IN THIS ISSUE

🪙 A New Face for USDh
💸 Jakob Talks BTC Yield Opportunitie
🗞️ Yield-bearing Stables Double
💰 USDh Yield Recap
📈 Weekly Market Review

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A New Face for USDh

USDh and sUSDh have a new face.

The look has changed, but the fundamentals remain.

🔸Still Bitcoin-backed
🔸 Still paying yield
🔸 Still powering BTCfi

A fresh identity for the mission to bring stability and yield to Bitcoin finance.

Jakob talks BTC Yield Opportunities

Our founder and CEO, Jakob, joined the STX Bitcoin DeFi Advanced Stream to share how USDh powers Bitcoin yield on Stacks.

Watch the recording for practical strategies with USDh and how they fit into the broader BTCfi ecosystem.

Yield-bearing Stables Double

Yield-bearing stablecoins continue to find demand.

Stablewatch reports that the total supply of yield-bearing stablecoins doubled since 2025, and has grown by over 1,203% since early 2024.

USDh Yield Recap

7% APY this week.

USDh is the only stablecoin where “stable” applies to yield too.

Market Review

This week, Bitcoin traded between $110,000 and $120,000, the previous range high. While Bitcoin holds its range, altcoins are posting notable relative gains.

Aggregated altcoin market caps rose from $1.66T to $1.7T this week, while Bitcoin dominance slipped 0.12% to a local low. After a three-year rally through June, Bitcoin dominance has only recently begun to reverse.

• DVOL made a new low at 33.8

• The average equal-weighted futures basis spread fell 2.14% to 6.82% APR

• The futures curve continues to steepen

• Perpetual futures funding rates were  in the positive double digits all week, peaking at 25% on Tuesday

The moving averages (MA) in Figure 1 are:

• Current Price:  $116,900

• 7-Day MA:  $116,300

• 30-Day MA: $112,900

• 180-Day MA:  $105,300

• 360-Day MA:  $96,500

• 200-Week MA: $52,700

Bitcoin is trading above the 7-day and 30-day MAs, signaling a weak but resumed uptrend.

Trend Following

Returns for a Bitcoin 7-day and 30-day long trend-following portfolio are down 4.25% from January’s ATH. The portfolio was long every day this week, recovering some previous losses. Current price action remains challenging for quantitative trend strategies. Low liquidity leaves Bitcoin prone to sharp rallies and sell-offs, where random noise triggers false signals that would stay below thresholds in high-liquidity markets.

BTC ETF Flows

Net inflows reached $1.31B this week, down $215M from last week’s $1.52B. Ethereum ETFs saw strong net inflows of $915M.

Volatility

Bitcoin’s implied volatility (DVOL) has fallen to range lows of 33.8, levels not seen since the depths of the 2023 bear market. While low implied volatility typically signals weak demand in crypto markets, it is also being suppressed long-term by systematic market maker hedging on Deribit.

TradFi Bitcoin products like ETFs and portfolio companies increasingly sell call options for yield, creating systematic downward pressure on option prices and implied volatility. Yield Max’s $MSTY, for example, sells $4.5B in notional calls on Strategy (formerly MicroStrategy) stock each month and quarter. Hedge funds run similar trades on miners and Bitcoin ETFs. Market makers buy these calls and resell on Deribit to lock in spreads, keeping DVOL capped even as recent price surges may normally result in delta hedging.

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 2.14% APR, from 8.96% APR to 6.82% APR, erasing most of last week’s spread expansion.

The futures curve is in normal contango, with the front month trading at a lower price than later maturities. There is a 1.5% spread between the lowest and highest yielding maturities. Futures open interest is 33% lower than in December 2024, despite the increase in spot price.

Macro

On September 17th, the Federal Reserve held its 6th FOMC meeting of the year, where Chairman Jerome Powell lowered the federal funds rate by 25 bps.

This shift was prefigured by the recent policy framework change, which enables flexible inflation targeting when employment and inflation goals conflict.

Canada cut interest rates by 25 bps on September 17th, the same day as the U.S., following in lockstep with U.S. monetary policy by design. The European Central Bank (ECB) cut rates by 25 bps on June 6th, but has not cut since. The Swiss National Bank cut rates by 25 bps to 0% in June, while the People’s Bank of China (PBOC) left rates unchanged. 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.

As of Thursday evening, the Dollar Index ($DXY) stands at 97.55. On Wednesday, the DXY reached a three-year low of 96.25. Thirty-year bond yields fell from 4.86% to lows of 4.60% on Wednesday before rebounding to 4.74% today. Both yields and the dollar bottomed during the Fed’s policy announcement but have since stabilized higher than pre-meeting levels.

Both equity market implied volatility (VIX) and U.S. Treasury bond implied volatility (MOVE) are near their long-term steady states. The VIX is currently 15.54, up from 14.69 last week/ The MOVE index is at a multi-year low of 71.91, down from 88.26 two weeks ago. 

Sincerely,
The Hermetica Team