IN THIS ISSUE

Jakob TL;DR

hBTC audits were the first step. This week, we reinforced our security-first approach with a bug bounty program on Immunefi, offering up to $100,000 for meaningful findings.

In parallel, I read Messari’s State of Stacks report for Q4. I’m impressed by how central stablecoins are becoming to Stacks DeFi. USDh, our BTC-backed stablecoin, was highlighted as the largest stablecoin on Stacks after aeUSDC, powering liquidations for Zest and enabling more scalable Bitcoin-backed loans.

On the other side, the market is also validating our approach to institutional-grade products. BlackRock took its first DeFi step by making $2.2B of its tokenized Treasury fund, BUIDL, tradable on Uniswap.

Find Bugs. Earn Up to $100K

Audits were step one. Our security-first approach stays on.

We have launched a public hBTC bug bounty on Immunefi, with rewards up to $100,000 for critical security findings.

Immunefi secures 650+ protocols, and hBTC is now open to that same global researcher network, reinforcing our focus on institutional-grade security.

We invite independent security researchers to review the protocol and report any significant findings.

See details:

Stacks Q4 2025 Recap

In Q4 2025, Stacks’ DeFi depth grew. TVL grew in STX terms, up 120.8% to 488.1M STX.

Stacks’ DeFi diversity score rose from 4 to 5, showing activity spreading across more protocols instead of pooling in one venue. Even as the STX price fell, momentum held, with stacked STX up 6.1% QoQ.

Stablecoins became a bigger part of Stacks’ DeFi stack. 

Total stablecoin market cap reached $20.5M by the end of Q4, up 177.5% YoY. USDh, our BTC-backed stablecoin, powered liquidations for Zest and supported more scalable Bitcoin-backed lending, while holding its position as the largest stablecoin on Stacks after USDC. Circle also launched USDCx in Q4, bringing a fully backed T1 stablecoin to the network.

Read the Messari State of Stacks Q4 2025 report for the complete breakdown of Q4 performance.

BlackRock goes Onchain

Institutions are expanding their investing playbook to include DeFi.

BlackRock took a first step into DeFi markets by making shares of its $2.2B tokenized Treasury fund, BUIDL, tradable through Uniswap. Qualified holders can move between BUIDL shares and USDC on-chain, with 24/7 execution and liquidity instead of waiting on traditional market hours. 

This is not a one-off. Banks and institutions are continually expanding client access to on-chain use cases.

Beyond adoption, the choice of venue paints a picture.

We’ve consistently seen institutional capital gravitate toward protocols that hold up under scrutiny on security, transparency, and operational readiness. Products built to that bar plug into how global banking and finance operate, meeting expectations of this new wave of users.

hBTC earns Bitcoin yield in a way that clears that standard.

USDh Yield Recap

USDh earned 4% APY this week.

Someone had to work during the dip.

Market Review

Bitcoin recovered from last week’s lows near $60,000, trading briefly above $70,000 before settling near $66,500. The price move extended into the new week, coinciding with spot Bitcoin ETFs recording back-to-back net inflows totaling $616M for the first time in nearly a month. Exchange volumes remain about 30% below late 2025 levels, signalling lower retail participation.

The S&P 500 started the week up 0.5% before falling 1.57% to 6,832.75. The NASDAQ dropped 2.03% to 22,597, driven by skepticism over AI capex sustainability. Cisco fell 12.5%, Apple dropped 5% in its worst session since April, and Amazon, Meta, and Broadcom each moved 2%–5% lower.

Data Summary:

• DVOL: ~50%, down from 72% last week

• Equal-weighted futures basis spread fell to 1.85% APR

• Futures curve is in steep contango in back months. Front month slipped into backwardation during selling episodes

• Perp funding rates are near zero to slightly negative

• Aggregated altcoin market caps are up slightly to $0.93T from $0.91T

• Bitcoin dominance rose to ~58.92% from 58.71%

The moving averages (MA) in Figure 1 are:

• Current Price: $66,700

• 7-Day MA: $68,400

• 30-Day MA: $81,300

• 180-Day MA: $99,300

• 360-Day MA: $99,900

• 200-Week MA: $58,200

Bitcoin remains below the 7-day MA and broader short- and long-term moving averages since the sell-offs. Key support levels are $60,000, $58,500, $52,000, and $48,000, with the 200-week MA near $58,500 marking cycle bottoms in 2015, 2018, and 2022. Key resistance levels are $70,000, $72,000, $80,000, and $86,000. At $66,500, Bitcoin is trading between 200-week MA support and the $70,000–$72,000 resistance zone.

BTC ETF Flows

Net outflows totaled $4M. ETF flows turned positive with $471.1M of inflows on Friday, followed by $144.9M on Monday and $166.5M on Tuesday, led by ARK 21Shares ($68.5M), Fidelity ($56.9M), and BlackRock’s IBIT ($26.5M). The broader trend remains outflow-dominated, but this streak of inflows suggests institutional and retail buyers view the $60,000–$70,000 range as a strategic accumulation zone.

From November 2025 through early February 2026, the spot Bitcoin ETF complex shed roughly $6.2B in net capital. Total ETF assets under management are about $97B. The average holder cost basis is near $90,200, leaving the ETF investor base roughly 26% underwater at current prices. In its Q4 2025 13F, Goldman Sachs cut IBIT holdings by 39.4% and added positions in spot XRP ETFs ($152M) and spot Solana ETFs ($108M), signaling a rotation from Bitcoin toward altcoin ETF products.

Volatility

Bitcoin’s implied volatility (DVOL) fell from last week’s close of ~72% to 52% by midweek as the price action from $60,000 to $70,000 reduced demand for protective puts. DVOL remains above the sub-40% levels seen through most of late 2025. Option premiums are elevated, consistent with a market still searching for a durable bottom.

The long-term DVOL downtrend, driven by TradFi call selling on Bitcoin-linked products such as ETFs, Bitcoin treasury companies, and miners, was disrupted by the scale of recent liquidations, breaking the trend that ran from late 2023 through September 2025. DVOL has roughly doubled from three months ago to levels not seen since the FTX collapse in November 2022. Strategy (MSTR) reported a $12.4B net loss for the most recent quarter.

Basis Spread

The basis spread, or futures pricing over spot, recovered this week from last week’s lows. The average equal-weighted basis spread rose from ~1.73% to 1.85% APR as the relief rally reduced hedging pressure that had pushed front-month futures into backwardation last week. Front-month basis is improving, but remains negative.

The futures curve remains in steep contango in the back months, with a wide front-to-back spread. Perp funding is near zero after turning negative during last week’s capitulation. More than $5B in positions were liquidated last week, keeping perp open interest below levels seen before the selloff. Lower open interest and near-zero funding point to lighter positioning, which may limit forced selling but also reduce short-side fuel for a squeeze-driven rally.

Macro

Following a brief government shutdown tied to a budget impasse over Department of Homeland Security funding, the January CPI report was rescheduled from February 11 to Friday, February 13. This is the second recent instance of a shutdown disrupting the release of key economic data. The BLS still has not published the October 2025 figures following the prior, longer shutdown.

The January jobs report was stronger than expected, with a lower unemployment rate to start 2026. The federal funds rate remains 3.50%–3.75% after the January 28 FOMC meeting. The next meeting is scheduled for March 17–18. Fed Chair Powell’s term expires in May, and the transition to nominee Kevin Warsh remains in focus.

Gold trades near $4,957 per ounce, down 2.8% from recent all-time highs but still near record levels and well above year-ago prices. The VIX rose to 20.83, up 18% on Thursday, while the Dollar Index (DXY) climbed to 97.05. Strong jobs data, delayed inflation data, and ongoing AI capex concerns have kept cross-asset volatility elevated into the weekend.

Sincerely,
The Hermetica Team