This report is for professional investors and information purposes only. Persons without professional investment experience should not rely on it. Not investment advice or a personal recommendation. Cryptoassets are high risk and volatile and you may lose all capital invested. See full risk information at the end of this document.
- Performance: Cryptoassets took a breather last week and moved in the opposite direction from traditional risk assets - while the S&P 500 marked a fresh all-time high above 7,800 points on the back of softer US inflation prints, Bitcoin retraced towards ~62.8k USD (-3.1% WoW) and Ethereum drifted lower around ~1,880 USD. The relative underperformance was mostly attributable to crypto-specific factors - renewed net outflows from crypto ETPs and the delay of the SEC's planned tokenization framework - rather than the macro backdrop, which actually turned more favourable for risk assets last week.
- Sentiment: Our in-house "Cryptoasset Sentiment Index" increased from a week ago and is now signalling a bullish sentiment again. The improvement in aggregate sentiment despite last week's negative price action suggests that positioning and sentiment are being reset from previously stretched levels - a constellation that has historically provided a more attractive risk/reward setting.
- Chart-of-the-Week: Bitcoin's implied volatility, the market's expectation of how much the price will swing, is near its lowest in this cycle. The BVIV index sits at just 36.8, among the calmest 10% of readings on record. This kind of stillness is unusual and rarely lasts: whenever it has dropped this low before, volatility has tended to pick back up over the following few months. Encouragingly, those past periods of ultra-low volatility were usually followed by positive Bitcoin returns, which suggests the current calm could resolve to the upside, and potentially mark the start of a new bull run.
Chart of the Week
Past performance not indicative of future returns
Source: Glassnode, Deribit, Bitwise Europe
Performance
Last week was characterised by a rare negative decoupling between cryptoassets and traditional risk assets. While US equities extended their "summer melt-up" - the S&P 500 advanced +0.4% WoW and closed above 7,800 points for the first time ever on Thursday, notching its third consecutive weekly gain - Bitcoin declined by around -3.1% WoW to ~62.8k USD, its lowest level since early August. Ethereum fared little better, drifting sideways-to-lower around 1,880 USD and continuing to lag the broader risk-on tone in equities.
The relative underperformance was mostly attributable to crypto-specific factors rather than macro: US spot Bitcoin ETFs saw renewed net outflows towards the end of the week, while the delay of the SEC's planned securities-tokenization framework weighed on sentiment. At the same time, the macro backdrop actually turned more favourable for risk assets - softer-than-expected July PPI and in-line CPI prints reduced the market-implied probability of another Fed rate hike in September but crypto largely sat out the relief rally.
Within traditional financial markets, the picture was constructive but increasingly narrow: The Nasdaq 100 closed at 30,046 points, roughly flat on the week, after reclaiming its 50-day moving average, while the Philadelphia Semiconductor Index (SOX) continued to recover from its bear-market territory reached in late July, posting its highest close in a month intraweek before settling at 12,417 points - just shy of the level that would technically mark a new bull market for semiconductors.
The more interesting action happened in sovereign bond markets: US 10-year Treasury yields tested fresh 19-month highs at 4.75% on Tuesday before easing to around 4.65-4.70% into Friday's close on the back of the softer inflation data and a surprise -0.6% MoM contraction in July retail sales. The long end remained under significantly more pressure - 30-year yields rose to a new 19-year high, and Thursday's 30-year auction saw the Treasury pay the highest borrowing costs in a quarter of a century (~5.2%), following a 10-year sale at the highest yield since 2007.
A key observation is that implied volatilities in Bitcoin remain near cycle lows.
Volmex's implied volatility index (BVIV) is at only 36.8 at the time of writing this report in early Monday morning. As highlighted in our previous Crypto Market Compass report, Bitcoin's option implied volatilities across all expiries are within their historical lowest 10% of observations.
Seasonal analyses also suggest that Bitcoin's 1-month realised volatility is at the lower extreme of the historical band at this time of the year. It is worth highlighting that especially September tends to be a month where Bitcoin has exhibited the lowest realised volatility in the past. August also tends to be subdued in terms of volatility - the classical "summer lull".
That being said, Bitcoin's 1-month implied volatility rarely drops below 40% - and when it does, it usually implies mean-reversion, i.e. rising implied volatilities, especially over a 90+ days time horizon. In other words, it is quite likely that Bitcoin's implied volatility will be higher in 3 months' time.
The good news: Compressed volatility in Bitcoin usually resolves via upside moves.
In fact, the previous instances when Bitcoin's 1-month implied volatility dropped below 40% imply that both Bitcoin's mean and median performances over the coming months might be positive - and that a new bull market may be about to commence (Chart-of-the-Week). These are historical tendencies rather than guarantees, of course, and past patterns need not repeat. That said, downside risks remain, and the worst case implies that Bitcoin may even make new lows instead - a scenario we regard as less likely, though.
Volatilities are also compressed in traditional financial markets.
For instance, the VIX is at the lowest level since late 2025. At the same time, implied volatilities for long-term US Treasury bonds (VXTLT) have gradually increased since mid-July as US 30-year Treasury yields have reached new multi-decade highs.
Long-term government bonds generally remain under pressure, as the most recent Treasury bond auction has highlighted - one of the key reasons being the ongoing divestments by major foreign holders like Japan, who need to sell Treasuries in order to defend the weakening Yen. Today's TIC data on foreign Treasury holdings may provide further details about these divestments, although the data may be somewhat outdated (June data release today).
From a macro perspective, financial markets will probably pay closer attention to the FOMC minutes (to be released on Wednesday this week) for further hints about the future direction of US monetary policy and the prospects for tighter monetary policy.
All in all, from our point of view, the sovereign bond markets remain one of the key macro tail risks for global financial markets and Bitcoin.
However, we do think that scarce cryptoassets with minimal counterparty risks like Bitcoin may likely benefit from rising sovereign risks over the medium term. With cross-asset volatility this compressed and Bitcoin's implied volatility below the critical 40% mark, the stage appears set for a pick-up in volatility over the coming months.
In general, among the top 10 crypto assets Hyperliquid, TRON, and Dogecoin were the relative outperformers. Ethereum outperformed bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” remains at a substantially positive level, having fallen early last week before recovering swiftly, in line with rising cross-asset risk appetite.
At the moment, 11 out of 15 indicators remain above their short-term trend.
The largest increases came from BTC exchange volumes and crypto dispersion, both indicative of rising risk appetite, albeit with a propensity to sell. This is consistent with global net outflows from BTC ETPs alongside greater risk appetite and a set of narratives across the longer tail of coins, suggesting a possible rotation is under way.
The Crypto Fear & Greed Index rose slightly to the highest level since May but has continued to remain in the ‘fear' territory.
Performance dispersion increased significantly as a possible rotation from the majors into the longer tail coins occurred. DeFi and AI coins outperformed week-over-week.
When dispersion increases, it may indicate that the market appears to be driven by a more diverse set of narratives which, in our analysis, has historically been associated with periods of increasing risk appetite in prior market cycles.
Altcoin outperformance vis-à-vis Bitcoin stayed flat at around 30% of our tracked altcoins in the index, having decreased from 50% mid-week. Ethereum outperformed Bitcoin over the week, likely driven by quiet relative net ETP outflows.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has increased slightly from 0.72 to 0.84 over the past week, signalling an improvement in risk appetite. This has likely fed through to broader crypto risk appetite and performance dispersion, Fear and Greed, and a brief uptick in altcoin outperformance.
The CME Bitcoin Commercials Net Positioning metric shows the difference between long and short CME Bitcoin futures contracts. The reading has declined slightly further to -16.65% of open interest, from –16.46%, suggesting that investors cautious outlook and positioning for downside protection has stayed broadly unchanged throughout last week’s relative underperformance.
Bottom Line: a rotation showed through as dispersion widened, the Crypto Fear & Greed Index improved and altcoin outperformance briefly rose before ending the week flat, with the DeFi and AI sectors outperforming. Despite broader net ETP outflows from the majors and CME commercials holding broadly flat at -16.65% of open interest, this longer-tail rotation was likely bolstered by CARA rising to 0.84.
Fund Flows
Global crypto ETPs experienced around -382.5 mn USD in net outflows last week, across all types of cryptoassets, after +1146.5 mn USD in net inflows the previous week.
Global Bitcoin ETPs continued to experience net outflows of -388.2 mn USD last week, of which -396.8 mn USD in net outflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows of -31.6 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net inflows equivalent to +0.4 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +1.4 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net outflows of -88.3 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net outflows of around -79 mn USD last week.
Meanwhile, global Ethereum ETPs experienced -7.8 mn USD in net outflows last week, of which US spot Ethereum ETFs recorded net outflows of around -6.9 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted no net inflows or outflows, whilst the iShares Ethereum Trust (ETHA) saw net outflows of -16.4 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced no net inflows or outflows last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded no net inflows or outflows, whilst the Bitwise Ethereum Staking ETP (ET32) saw no net inflows or outflows.
Altcoin ETPs ex Ethereum also saw net inflows of +14 mn USD last week.
Thematic & basket crypto ETPs posted net outflows of -0.4 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) recorded no net inflows or outflows last week.
Bottom Line: All in all, flows reversed sharply last week, swinging from roughly +1.1 bn USD of net inflows to net outflows of -382.5 mn USD, driven almost entirely by Bitcoin products. US spot Bitcoin ETFs led the retreat with -396.8 mn USD of outflows, concentrated in GBTC and IBIT, whilst European Bitcoin ETPs held broadly flat. Ethereum products proved comparatively resilient, shedding just -7.8 mn USD despite the previous week's strong inflows, and altcoin ETPs ex Ethereum bucked the trend with +14 mn USD of net inflows, with over half into Solana products. The pullback sits somewhat at odds with the macro backdrop, as Cross Asset Risk Appetite firmed to 0.84 and the Cryptoasset Sentiment Index stayed elevated through the week, suggesting profit-taking in the majors after the prior week's surge rather than a broad deterioration in risk appetite.
On-Chain Data
The demand side remains the key drag. US spot Bitcoin ETFs posted around -390 mn USD in net outflows last week - a sharp reversal from the +850 mn USD of net inflows recorded in the first week of August - with Monday marking the heaviest single-day withdrawal (-145 mn USD) and three consecutive outflow days into Friday's close. It is worth highlighting that Bitcoin ETF turnover also declined to its second-lowest full-week level since October 2024, i.e. the outflows occurred amid very thin participation - consistent with the "summer lull" in volatility described above.
Adding to the demand vacuum, Strategy reportedly sold 1,690 BTC (~109 mn USD) following a multi-week pause in its accumulation programme, implying that the corporate treasury bid has also temporarily stalled. Meanwhile, US spot Ethereum ETFs were essentially flat on the week (-2 mn USD), ending a five-week inflow streak and recording their first zero-flow day in 277 days.
That being said, the underlying on-chain structure continued to heal. For instance, the share of Bitcoin UTXOs in profit has recovered from 48% to 53% over the past month - still a deep-stress reading with almost half of all UTXOs underwater, but a clear sign that "the network is recovering faster than holder profitability". The improvement points primarily to easing pressure on holders rather than a confirmed regime change. In a similar vein, aggregate MVRV remains near ~1.2 with the realized price (~52.7k USD) - the aggregate on-chain cost basis - continuing to act as the deepest structural support: Bitcoin still appears undervalued.
The key on-chain resistance remains the short-term holder cost basis: As flagged by us repeatedly in the past, the short-term holder profit/loss ratio has repeatedly failed at its break-even point, forming a series of lower highs - implying that Bitcoin needs to clear the 64k-65k USD "sell wall" in order to flip meaningful supply back into profit and sustain any recovery rally.
On the supply side, the picture is increasingly constructive: Bitcoin miners are currently undergoing the third-worst capitulation on record. At the same time, exchange net flows remained firmly negative last week and large entities are estimated to have accumulated more than 20k BTC (~1.2 bn USD) - a notable divergence between weak ETF demand and continued whale accumulation on-chain.
Bottom Line: The on-chain picture is consistent with a late-stage capitulation/early repair phase - weak hands have largely been flushed out, holder profitability is recovering from deep-stress levels, miners are capitulating, and whales are accumulating. The missing ingredient for a sustained trend reversal remains a re-acceleration in ETF demand and a reclaim of the short-term holder cost basis around 64k-65k USD.
Futures, Options & Perpetuals
The derivatives set-up increasingly resembles a coiled spring. Aggregate BTC futures open interest remains near cycle highs - around ~750k BTC (~48 bn USD notional), a level first reached in July - and, notably, open interest increased further into the weekend despite the decline in spot prices: In a single eight-hour window late last week, aggregate open interest rose by ~1.2 bn USD (~19k BTC), almost entirely driven by offshore perpetual futures rather than CME.
Rising open interest into falling prices generally signals fresh positioning rather than capitulation - leverage is being added at the range floor, not withdrawn. That being said, the week was two-sided: Binance open interest had earlier declined alongside price (~8.2 bn USD peak) as leveraged longs were cleaned out, with ~236 mn USD in liquidations recorded across cryptoassets in a single 24-hour window mid-week.
Positioning remains asymmetric - and vulnerable in both directions. Perpetual funding rates stayed slightly positive on major offshore venues throughout the week, implying a persistent (if moderate) long bias, with retail positioning on Binance skewed roughly two-to-one towards longs.
This leaves leveraged longs exposed to a stop-run if the 61.5k-62k USD support zone gives way. On the other side of the ledger, CME leveraged funds remained net short (~7k contracts as of the latest CFTC data) - mostly basis trade-related, but nonetheless a meaningful source of potential short-covering fuel should spot break higher. In other words: Whichever way the range resolves, forced flows are likely to accelerate the move - fully consistent with our volatility mean-reversion thesis outlined above.
In the options market, the picture mirrors the low-volatility regime: With BVIV at 36.8 and implied volatilities across all expiries within their lowest historical decile, optionality remains historically cheap. Positioning is anything but bearish, though - the put/call ratio on Friday's ~2 bn USD Deribit expiry stood at a mere 0.26, i.e. roughly four calls outstanding for every put, signalling that traders continue to position for upside rather than pay up for downside protection. Short-dated skews retain a modest put premium - some residual hedging demand into Wednesday's FOMC minutes - while longer tenors remain balanced-to-call-tilted.
Max pain also continues to exert a gravitational pull from above: Friday's weekly expiry settled with a max pain price of 64k USD - roughly 1k USD above spot - and it is no coincidence, in our view, that this level coincides almost exactly with the short-term holder cost basis and the 64k-65k USD "sell wall" identified in the on-chain section. Option-related hedging flows should continue to pull spot towards this zone, making 64k-65k USD the pivotal battleground for the weeks ahead.
Bottom Line: Elevated open interest, two-sided leveraged positioning, historically cheap optionality, and a max pain magnet just overhead - the derivatives complex is primed for an expansion in volatility. In this constellation, our base case remains that the eventual resolution is more likely to be to the upside.
Bottom Line
- Performance: Cryptoassets took a breather last week and decoupled negatively from traditional risk assets - while the S&P 500 marked a fresh all-time high above 7,800 points on the back of softer US inflation prints, Bitcoin retraced towards ~62.8k USD (-3.1% WoW) and Ethereum drifted lower around ~1,880 USD. The relative underperformance was mostly attributable to crypto-specific factors - renewed net outflows from crypto ETPs and the delay of the SEC's planned tokenization framework - rather than the macro backdrop, which actually turned more favourable for risk assets last week.
- Sentiment: Our in-house "Cryptoasset Sentiment Index" increased from a week ago and is now signalling a bullish sentiment again. The improvement in aggregate sentiment despite last week's negative price action suggests that positioning and sentiment are being reset from previously stretched levels - a constellation that has historically provided a more attractive risk/reward setting.
- Chart-of-the-Week: Bitcoin's implied volatilities remain near cycle lows - the BVIV index stands at only 36.8, within the historical lowest 10% of observations across all expiries. Implied volatility rarely drops below 40%, and when it does, it usually implies mean-reversion, i.e. rising volatility, over a 90+ days horizon. More importantly, previous instances of sub-40% 1-month implied volatility were historically followed by positive mean and median Bitcoin performances over the coming months, suggesting that compressed volatility usually resolves via upside moves - and that a new bull market may be about to commence.
Appendix
Data subject to change
Combined positioning = futures and options in % of Ol
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