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: The break above the US spot Bitcoin ETF cost basis, resurgent ETP inflows, and a bear market that proved far shorter and shallower than previous cycles all point to a structurally maturing asset class where a revisit of the June lows appears very unlikely. Our latest institutional survey corroborates this view: sticky, thesis-driven institutional capital is increasingly absorbing retail-driven drawdowns, and with adoption dynamics being reflexive, we expect institutional participation to accelerate rather than plateau, providing a durable tailwind for bitcoin and major cryptoassets despite short-term sentiment risks.
- Cryptoasset Sentiment Index:[1] Our in-house Cryptoasset Sentiment Index has briefly signalled overbought conditions last week but has cooled off since then. It continues to signal a bullish level of sentiment as of this morning.
- Chart-of-the-Week: Our Chart-of-the-week puts the recent bear market into historical perspective: with a peak-to-trough drawdown of slightly more than -50% and a bottom already in June, this cycle has been both significantly shallower and shorter than previous bear markets, which saw drawdowns of at least -80% and considerably longer recovery periods. In our view, this structural dampening of drawdowns is no coincidence but rather tangible evidence of bitcoin's increasing maturation, driven by broader adoption and a more heterogeneous and sophisticated investor base that increasingly steps in on weakness.
Chart of the Week
Performance
Last week, cryptoassets have continued to outperform traditional assets as fund flows into global cryptoasset ETPs reached the highest level since October 2025. As a result, this has pushed bitcoin above key pricing levels including the US spot Bitcoin ETF cost basis.
One of our long-held views at Bitwise was that any break above the US spot Bitcoin ETF cost basis at around $83k may constitute the beginning of a durable bull market for bitcoin and other major cryptoassets as well. In fact, bitcoin has managed to hold above that ETF cost basis last week which supports this view.
Moreover, the fact that equities related to tokenization and the agentic economy alongside major altcoins are continuing to break out higher implies that the rally in bitcoin and the broader crypto market may even continue in the short term despite elevated sentiment.
It is worth highlighting that this bear market has (unexpectedly) been much shorter and shallower than previous ones (Chart-of-the-week). In hindsight, bitcoin has so far defied consensus expectations of a cycle bottom in October with a bottom in June and has also experienced a peak-to-trough drawdown of slightly more than -50% - significantly less than previous bear markets that saw drawdowns of at least -80%.
Although downside risks remain in the short term due to elevated levels of sentiment, we think that a revisiting of the cycle lows in June is very unlikely at this point.
From our point-of-view, this speaks volumes in terms of the increasing maturation of the asset due to higher adoption and a more heterogenous and sophisticated investor base. This tends to dampen volatility and drawdowns – something that we highlighted in a previous report as well.
In this context, we wanted to draw attention to one of our most recent institutional investor surveys that we published last week.
A point that is made in the report is that Bitcoin declined by around -50% between October 2025 and April 2026, yet not a single one of the 15 major institutions interviewed by Bitwise reduced exposure.
To the contrary, several investors surveyed added on weakness, which tells you the marginal seller in drawdowns is retail and leveraged fast money, not sticky institutional capital with thesis-based rather than price-based exit triggers.
The key structural insight: the institutional debate has already shifted from "if" to "how much and via which vehicle", with the remaining frictions being purely reputational and operational (career risk, committee governance, asset classification), not the investment case itself.
Since institutional adoption is reflexive, meaning each disclosed allocation lowers the reputational hurdle for the next allocator, the adoption curve is more likely to be exponential than linear, and reported 13F-based ownership figures are merely a floor.
To sum up, institutional capital appears to be earlier in its adoption arc and significantly stickier than the market currently assumes.
Bottom Line: The break above the US spot Bitcoin ETF cost basis, resurgent ETP inflows, and a bear market that proved far shorter and shallower than previous cycles all point to a structurally maturing asset class where a revisit of the June lows appears very unlikely. Our latest institutional survey corroborates this view: sticky, thesis-driven institutional capital is increasingly absorbing retail-driven drawdowns, and with adoption dynamics being reflexive, we expect institutional participation to accelerate rather than plateau, providing a durable tailwind for bitcoin and major cryptoassets despite short-term sentiment risks.
Sentiment
Our in-house “Cryptoasset Sentiment Index”[2] softened substantially but still remains in positive territory after rebounding from mid-week lows.
At the moment, 11 out of 15 indicators remain above their short-term trend.
The most notable changes were in BTC exchange inflows and BTC 1M implied volatility, which both flipped from negative to positive. This suggests investors are more inclined to sell and expect larger price moves in the future than the week prior. BTC STH-SOPR and the BTC funding rate flipped from positive to negative, meaning coins are being spent at lower profit margins and traders are paying less for leveraged exposure.
The Crypto Fear & Greed Index declined slightly over the past week but still remains within the “Greed” Zone.
Performance dispersion increased slightly in-line with inflows of spot Altcoin Ex-ETH ETP flows, such as Solana.
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 80% of the altcoins tracked in our index. It declined mid-week but rebounded in line with Crypto Fear and Greed and our Sentiment Index.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has decreased from 0.6 to 0.51 over the past week, signalling risk appetite has declined from less favourable macro conditions.
The CME Bitcoin Commercials Net Positioning metric captures the difference between long and short CME Bitcoin futures contracts. The reading has declined to –13.52% of open interest, suggesting traders have increased their short leverage amongst a less favourable macro backdrop, despite the reversal in flows.
Bottom Line: Crypto and TradFi sentiment softened as short leverage picked up despite significant crypto fund net inflows across the board. Altcoin outperformance and dispersion remained high; however, this could be on fragile footing if sentiment were not to rebound higher and flows reverse after a strong week last week.
Fund Flows
Global crypto ETPs experienced around +3330.1 mn USD in net inflows last week, across all types of cryptoassets, after -124.9 mn USD in net outflows the previous week.
Global Bitcoin ETPs experienced net inflows of +2459.3 mn USD last week, of which +2182.5 mn USD in net inflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net inflows of +13.8 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -2 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +5.2 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net inflows of +3.3 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net inflows of around +1157.6 mn USD last week.
Meanwhile, global Ethereum ETPs experienced +634.7 mn USD in net inflows last week, of which US spot Ethereum ETFs recorded net inflows of around +639.4 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net inflows of +19.6 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net inflows of +326.2 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced net inflows of +4.3 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded no net inflows or outflows, whilst the Bitwise Ethereum Staking ETP (ET32) saw net inflows of +4.1 mn USD.
Altcoin ETPs ex Ethereum also saw net inflows of +245.2 mn USD last week.
Thematic & basket crypto ETPs posted net outflows of -9.1 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: Last week marked a decisive reversal in tone, with global crypto ETPs swinging from -124.9 mn USD of net outflows to +3330.1 mn USD of net inflows. US spot Bitcoin ETFs did most of the heavy lifting at +2182.5 mn USD, whilst Ethereum staged an equally sharp turnaround from -174.2 mn USD to +634.7 mn USD. Altcoin demand remained concentrated in Solana: US spot Solana ETFs took in +188.1 mn USD over the week, yet Friday's +86.7 mn USD marks the category's largest single-day inflow to date. Hyperliquid ETFs saw a more modest +9.3 mn USD. Notably, the buying persisted even as the Cryptoasset Sentiment Index slid from 1.02 to 0.5959 midweek and cross-asset risk appetite softened.
On-Chain Data
Bitcoin extended higher over the past week, breaking decisively through the previously highlighted $82k-$83k resistance region and establishing a new higher high before finding initial support around the same area. Within our framework, a decisive break above this zone represented the final technical confirmation of the transition into a new bull-market structure, given the confluence of the prior higher-high threshold and the average ETF cost basis.
The fact that price has now cleared this region marks an important structural change. Even in the event of renewed downside, the market structure has shifted positively, with $83k now attempting to transition from a major resistance zone towards an important support reference. A sustained hold above this area would further reinforce the durability of the breakout.
In the event of downside, Bitcoin also retains a meaningful cushion before the broader constructive structure would come under pressure. The True Market Mean, Short-Term Holder cost basis and 200-day moving average together form what we view as the market’s bull-market transition ribbon, with these measures currently clustered between roughly $73k and $77k. Price is now gaining further velocity away from this zone, although it remains the market’s broader centre of gravity. A future pullback towards this ribbon that is successfully absorbed would remain consistent with constructive risk-on conditions and further reinforce the transition of former resistance into support.
Interestingly, realised volatility has remained elevated at the front end, while the longer end of the curve continues to lag. One-week realised volatility increased further to 45.1%, placing it in the 71st percentile of its three-year distribution, while two-week realised volatility rose more materially to 44.3%, moving into the 61st percentile. By contrast, one-month realised volatility fell back to 38.8%, while three- and six-month measures remain comparatively subdued. This suggests that the recent increase in price movement remains concentrated at shorter horizons rather than representing a broad-based transition into a higher-volatility regime.
| Window | Last Week | Current | 3-Year Percentile |
|---|---|---|---|
| 1w | 43.4% | 45.1% | 71st |
| 2w | 34.8% | 44.3% | 61st |
| 1m | 43.1% | 38.8% | 35th |
| 3m | 38.0% | 38.4% | 26th |
| 6m | 38.1% | 38.2% | 20th |
By contrast, implied volatility has compressed further over the past week and remains historically subdued across the curve. One-week implied volatility has fallen from 33.8% to 31.2%, moving from the 13th to roughly the 6th percentile of its three-year distribution, while one-month implied volatility has declined from 34.7% to 33.9%, placing it near the 7th percentile. Further out, three-month implied volatility remains around the 3rd percentile, while six-month implied volatility continues to sit below the 1st percentile.
| Tenor | Last Week | Current | 3-Year Percentile |
|---|---|---|---|
| 1w | 33.8% | 31.2% | 6th |
| 1m | 34.7% | 33.9% | 7th |
| 3m | 36.9% | 37.1% | 3rd |
| 6m | 38.5% | 38.0% | <1st |
The important development is that front-end realised volatility remains elevated while implied volatility has continued to compress, creating an increasingly pronounced divergence between observed and expected volatility. Assessing the realised-implied volatility spread, calculated as realised volatility minus implied volatility, realised volatility currently exceeds implied volatility by approximately +13.8 vol points at one week, +4.9 at one month, +1.3 at three months and +0.1 at six months.
Positive readings indicate that recent realised movement is running above the volatility currently priced by options. The divergence is particularly pronounced at the front end, where the one-week spread sits around the 94th percentile of its three-year distribution. This suggests that short-dated options markets remain relatively complacent despite the recent increase in realised volatility. Should elevated spot movement persist, implied volatility would likely face increasing pressure to reprice higher, leaving meaningful scope for a broader volatility expansion.
| Tenor | RV - IV | 3-Year Percentile |
|---|---|---|
| 1w | +13.8 pts | 94th |
| 1m | +4.9 pts | 85th |
| 3m | +1.3 pts | 80th |
| 6m | +0.1 pts | 81st |
Signs of increasingly elevated volatility conditions are also becoming visible on-chain. The Realised Supply Density metric, which measures the proportion of circulating supply held within ±10% of the current spot price, has risen to approximately 20.7%, placing the reading around the 85th percentile since 2015. Importantly, the latest observation has now moved slightly above its +1σ threshold near 20.4%.
This indicates that an increasingly large share of Bitcoin’s supply is clustered close to the prevailing market price. When more coins are concentrated near spot, relatively small price movements can affect a broader group of holders, increasing market sensitivity and creating conditions in which volatility can propagate more readily through investor behaviour. The recent rise in Realised Supply Density therefore suggests that the market is moving into a more elevated volatility state.
At the same time, the Sell-Side Risk Ratio remains extremely compressed, with the latest reading around the 7th percentile of observations since 2015. The metric compares the absolute magnitude of realised profit and loss with the size of Bitcoin’s Realised Cap, providing a measure of how much economic value is being transferred relative to the capital stored within the network.
Such a low reading indicates that relatively little profit or loss is currently being realised compared with Bitcoin’s broader capital base. Despite the recent advance in price, on-chain spending therefore remains subdued, suggesting that the market has yet to release much of its accumulated tension through meaningful profit-taking or loss realisation.
Taken together, these conditions point towards an increasingly sensitive market structure. Realised Supply Density indicates that a growing share of supply is concentrated close to spot, increasing the number of investors exposed to relatively small price movements, while the exceptionally low Sell-Side Risk Ratio shows that relatively little economic value is currently being transferred through realised profit and loss. Combined with elevated front-end realised volatility and historically compressed implied volatility, the market appears increasingly primed for a broader expansion in volatility. While the direction of any subsequent move remains uncertain, the underlying conditions suggest that the probability of a more meaningful volatility event is increasing.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest declined by around 35.2k BTC, or approximately 7.7%, reversing the increase observed last week and indicating a meaningful reduction in perpetual futures positioning.
By contrast, CME futures open interest increased by around 8.6k BTC over the same period, pointing to a continued rise in institutionally oriented futures exposure. The composition of CME positioning is consistent with some renewed cash-and-carry activity, although the increase cannot be attributed entirely to basis trading. Overall, the divergence suggests that leverage has been reduced across perpetual markets even as CME positioning has expanded, leaving little evidence of a broad-based build-up in speculative leverage.
Liquidations remained effectively unchanged over the past week at approximately $2.7n in combined long and short liquidations. This also remains below the roughly $3bn liquidated on 19 August alone, suggesting that recent volatility has not resulted in another significant forced-deleveraging event.
Perpetual funding rates have also moderated. Measured on a seven-day moving average, annualised funding ended the week at approximately 4.3%, down from around 6.2% previously. Funding therefore remains positive, but the decline points to a softer long bias and is consistent with the broader reduction in perpetual futures positioning. Taken together, lower open interest and moderating funding suggest that leverage conditions have become less stretched rather than more aggressive over the past week.
Across options markets, BTC open interest on major exchanges declined by around 107.4k BTC over the past week, or approximately 20.8%, falling to roughly 409.9k BTC. However, this decline was largely driven by the major quarterly options expiry on 25 September. Around 185.9k BTC of options expired on Deribit that day, closely matching the roughly 190.7k BTC one-day decline observed in aggregate open interest. The weekly contraction should therefore be viewed primarily as an expiry-driven reset in outstanding positioning rather than evidence of a broad withdrawal from options markets. However, the pace and composition of the subsequent rebuild in open interest should provide a cleaner indication of positioning following the expiry reset.
The put-to-call open interest ratio across major crypto-native exchanges declined to approximately 0.52 from 0.57, while the equivalent ratio across IBIT options eased further to 0.69 from 0.71. Both measures therefore point to a modest reduction in the relative concentration of put positioning, although IBIT continues to retain a higher put-to-call ratio than crypto-native venues.
The 25-delta skew curve has also normalised materially over the past week.
| Tenor | Current | 7-Day Change | 3-Year Percentile |
|---|---|---|---|
| 1w | +0.0279 | +0.1311 | 46th |
| 1m | +0.0161 | +0.0198 | 50th |
| 3m | +0.0248 | -0.0070 | 65th |
| 6m | +0.0103 | -0.0113 | 67th |
The pronounced short-dated call premium visible last week has therefore fully unwound, leaving near-term skew broadly neutral while three- and six-month maturities continue to retain a modest premium for downside protection.
Gamma exposure is broadly balanced in aggregate, but this masks substantial offsetting concentrations across individual strikes. The latest strike-level snapshot shows approximately +$12.0bn of positive gamma against -$11.3bn of negative gamma, leaving net exposure only modestly positive at around +$0.7bn.
Importantly, the distribution around the prevailing market price retains a meaningful negative bias. With Bitcoin near $84.4k, the $84k and $84.5k strikes carry approximately -$1.6bn and -$0.4bn of gamma respectively, while larger negative concentrations remain at $88k and $90k at approximately -$1.4bn and -$4.4bn. These are partly offset by positive gamma around $85k and $86k, at approximately +$0.5bn and +$1.0bn respectively. Further away from spot, the largest positive concentration sits near $95k at approximately +$5.1bn, while additional negative exposure of around -$1.5bn remains concentrated near $100k.
This distinction is particularly important when considered alongside the elevated volatility sensitivity highlighted in the on-chain data. Although aggregate gamma is roughly balanced, sizeable negative concentrations close to the prevailing market price mean dealer hedging could become more procyclical if price begins moving decisively through these strikes. Combined with an on-chain structure in which a growing share of supply is concentrated close to spot, this creates two separate mechanisms through which an initial price move could propagate more readily. The signals do not imply a directional outcome, but they reinforce the view that realised volatility could expand if Bitcoin breaks decisively away from the current range.
On balance, derivatives positioning has become less levered over the past week. Perpetual futures open interest has contracted materially, funding has moderated and liquidations have remained broadly unchanged, while CME exposure has continued to expand. In options, the sharp decline in open interest largely reflects the quarterly expiry reset rather than a broad withdrawal from the market, while short-dated skew has normalised following last week’s pronounced upside bias. Aggregate gamma is now broadly balanced, but substantial negative concentrations remain close to spot. Together with the elevated sensitivity visible in the on-chain structure, this leaves the market relatively balanced in positioning terms but still susceptible to a larger expansion in realised volatility should price break decisively from the current range.
Bottom Line
- Performance: The break above the US spot Bitcoin ETF cost basis, resurgent ETP inflows, and a bear market that proved far shorter and shallower than previous cycles all point to a structurally maturing asset class where a revisit of the June lows appears very unlikely. Our latest institutional survey corroborates this view: sticky, thesis-driven institutional capital is increasingly absorbing retail-driven drawdowns, and with adoption dynamics being reflexive, we expect institutional participation to accelerate rather than plateau, providing a durable tailwind for bitcoin and major cryptoassets despite short-term sentiment risks.
- Cryptoasset Sentiment Index:[3] Our in-house Cryptoasset Sentiment Index has briefly signalled overbought conditions last week but has cooled off since then. It continues to signal a bullish level of sentiment as of this morning.
- Chart-of-the-Week: Our Chart-of-the-week puts the recent bear market into historical perspective: with a peak-to-trough drawdown of slightly more than -50% and a bottom already in June, this cycle has been both significantly shallower and shorter than previous bear markets, which saw drawdowns of at least -80% and considerably longer recovery periods. In our view, this structural dampening of drawdowns is no coincidence but rather tangible evidence of bitcoin's increasing maturation, driven by broader adoption and a more heterogeneous and sophisticated investor base that increasingly steps in on weakness.
Appendix
Data subject to change
Combined positioning = futures and options in % of Ol
Notes
[1], [2], [3] The Cryptoasset Sentiment Index is a composite indicator consisting of 15 different sub-indicators covering sentiment, on-chain, derivatives, flows developments as well as sentiment in traditional financial markets. A 90-day rolling z-score is used to standardise and aggregate these sub-indicators.
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