IN THIS ISSUE

📊 USDh Dashboard Upgrade
🛡️ Custodian Attestations: September 2025
🗞️ Stablecoin Supply Grows
💰 USDh Yield Recap
☎️ Hermetica Hangout
📈 Weekly Market Review

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USDh Dashboard Upgrade

Two new charts are live on our APY dashboard:

🔸Average Funding: Tracks  BTC perp funding powering USDh yield
🔸 Average Perp Yield by Quarter: Tracks  average perp yields by quarter

Check out the dashboards for a clear view of the mechanics behind USDh’s sustainable yield.

Custodian Attestations: September 2025

The September 2025 USDh attestation is live.

Independent verification confirms that all Bitcoin collateral is securely held in institutional-grade, off-exchange custody, maintaining full 1:1 USDh backing.

In summary, as of the snapshot time:

• USDh supply: $6,294,488.48

• Copper custodied assets: $3,395,041.10

• Ceffu custodied assets: $2,607,379.42

• Redeeming Reserve Stacks: $249,954.10

• Redeeming Reserve Ethereum: $4,087.92

• Minting Wallet: $36,704.97

• Total backing assets: $6,294,686.48

• Reserve Fund: $77,681.61

  • USDC: $75,148.12

  • USDh: $2,533.49

• Total % of USDh: 101.19% 

See the full breakdown of USDh’s Bitcoin backing, verified by Copper and Ceffu.

Stablecoin Supply Grows

Stablecoins added $4.85B to total supply over the past week, bringing the total market cap to $295.57B.

Within that, USDh has expanded by 25% over the past quarter, matching the growing demand for Bitcoin-backed and yield-bearing stables.

USDh Yield Recap

We brought a little green to a sea of red.

While markets dumped, USDh paid 4% APY this week.

Hermetica Hangout

Next week, we’re hosting Zest Protocol for a session on Bitcoin credit markets.

Join us to learn about recent updates, the BTC-USDh borrow loop, and new opportunities in Bitcoin DeFi.

Set your reminder now.

Market Review

Bitcoin is now trading at $109,500, slightly below its July to September range low. Bitcoin dominance back up to 58.92%, with aggregated altcoin market caps down week-over-week from $1.7T to $1.52T. 

• DVOL has risen from multi-year lows to 37.98% 

• The average equal-weighted futures basis spread is down to 5.53% APR

• The futures curve continues to steepen and become more typical for a contango

• Perpetual futures were positive all week, peaking at 28.47% on Thursday

The moving averages (MA) in Figure 1 are:

• Current Price: $109,500

• 7-Day MA:  $112,500

• 30-Day MA: $112,700

• 180-Day MA: $106,300

• 360-Day MA: $97,500

• 200-Week MA: $53,000

Bitcoin is trading below the 7-day and 30-day MAs. Bitcoin’s price action is beginning to mirror the prolonged decline seen in early 2024.

Trend Following

Returns for a Bitcoin 7-day and 30-day long trend-following portfolio are down 8.79% from January’s ATH. Current price action remains challenging for quantitative trend strategies. Low liquidity makes Bitcoin vulnerable to sharp swings that mislead quantitative systems, triggering false signals from random noise that would stay below thresholds in more liquid markets.

BTC ETF Flows

Net outflows totaled $257M this week, down $1.56B from last week’s $1.31B in inflows. Ethereum ETFs saw outflows of $500M.

Volatility

Bitcoin’s implied volatility (DVOL) rose to 37.98% this week, increasing from multi-year lows. Low implied volatility typically signals weak demand in crypto markets. However, volatility is also in a long-term downtrend due to systematic market maker hedging in the Deribit options market. Both factors contribute to the current low implied volatility.

TradFi Bitcoin products like ETFs and portfolio companies are increasingly selling call options for yield, putting systematic downward pressure on option prices and implied volatility. Yield Max’s $MSTY, for example, sells $4.5B in notional calls on Strategy stock monthly and quarterly. Many hedge funds run similar trades on miners and Bitcoin ETFs. Market makers buy these calls and resell on Deribit to lock in spreads, capping DVOL even as rising prices would normally trigger delta hedging. With prices now falling, this call-selling strategy is likely to grow even more popular.

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 from 6.82% APR to 5.53% APR, erasing most spread expansion from earlier this month.

The futures curve is in normal contango, with the front month trading below later maturities and a 5.73% spread between the lowest- and highest-yielding contracts. It’s now at its steepest level since August 15. Futures open interest remains 33% below December levels despite higher spot prices.

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 for the first time in nine months. The cut aligns with the recent policy framework changes that emphasize flexible inflation targeting and a balanced approach 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. interest rate policy. The European Central Bank (ECB) cut rates by 25 bps on June 6th, but has not cut again 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.

The Dollar Index (DXY) is 98.32 as of Thursday evening, rebounding from a three-year low of 96.25 on September 17. 30-year Treasury yields are flat week-over-week at 4.75%. The VIX is currently 16.88%, up from 15.54% last week, while the interest rate-adjusted MOVE index (MOVE index/10 Year Treasury Bond Yield) is currently near a multi-year low at 18.01%. 

Sincerely,
The Hermetica Team