IN THIS ISSUE

📝 Why we need USDh
🎥 Hermetica Hangout: Velar
💰 USDh yield recap
📈 Weekly market review

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Why We Need USDh

Stablecoins aren't new — USDT has been around for a decade. Today, they account for 70%+ of on-chain transaction volume, with over $130b in value.

So, why do we need another stablecoin? Why do we need USDh?

Learn more in our latest article where we explore the advantages and drawbacks of the two main types of stablecoins and explain how USDh overcomes their limitations.

Hermetica Hangout: Velar

Did you miss Hermetica Hangout #9? Jakob, our Founder and CEO, sat down with Velar to discuss:

Want more? Check out the Stacks DeFi Show for an inside look at what Hermetica and other builders are working on.

Stay tuned for our next Hermetica Hangout! We’ll be posting an official reminder on X this Monday, so follow the Hermetica X account and turn on notifications for updates.

In the meantime, tune into the recording of Hermetica Hangout #9 with Velar!

USDh Yield Recap

sUSDh holders earned a cool 6% APY this week as week #36 closes.

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

Market Review

Bitcoin’s price has gradually declined from $59,000 last Friday to $56,000 today.

Bitcoin remains in a downtrend, trading below several key moving averages (MAs), including the 6-month MA at $64,259, the 5-week MA at $59,287, and the 1-month MA at $59,700.

The cluster of MAs around $63,000 is expected to serve as strong resistance for any upward movement. Price action has been relatively flat over the past two weeks, allowing the 4- and 5-week MAs to close in on the current price, with the potential for a crossover. If this crossover occurs, it could break the downtrend and increase the chances of a rally to around $65,000.

The price remains above the 1-year MA at $52,274 and the 200-week MA at $38,724, both of which acted as key support during the last liquidation event. Traders may look to re-enter at the 1-year MA if the price pulls back again.

If Bitcoin's price continues to rise, resistance levels are expected at $58,000, $63,000, $64,000, $68,000, $70,000, $72,000, and $74,000. Conversely, if the downtrend persists, support levels are likely at $55,000 and $49,000.

BTC ETF Flows

Net BTC ETF flows since last Friday were negative, totaling -$711.7 million, with an average daily outflow of -$177.9 million.

Volatility

Bitcoin's implied volatility (DVOL) is currently at 56.81%, placing it in the 65.4th 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 short end of the curve has fallen to almost zero in the last week.

The futures curve is in an archetypical normal contango with front month (September 27th) APR lower than all other maturities. The basis rises in the back month (October 27th) and then flattens out thereafter. This yield curve is positively sloped, but less steep than it was in recent weeks. For Bitcoin this is not a bullish curve in the short term.

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

The macro environment has started to turn turbulent again, roughly a month after the Nikkei and Yen-Dollar liquidation event. The VIX reached a local high of 23.4 on Wednesday, with stocks experiencing their sharpest decline since the carry trade unwinding. While stock volatility is expected to ease into next week, it will likely remain elevated compared to pre-liquidation levels.

S&P 500 implied volatility (VIX) currently stands at 19.89, while US Treasury implied volatility is at 114.81.

Sincerely,
The Hermetica Team