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 weakened last week as the broader macro backdrop remained challenging, with a stronger dollar, elevated sovereign yields and higher energy prices continuing to weigh on financial conditions locally. Bitcoin nevertheless outperformed higher-beta cryptoassets, suggesting that the reduction in risk appetite remains more pronounced further out along the crypto risk curve. The key question is whether these macro pressures begin to ease or continue to constrain liquidity and risk appetite over the coming weeks. For our longer-term view on how these macro forces may evolve and their implications for Bitcoin, see the latest Bitcoin Macro Investor.
- Cryptoasset Sentiment Index [1]: Cryptoasset Sentiment Index [2]: Declined into negative territory then increased back into neutral territory toward the end of the week. At the moment, 6 out of 15 indicators remain above their short-term trend. The most notable changes were in BTC Long Futures Liquidation Dominance that flipped from negative to positive, and BTC Put-Call Volume and BTC STH SOPR flipping from positive to negative. Together this suggests that hedging activity increased as investor profitability declined alongside long liquidations that had hampered price.
- Chart-of-the-Week: Bitcoin has spent much of the past few weeks oscillating around the average ETF cost basis near $83k, with neither buyers nor sellers able to establish a sustained deviation from the level. This has increasingly turned the ETF cost basis into an important decision point for the market. The way price ultimately reacts around this region should therefore be particularly informative, with a sustained hold above it strengthening the case that the level is establishing itself as support, while persistent acceptance below would suggest that the market is struggling to maintain the recent breakout.
Chart of the Week
Performance
Cryptoassets came under renewed pressure last week, with Bitcoin declining roughly 2.6% and briefly trading below the $83,000 region. However, Bitcoin continued to outperform the higher-beta areas of the market, with XRP, Ethereum and Solana falling approximately 6.2%, 7.5% and 8.8% respectively. The dispersion suggests that the deterioration in risk appetite was felt most acutely further out along the crypto risk curve. However, the recent recovery back above the $83k represents a sign of structural strength, as discussed in the on-chain section below.
The broader macro backdrop remains the more important consideration. The US dollar recorded a fourth consecutive weekly advance, extending a meaningful appreciation over the past month. While this week’s gain was relatively modest at around 0.3%, the cumulative move has created an increasingly restrictive backdrop for Bitcoin, which has remained particularly sensitive to changes in the dollar. Weakness across Europe has contributed to the move, with pressure on the euro providing an additional tailwind to the DXY.
Sovereign yields remain another important constraint. The US 10-year Treasury yield briefly reached 5.36% during the week before retracing to close around 5.24%. While yields ended the week slightly lower, they remain at historically elevated levels, keeping funding costs high and maintaining pressure on liquidity-sensitive assets. Taken alongside the stronger dollar, the broader trend in financial conditions remains considerably tighter than it was only a few weeks ago.
However, our longer-term view is that increasing inflation expectations, and by extension, currency debasement will continue to weight on the DXY overtime, which could act as a potential tailwind for Bitcoin.
Energy markets have added another complication. Brent crude climbed almost as high as $106 before closing the week at approximately $104.72, up around 2.4%. The persistence of higher energy prices risks keeping inflationary pressure elevated. This matters particularly in an environment where sovereign yields are already high and the dollar has been strengthening.
At the same time, signs of stress continue to emerge within some of the market’s most crowded growth trades. Semiconductor and technology shares experienced renewed weakness during the week, reinforcing our broader concern around the increasingly concentrated AI trade.
Interestingly, headline US equity indices remain remarkably resilient. The S&P 500 total return index gained approximately 1.2% over the week and reached a fresh high earlier in the period, while the Nasdaq-100 also recorded a new high before subsequently weakening. The divergence between strong headline indices and tighter underlying financial conditions remains notable, particularly given the increasingly elevated cost of capital.
Precious metals also remained comparatively resilient. Gold fell to a two-month low near $4,067 as the dollar and Treasury yields strengthened earlier in the week, before recovering to close around $4,194.
Bottom Line:Bottom Line: Cryptoassets weakened last week as the broader macro backdrop remained challenging, with a stronger dollar, elevated sovereign yields and higher energy prices continuing to weigh on financial conditions locally. Bitcoin nevertheless outperformed higher-beta cryptoassets, suggesting that the reduction in risk appetite remains more pronounced further out along the crypto risk curve. The key question is whether these macro pressures begin to ease or continue to constrain liquidity and risk appetite over the coming weeks. For our longer-term view on how these macro forces may evolve and their implications for Bitcoin, see the latest Bitcoin Macro Investor.
Sentiment
Our in-house “Cryptoasset Sentiment Index” [3] declined into negative territory then increased back into neutral territory.
At the moment, 6 out of 15 indicators remain above their short-term trend.
The most notable changes were in BTC Long Futures Liquidation Dominance that flipped from negative to positive, and BTC Put-Call Volume and BTC STH SOPR flipping from positive to negative. Together this suggests that hedging activity increased as investor profitability declined alongside long liquidations that had hampered price.
The Crypto Fear & Greed Index declined slightly over the past week but remains within the “Greed” Zone.
Performance dispersion decreased slightly in line with net outflows across single asset products and declining sentiment.
When dispersion decreases, 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 slightly to 35% of the altcoins tracked in our index. This seems more leverage driven and concentrated within the Blue-Chip altcoins.
Sentiment in traditional financial markets as measured by our in-house measure of Cross Asset Risk Appetite (CARA) has increased from 0.08 to 0.14 over the past week, signalling risk appetite has increased within TradFi but remains somewhat low. This has not had a positive effect on Crypto though.
The CME Bitcoin Commercials Net Positioning metric captures the difference between long and short CME Bitcoin futures contracts. The reading has declined from –13.95% to –13.85% of open interest, suggesting traders have slightly decreased their short leverage, although the outlook remains broadly the same, with preference to hedge against a potential decline in prices.
Bottom Line: Crypto and TradFi sentiment diverged. Altcoin outperformance increased despite the decline in Sentiment and Performance Dispersion whilst broad spot Net ETP Outflows accelerated, suggesting it was concentrated in Large Caps with leverage.
Fund Flows
Global crypto ETPs experienced around -1274.1 mn USD in net outflows last week, across all types of cryptoassets, after -69.6 mn USD in net outflows the previous week.
Global Bitcoin ETPs experienced net outflows of -656 mn USD last week, of which -688.9 mn USD in net outflows were related to US spot Bitcoin ETFs.
The Bitwise Bitcoin ETF (BITB) in the US experienced net outflows of -45.3 mn USD last week.
In Europe, the Bitwise Physical Bitcoin ETP (BTCE) experienced net outflows equivalent to -1.2 mn USD, as the Bitwise Core Bitcoin ETP (BTC1) experienced net inflows of around +11.4 mn USD.
The Grayscale Bitcoin Trust (GBTC) posted net outflows of -47.5 mn USD whereas, the iShares Bitcoin Trust (IBIT) experienced net inflows of around +1 mn USD last week.
Meanwhile, global Ethereum ETPs experienced -593 mn USD in net outflows last week, of which US spot Ethereum ETFs recorded net outflows of around -543.4 mn USD on aggregate.
The Grayscale Ethereum Trust (ETHE) posted net outflows of -31.9 mn USD, whilst the iShares Ethereum Trust (ETHA) saw net outflows of -477 mn USD.
The Bitwise Ethereum ETF (ETHW) in the US experienced net outflows of -5.9 mn USD last week.
In Europe, the Bitwise Physical Ethereum ETP (ZETH) recorded net inflows of +0.2 mn USD, whilst the Bitwise Ethereum Staking ETP (ET32) saw net outflows of -34 mn USD.
Altcoin ETPs ex Ethereum also saw net outflows of -36.3 mn USD last week.
Thematic & basket crypto ETPs posted net inflows of +11.3 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: Selling pressure intensified sharply last week, with net outflows from global crypto ETPs deepening to -1274.1 mn USD and bitcoin swinging from +290.9 mn USD of inflows the prior week to -656 mn USD of outflows. Ethereum saw –593 mn USD of outflows, with Blackrock’s ETHA alone accounting for around 80% of global Ethereum ETP outflows, extending a run of ETH redemptions across nine consecutive sessions.
On-Chain Data
Bitcoin briefly lost the $83k region over the past week before recovering the level relatively quickly, bringing price back towards an important decision point for the market. This area represents a notable confluence between the average ETF cost basis and the prior technical higher-high threshold, both of which had previously acted as major resistance. The fact that Bitcoin was able to recover the region after trading below it is constructive, and if $83k continues to hold, it would provide further evidence that former resistance is establishing itself as support.
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 remains comfortably above this zone, which continues to represent 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.
Bitcoin’s participation profile has become even more uneven over the past week. Spot and futures volumes have fallen to just the 18th and 21st percentiles of their respective one-year distributions, suggesting that activity across the core directional trading venues remains exceptionally subdued. By contrast, options volume remains elevated near the 78th percentile, continuing to stand out as one of the more active areas of the market. While the data does not identify the underlying strategies directly, this may partly reflect the growing use of structured positioning, including covered-call and volatility strategies, alongside greater institutional participation in the options market. This divergence is an interesting signpost of a more mature market structure, where activity can remain concentrated in derivatives even as outright spot and futures participation remains relatively weak.
| Market Segment | 7-Day Volume | 1-Year Percentile |
|---|---|---|
| Spot | $38.4bn | 17.8th |
| Futures | $265.3bn | 21.3rd |
| Options | $41.7bn | 77.6th |
| On-chain | $41.4bn | 64.5th |
| ETF | $11.3bn | 32.2nd |
| DAT | $15.3bn | 57.1st |
Hallmarks of a durable risk-on regime remain present beneath the surface. Capital inflows remain positive and robust, suggesting that liquidity continues to enter the asset class. The Spent Output Profit Ratio (SOPR), which measures the average percentage of profit or loss realised per coin spent, also remains positive. Importantly, recent weakness in price action have generally been absorbed, with SOPR recovering from around its break-even level. This suggests that investors continue to defend their cost basis during periods of weakness rather than using those rallies simply as an opportunity to exit.
Investor profitability also continues to improve, suggesting that the portfolio impairment generated during the preceding drawdown is gradually being repaired. Taken together, these signals indicate that despite relatively difficult price action and continued macro pressure, investor behaviour beneath the surface remains more consistent with an early bull-market regime than a renewed deterioration in risk appetite.
The Accumulation Trend Score provides further evidence of this shift. The metric assesses changes in balances across different wallet-size cohorts to determine whether the market is, in aggregate, accumulating or distributing Bitcoin. Despite price trading materially above levels seen one to two months ago, the score remains tilted towards accumulation, suggesting that accumulation continues to outweigh distribution. In other words, investors still appear willing to increase exposure at higher prices, reinforcing the broader evidence that demand remains present even after the recent advance.
Bitcoin’s Percent Supply in Profit has still been unable to break decisively above its long-term mean, leaving investor profitability close to a broader market equilibrium. Historically, sustained moves above this mean have often been associated with a strengthening bull-market regime as a larger share of circulating supply moves back into profit. However, the mean can also act as resistance during transitional phases when profitability has only recently recovered. Continued expansion above this level would therefore provide further evidence that the current bull-market structure is becoming more durable, while repeated rejection would suggest that further consolidation may be required.
There is, however, an important distinction when looking specifically at Short-Term Holders, defined as investors who have held their coins for less than 155 days and who broadly represent newer market demand. At present, this cohort is almost entirely in profit. Historically, periods in which profitability becomes this widespread among newer investors have at times coincided with locally overheated conditions. This does not necessarily imply an immediate reversal, but does suggest that the market may become increasingly sensitive to profit-taking as profitability among newer investors approaches more extreme levels.
Futures, Options & Perpetuals
Over the past week, BTC perpetual futures open interest increased by around 2.9k BTC, or approximately 0.7%, rising to roughly 419.1k BTC. This represents only a modest rebuilding following two consecutive weeks of contraction and remains small relative to the deleveraging observed recently. Perpetual positioning therefore remains relatively quiet, with little evidence of a meaningful build-up in leverage. CME futures open interest also increased, rising by around 3.4k BTC and partially reversing last week’s sizeable decline.
Liquidations increased to approximately $2.5bn in combined long and short liquidations, up from around $1.9bn previously. Importantly, roughly $1.0bn of long positions were liquidated in a single day, representing a sizeable long squeeze and a meaningful forced reduction in leveraged bullish positioning. Despite this flush, perpetual open interest ended the week modestly higher, suggesting that some leverage was subsequently rebuilt rather than positioning remaining entirely depressed.
Perpetual funding rates have also moderated materially. Measured on a seven-day moving average, annualised funding ended the week at approximately 2.4%, down from around 4.0% previously. Funding therefore remains positive, but the combination of a sizeable long squeeze, softer funding and only modest open-interest growth suggests that the market has ended the week with a cleaner and less aggressively long-biased leverage structure.
Across options markets, BTC open interest increased by around 37.1k BTC over the past week, or approximately 9.0%, rising from roughly 410.4k BTC to 447.5k BTC. This represents a more meaningful rebuilding following the quarterly expiry reset, although the increase remains concentrated in options rather than reflecting a broader expansion in derivatives leverage.
The put-to-call open interest ratio across major crypto-native exchanges increased to approximately 0.59 from 0.56, while the equivalent ratio across IBIT options rose more sharply from around 0.70 to approximately 0.75. Both measures therefore point to a greater relative concentration of put positioning, with the stronger move across IBIT suggesting a particularly notable increase in downside positioning within the ETF options complex.
The 25-delta skew curve has also repriced materially towards downside protection over the past week.
| Tenor | Current | 7-Day Change | 3-Year Percentile |
|---|---|---|---|
| 1w | +0.0981 | +0.1560 | 74th |
| 1m | +0.0793 | +0.0681 | 71st |
| 3m | +0.0426 | +0.0184 | 69th |
| 6m | +0.0333 | +0.0194 | 72nd |
The most pronounced shift has occurred at the front end, with one-week skew reversing from approximately -0.06 to +0.10. Positive skew indicates that puts trade at higher implied volatility than calls, meaning short-dated option pricing has moved from a pronounced call premium last week to a meaningful premium for downside protection. Importantly, however, the shift extends across the curve, with one-, three- and six-month skew all moving further into positive territory. This therefore represents a broader defensive repricing rather than simply a reversal of last week’s short-dated upside bias.
Implied volatility has also increased across the curve.
| Tenor | Last Week | Current | 3-Year Percentile |
|---|---|---|---|
| 1w | 29.5% | 30.8% | 5th |
| 1m | 33.3% | 34.1% | 7th |
| 3m | 36.6% | 37.1% | 4th |
| 6m | 37.6% | 38.1% | 1st |
The increase indicates that forward volatility expectations have begun to rise following the compression observed over recent weeks. However, implied volatility remains close to the bottom of its three-year distribution across every major tenor. Historically, periods of deep volatility compression have often preceded a subsequent expansion in realised volatility. Despite the modest repricing this week, options markets therefore continue to price an unusually subdued forward-volatility environment.
On balance, futures leverage remains relatively restrained despite some rebuilding in positioning. Futures open interest has increased only modestly, while a sizeable one-day long squeeze and materially lower funding have left leverage conditions cleaner and less aggressively long-biased. Options open interest has rebuilt more meaningfully, but the accompanying rise in put positioning and downside skew points towards a more defensive composition. At the same time, implied volatility has begun to increase from historically compressed levels. The broader takeaway is therefore not one of excessive leverage, but of derivatives positioning becoming incrementally more defensive as volatility expectations begin to reprice from unusually subdued levels.
Bottom Line
- Performance: Cryptoassets weakened last week as the broader macro backdrop remained challenging, with a stronger dollar, elevated sovereign yields and higher energy prices continuing to weigh on financial conditions locally. Bitcoin nevertheless outperformed higher-beta cryptoassets, suggesting that the reduction in risk appetite remains more pronounced further out along the crypto risk curve. The key question is whether these macro pressures begin to ease or continue to constrain liquidity and risk appetite over the coming weeks. For our longer-term view on how these macro forces may evolve and their implications for Bitcoin, see the latest Bitcoin Macro Investor.
- Cryptoasset Sentiment Index: Declined into negative territory then increased back into neutral territory toward the end of the week. At the moment, 6 out of 15 indicators remain above their short-term trend. The most notable changes were in BTC Long Futures Liquidation Dominance that flipped from negative to positive, and BTC Put-Call Volume and BTC STH SOPR flipping from positive to negative. Together this suggests that hedging activity increased as investor profitability declined alongside long liquidations that had hampered price.
- Chart-of-the-Week: Bitcoin has spent much of the past few weeks oscillating around the average ETF cost basis near $83k, with neither buyers nor sellers able to establish a sustained deviation from the level. This has increasingly turned the ETF cost basis into an important decision point for the market. The way price ultimately reacts around this region should therefore be particularly informative, with a sustained hold above it strengthening the case that the level is establishing itself as support, while persistent acceptance below would suggest that the market is struggling to maintain the recent breakout.
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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