $102,900

• 360-Day MA:  $94,400

• 200-Week MA: $52,200

Bitcoin is trading below its 30-day MA but remains above the 7-day. A bull trend break is possible if the price lingers under short-term MAs. Relative strength in altcoins shows demand moving up the risk curve.

Trend Following

Returns for a Bitcoin 7-day and 30-day long trend-following portfolio are down 7.69% from January’s ATH. The portfolio was only long on Wednesday and Thursday with no gains. Current price action and low liquidity make Bitcoin vulnerable to sharp swings, creating tough conditions for quantitative trend strategies. In illiquid markets, sharp price moves can trick quantitative trading systems into false buy or sell signals, since random noise crosses trigger levels. In high-liquidity markets, the same moves would stay below signal thresholds.

BTC ETF Flows

Net inflows totaled $284M this week, down $260M from last week’s $544M. Ethereum ETFs saw $505M in outflows, contributing to a rise in Bitcoin dominance.

Volatility

Bitcoin’s implied volatility (DVOL) bounced off early August lows of 34.35% to 38.60% but remains at levels not seen since September 2023. Low implied volatility could indicate weak demand or that market makers are already hedged.

TradFi Bitcoin products like ETFs and portfolio companies often sell call options for yield, putting systematic downward pressure on options prices and implied volatility. For instance, Yield Max’s $MSTY sells $4.5B in notional calls on Strategy (formerly MicroStrategy) stock each month and quarter. Hundreds of hedge funds run similar trades on Bitcoin miners and ETFs, with market makers buying these calls and reselling on Deribit to lock in spreads. Call selling is keeping DVOL capped, even as price rallies would normally trigger delta hedging by market makers.

Basis Spread

The basis spread, or the price of a futures contract over its spot price, is positive across all maturities. The average (equal-weighted) basis spread fell 1.7% APR, from 8% to 6.3%.

The futures curve is in a flat normal contango, with the front month trading below later maturities. There is a 1.51% spread between the lowest- and highest-yielding maturity. The curve is slightly steeper than the structure of the last two weeks, which were among the flattest in our recent data. There is little evidence of contract duration preference.

Deribit’s Bitcoin futures curve remains indirectly constrained by TradFi call selling, and futures open interest sits 33% below December levels despite rising spot prices.

Macro

On August 22nd, Federal Reserve Chairman Jerome Powell gave a speech at the Jackson Hole Monetary Conference, where he introduced significant updates to the Fed’s monetary policy framework. 

The new framework abandons the strategy of aiming for inflation moderately above 2% to make up for past shortfalls. The revisions emphasize a return to flexible inflation targeting and a balanced approach when employment and inflation goals conflict. Markets interpreted this information as dovish.

The European Central Bank (ECB) cut rates by 25 bps on June 6th and has not cut further despite increased clarity on its trade deal with the U.S. The Swiss National Bank cut rates by 25 bps to 0% in June, while the People’s Bank of China (PBOC) did not cut. The Bank of England (BOE) lowered rates by 25 bps on August 7th, and the Bank of Australia cut rates by 25 bps on August 12th. Britain and Australia remain the only major central banks to have lowered rates since June.

The Dollar Index ($DXY), which measures the US dollar against a basket of currencies, stood at 98.08 as of Thursday evening, near 3-year lows. DXY saw a small selloff last week after Trump’s letter to Governor Cook due to concerns about Fed policy, but the impact was minor and the index has since rebounded.

30-year Treasury yields hit 5.15% on May 22, the highest since the 2023 rate-hike cycle ended. Yields are currently at 4.86%, still near multi-year highs despite Powell’s dovish framework shift on August 22. In Q2 and early Q3, rising long-term yields paired with a weak DXY signaled foreign investors diversifying away from U.S. markets, but recent trade deal announcements suggest this trend may be reversing.

Historically, $DXY and U.S. Treasury bond yields have maintained a strong positive correlation. Figure 8 demonstrates this relationship between the relative value of the dollar ($DXY) and U.S. Treasury bond yields.

Both equity market implied volatility (VIX) and U.S. Treasury bond implied volatility (MOVE) are near their long-term steady state. The impact on equity IV from the Middle East conflict was mild and when it ended, the VIX fell to new lows. VIX now sits at 15.22, up from 14.44 last week, while MOVE is 88.26, up from a multi-year low of 77.55.

Sincerely,
The Hermetica Team