IN THIS ISSUE

📝 Stablecoins: The emerging market story
🎥 Hermetica Hangout: Zero Authority DAO
💰 USDh yield recap
📈 Weekly market review

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Stablecoins: The Emerging Market Story

StIt may not come as a surprise, but stablecoin adoption is skyrocketing. There are now $160b worth of stablecoins in circulation — up from just single-digit billions in 2020.

But what are the practical applications of stablecoins? Great question.

In a recent report, Castle Island Ventures and Brevan Howard Digital dug into the real-world applications of stablecoins and how they offer a compelling alternative to traditional fiat-backed systems, especially in emerging markets.

From cross-border payments to payroll and currency substitution, stablecoins provide users with reliable, fast, and programmable ways to manage money.

Want to learn more about how stablecoins are reshaping global transactions? Dive into the full report here:

Hermetica Hangout: Zero Authority DAO

Did you miss Hermetica Hangout #10? We’ve got you covered. This week we sat down with Zero Authority DAO to discuss:

We have something very special planned for our next Hermetica Hangout — it's one you definitely won’t want to miss! Follow the Hermetica X account and turn on notifications for updates so you stay up to date.

In the meantime, tune into the recording of Hermetica Hangout #10 with Zero Authority DAO!

USDh Yield Recap

The days of losing your dollars to inflation are over. USDh lets you do the opposite — this week sUSDh holders earned 2% APY.

Stake USDh today — don’t miss out on your chance to earn up to 25% APY.

Market Review

Bitcoin maintains its medium-term downtrend as the current price sits in the $57,900 range.

The moving averages (MA) in Figure 1 are:

• 7-Day MA: $56,736

• 30-Day MA: $58,822

• 180-Day MA: $63,721

• 360-Day MA: $52,852

The medium-term 30-day and 180-day MAs are above the current price, indicating resistance, while the short-term 7-day MA and the longer-term 360-day and 200-week MAs are below, providing potential support. Price remains in a medium-term downtrend until it breaks above the 180-day MA. During this week’s dip, price bounced off the 360-day MA, marking the second time in a month it has done so. A third test of this level may not hold.

Should the price continue to increase, we can estimate the upside price levels where the price is likely to meet resistance: $60,000, $63,000, $64,000, $68,000, $70,000, $72,000, and $74,000.

However, if price momentum continues downward, we would expect support levels at $55,000 and $49,000.

Bitcoin returns are currently at:

• 1 month: -1.08%

• 3 months: -12.21%

• 6 months: -15.08%

Despite a recent price decline, annual returns for Bitcoin remain high at +119%. While Bitcoin is unlikely to fully retrace its one-year rally, the slow decline over the past 6 months hasn’t been sufficient to reverse the current downtrend. A faster or more significant drop in prices would increase the probability of a trend reversal. The market is still absorbing over 100% gains from late 2023 to early 2024, leading to continued profit-taking from traders who bought in during that period.

BTC ETF Flows

Net BTC ETF flows since last Friday were negative, with a total outflow of -$29.3 million.

Average daily flows were -$5.86 million. Overall slight outflows on low volumes except for last Friday.

Volatility

Bitcoin's implied volatility (DVOL) is currently at 53.88%. DVOL is currently in the 42.2 percentile.

DVOL has been in a gradual downtrend since the liquidation event a month ago.

Basis Spread

The basis spread, or the price of a futures contract over its spot price, is positive across all maturities, but the absolute yield across all maturities has fallen slightly and now sits around 8%.

The futures curve is in a flat normal contango with front month (September 27th) APR lower than all other maturities, except front week (September 20th) and back month (October 25th). The basis rises in December and then flattens out there after. This yield curve is positively sloped, but with less than a 2% difference between the lowest and highest yielding maturities.

For Bitcoin this is not a bullish curve yet, but it is trending in the right direction and might signal a local market bottom.

Bullish Bitcoin futures curves are typically special contangos (Figure 6) where front month has the highest APR, and APR falls every maturity thereafter, but APR is positive along the whole curve.

This is the most bullish curve in the short term because market makers use front month as a substitute for perps and spot during periods of high demand.

Macro

S&P 500 implied volatility (VIX) currently stands at 17.12, while US Treasury implied volatility is at 98.03.

Sincerely,
The Hermetica Team