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: Bitcoin posted its biggest weekly gain since the start of the last bull market in late 2022. The rally was driven by a confluence of factors: historic seller exhaustion in Bitcoin and Ethereum (the seller exhaustion constant hit its lowest levels since November 2018 and December 2015, respectively), a mean-reversion in volatility from multi-year lows amid thin trading volumes, and a major macro catalyst - the US Treasury's announcement to double its bond buyback programme from $2bn to $4bn per month, which weakened the US Dollar and signalled a renewed willingness to ease financial conditions. The move was amplified by the highest short futures liquidations ever recorded and a reacceleration in weekly net inflows into global crypto ETPs to the highest level since October 2025.
- Sentiment: The Cryptoasset Sentiment Index increased to its highest level since mid-2025, driven by a steep rise in the Crypto Fear & Greed Index and option market dynamics. Intraday, it even increased to the highest level since late 2024. Given how quickly sentiment has heated up, a short-term pullback or consolidation appears likely, although this would not necessarily invalidate the broader constructive outlook.
- Chart-of-the-Week: Bitcoin reclaimed several key on-chain and technical pricing levels in a very short period of time - the short-term holder (STH) cost basis (the average acquisition price of investors holding bitcoin for less than 155 days), the 200-day moving average, and the True Market Mean (the average acquisition price of all on-chain investors excluding the Satoshi wallets). As long as bitcoin holds above these levels, a new bull market is likely intact.
Chart of the Week
Performance
Last week, Bitcoin experienced its biggest weekly gain since the beginning of the last bull market in late 2022.
We think that a combination of different factors led to this significant spike in prices.
Firstly, before this run-up, major cryptoassets like Bitcoin and Ethereum experienced historic levels of seller exhaustion. In fact, the so-called seller exhaustion constant indicator reached the lowest level since November 2018 (Bitcoin) and December 2015 (Ethereum), respectively. In other words, market positioning was extremely one-sided.
Secondly, as mentioned in our previous Crypto Market Compass report, volatility was at multi-year lows and historical analyses suggested that it may mean-revert over the next 3 months. What is more is that increases in volatility from very low levels (sub-40) have historically resolved to the upside for Bitcoin (see last week’s report as well). Low volatility was also the mirror image of low trading volumes across both native crypto exchanges but also traditional ETF exchanges. Broadly speaking, low volumes imply that significant price swings can be caused by relatively small increases in volumes.
Thirdly, expectations for financial conditions have significantly improved after the US Treasury department announced to at least double its Treasury bond buyback programme from $2 billion to $4 billion per month. This announcement is following a progression of events such as the recent joint FX intervention with the Japanese Ministry of Finance that suggest that the US administration is trying to curb the increase in long-term bond yields to ease financial conditions again. Long-term bond yields had continued to increase to new multi-decade highs before this announcement.
In this context, one of our long-held views at Bitwise is that Bitcoin tends to be the “canary in the macro coal mine” that signals changes in financial conditions both to the downside and the upside well in advance. Therefore, we think that the latest Treasury bond buyback announcement was the major macro catalyst for bitcoin, especially because it led to a depreciation of the US Dollar and signalled a greater willingness by the US administration to ease financial conditions again.
In any case, we think that the recent US policies suggest that a “policy put” is very much alive which positively skews the macro outlook for cryptoassets.
Moreover, the recent rally in cryptoassets was further fuelled by record short futures liquidations and a reacceleration in net inflows into crypto ETPs. More specifically, last week saw the highest number of short futures liquidations ever recorded while weekly net inflows into global crypto ETPs reaccelerated to the highest level since October 2025.
As a result, bitcoin reclaimed key pricing levels in a very short period of time such as the short-term holder (STH) cost basis – the average acquisition price of investors who held bitcoin for less than 155 days) - the 200-days moving average and the so-called True Market Mean – the average acquisition price of all on-chain investors excluding the Satoshi wallets (Chart-of-the-week).
As long as bitcoin holds above these key pricing levels, we think that a new bull market is likely intact.
In general, among the top 10 crypto assets Zcash, XRP and Hyperliquid were the relative outperformers. Ethereum outperformed bitcoin last week.
Sentiment
Our in-house “Cryptoasset Sentiment Index” increased above 1, as the hourly chart hit its highest levels since late 2024, suggesting sentiment is likely stretched in the short term.
At the moment, 12 out of 15 indicators remain above their short-term trend.
The largest changes were in the BTC CME Commercials Net Positioning, the BTC funding rate, short liquidation dominance and one-month implied volatility, all indicative of the short squeeze that catalysed Bitcoin and altcoins higher. Altcoins rerated off this backdrop, with the Altseason Index also flipping positive, whilst the Performance Dispersion Index flipped negative, suggesting a broad-based bid across the digital asset complex rather than strengthening idiosyncratic narratives.
The Crypto Fear & Greed Index increased significantly to the highest level since October 5th, or the peak of the last bull market, and now remains in “greed” territory.
Performance dispersion decreased as investors focused less on specific narratives and more focused on higher beta coins.
When dispersion decreased, it may indicate that the market appears to be driven by a less diverse set of narratives which, in our analysis, has historically been associated with periods of decreasing risk appetite in prior market cycles.
Altcoin outperformance vis-à-vis Bitcoin increased to around 60% of our tracked altcoins in the index. Ethereum outperformed Bitcoin over the week.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has decreased slightly from 0.85 to 0.83 over the past week, signalling a reduction in risk appetite.
The CME Bitcoin Commercials Net Positioning metric captures the difference between long and short CME Bitcoin futures contracts. The reading has risen to -11.05% of open interest, from -16.65%, suggesting investors unwound significant short leverage amidst the short squeeze, as risk appetite and positioning returned.
Bottom Line: Sentiment and the Crypto Fear & Greed Index are likely at local highs, potentially dampening short-term forward returns as the market settles. CARA was not a driver of last week's outperformance, which was instead driven largely by short liquidations, an expansion in volatility and spot net inflows. Altcoin outperformance was broad-based rather than idiosyncratic, as investors chased beta over specific narratives.
Fund Flows
Global crypto ETPs experienced around +2756.2 mn USD in net inflows last week, across all types of cryptoassets, after -382.5 mn USD in net outflows the previous week.
Global Bitcoin ETPs experienced net inflows of +1955.1 mn USD last week, of which +1888.8 mn USD in net inflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net inflows of +87.3 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -1.3 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +1.9 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net inflows of +21.2 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net inflows of around +1330.8 mn USD last week.
Meanwhile, global Ethereum ETPs experienced +627.3 mn USD in net inflows last week, of which US spot Ethereum ETFs recorded net inflows of around +637.3 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net inflows of +3.2 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net inflows of +536.8 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced net inflows of +7.1 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded net inflows of +0.1 mn USD, whilst the Bitwise Ethereum Staking ETP (ET32) saw net inflows of +3.2 mn USD.
Altcoin ETPs ex Ethereum also saw net inflows of +50.4 mn USD last week.
Thematic & basket crypto ETPs posted net inflows of +123.4 mn USD on aggregate last week. The Bitwise MSCI Digital Assets Select 20 ETP (DA20) recorded net outflows of -0.2 mn USD last week.
Bottom Line: All in all, flows accelerated sharply last week, with aggregate net inflows of +2.76bn USD marking a decisive shift back to risk-on positioning from the previous week’s outflows. Bitcoin products drove the bulk of the move, drawing close to +1.96bn USD, as Ethereum flows remained robust at +627mn USD. Altcoin ETPs ex Ethereum added +50.4mn USD, of which US spot Solana funds accounted for roughly +28.7mn, with the Bitwise Solana Staking ETF (BSOL) capturing the bulk at +22.5mn USD. Whilst, thematic and basket products took in +123.4mn USD on aggregate, pointing to allocators expressing renewed appetite for diversified exposure through multi-asset wrappers rather than single names.
On-Chain Data
It was an extremely eventful week for digital assets, with Bitcoin rallying from around $62.9k to a high of $78.3k, representing a low-to-high gain of approximately 24.6%. The seven-day advance ranked around the 95.5th percentile of historical weekly moves, highlighting the magnitude of the repricing.
When assessing gains across large-cap assets above $1bn, mid-cap assets between $100mn and $1bn, and small-cap assets below $100mn, the largest absolute gains were concentrated among headline coins. Large-cap assets added approximately $484bn in market value across the week, their 18th largest seven-day increase on record. Mid- and small-cap assets also participated in the rally, although to a comparatively lesser extent.
The substantial rise in price materially improved investor profitability. Bitcoin’s percentage of supply held in profit increased by 19 percentage points across the week, with only 18 trading days recording a larger improvement. This highlights the intensity of the shift in investor conditions and demonstrates how rapidly market sentiment can change following an extended bear-market regime.
This dynamic is closely linked to the mechanics of bear-market bottom formation. Bear markets gradually redistribute supply from price-sensitive investors towards more value-oriented holders. As sell-side supply is progressively absorbed, large concentrations of coins become accumulated within relatively tight price ranges. Once demand strengthens, even modest price appreciation can push substantial amounts of supply back into profit, reinforcing the improvement in investor positioning.
The rally has also been accompanied by a meaningful recovery in market activity, with volumes increasing across all major sectors. Options and DAT markets recorded the strongest relative participation, ranking in the 80.6th and 82nd percentiles over the past year, while ETF volumes rose to the 77.6th percentile. Sustained increases in volume have historically been associated with more durable rallies, as broader participation provides stronger confirmation of the underlying move.
| Market | 7-Day Volume | 1-Year Percentile |
|---|---|---|
| Spot | $52.6bn | 40.4% |
| Futures | $374.1bn | 61.7% |
| Options | $39.2bn | 80.6% |
| On-chain | $40.1bn | 52.2% |
| ETF | $22.1bn | 82.0% |
| DAT | $19.5bn | 82.0% |
The move higher also carried Bitcoin through several key cost-basis and momentum levels. We have repeatedly highlighted the 200-day moving average ($69k) and the Short-Term Holder cost basis ($69.5k) as important measures of local market momentum, both of which have now been decisively reclaimed. More recently, price also moved above the True Market Mean ($76k), which represents a broader market equilibrium level. Bitcoin now appears to be attempting to establish support around this threshold. A decisive transition from resistance to support would, in our view, provide strong evidence that the bear market has ended.
However, despite the impressive price action, near-term conditions may be becoming somewhat overheated. Price is now moving towards the +1σ around the Short-Term Holder cost basis ($81k). Across the previous cycle, moves beyond this threshold were frequently associated with locally elevated conditions and increased sell-side pressure, suggesting that the market may require time to digest the recent advance.
It would therefore be constructive to see the True Market Mean hold as support. Should this level fail, a retest of the Short-Term Holder cost basis would represent the next logical downside reference. Either outcome could remain consistent with constructive market structure provided these reclaimed levels continue to hold. Either way, this is the first time the market has cleared all 3 levels since November 2025.
On the downside, the Realised Price at $52.8k, representing the market’s average cost basis, and the 200-week moving average at $64.2k have historically bracketed the regions where terminal cycle lows form during deep bear markets. Our base case has been that terminal valuation would form within this range, with the current cycle low ultimately emerging near $58k. Following the recent repricing and decisive reclamation of key cost-basis levels, we believe the probability of a new cycle low has materially diminished.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest declined by approximately 62.4k BTC, representing one of the largest closures of leveraged positioning on record. Meanwhile, CME futures open interest increased by around 11.9k BTC versus the prior week, suggesting institutionally oriented positioning rebuilt as basis and carry opportunities became more attractive alongside the rally.
The move across digital assets was amplified by one of the largest short squeezes on record. On 19 August, approximately $2.74bn of short positions were forcibly liquidated, marking the largest single-day short wipeout on record. This created a reflexive feedback loop, with rising prices triggering liquidations and further market buying, helping transform the initial macro-driven move into a broader acceleration across digital assets.
Perpetual funding rates, measured on a seven-day moving average, ended the week positive at approximately 7.9% annualised. This suggests that futures positioning remains long-biased, with investors increasingly willing to pay for upside exposure.
Across options markets, BTC open interest on major exchanges increased by approximately 83k BTC, highlighting a substantial rebuild in positioning as the sharp repricing created renewed opportunities for investors.
Interestingly, the put-to-call open interest ratio across major crypto-native exchanges increased from 0.56 on 18 August to 0.59, indicating greater demand for downside protection. By contrast, the equivalent ratio across IBIT options declined from 0.71 to 0.68. Using the distinction between crypto-native and institutional venues as a crude proxy, this suggests a divergence in positioning, with crypto-native investors displaying greater caution while institutionally oriented investors became comparatively less defensive.
The 25-delta skew also declined sharply across all tenors, with several maturities recording some of their largest weekly falls on record. This indicates that downside protection became materially cheaper relative to upside exposure, reflecting a rapid improvement in options market expectations following the rally.
Total gamma exposure, measured on a seven-day moving average, surged to approximately $6.6bn, its highest level since December 2025. Positive gamma can dampen price moves in either direction as dealer hedging acts countercyclically, consistent with a market beginning to absorb the recent increase in volatility. The largest positive gamma concentration sits between $74k and $76k, broadly aligning with the True Market Mean and potentially creating a stabilising zone around this region.
Bottom Line
- Performance: Bitcoin posted its biggest weekly gain since the start of the last bull market in late 2022. The rally was driven by a confluence of factors: historic seller exhaustion in Bitcoin and Ethereum (the seller exhaustion constant hit its lowest levels since November 2018 and December 2015, respectively), a mean-reversion in volatility from multi-year lows amid thin trading volumes, and a major macro catalyst - the US Treasury's announcement to double its bond buyback programme from $2bn to $4bn per month, which weakened the US Dollar and signalled a renewed willingness to ease financial conditions. The move was amplified by the highest short futures liquidations ever recorded and a reacceleration in weekly net inflows into global crypto ETPs to the highest level since October 2025.
- Sentiment: The Cryptoasset Sentiment Index increased to its highest level since mid-2025, driven by a steep rise in the Crypto Fear & Greed Index and option market dynamics. Intraday, it even increased to the highest level since late 2024. Given how quickly sentiment has heated up, a short-term pullback or consolidation appears likely, although this would not necessarily invalidate the broader constructive outlook.
- Chart-of-the-Week: Bitcoin reclaimed several key on-chain and technical pricing levels in a very short period of time - the short-term holder (STH) cost basis (the average acquisition price of investors holding bitcoin for less than 155 days), the 200-day moving average, and the True Market Mean (the average acquisition price of all on-chain investors excluding the Satoshi wallets). As long as bitcoin holds above these levels, a new bull market is likely intact.
Appendix
Data subject to change
Combined positioning = futures and options in % of Ol
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