⏰ The Wait Is Almost Over
🗞️ State of Tokenization Q1 2026
💰 Yield Recap
📈 Weekly Market Review

This week, I have another hBTC update for weekly readers. The next deposit cap is set at 75 BTC, and the window opens May 27. Access will roll out to waitlist members. If you are not on the waitlist yet, join now.

I spent time this week with Pantera Capital’s Q1 2026 State of Tokenization report. $320 billion of assets have been tokenized, but most of it is still old products wearing blockchain wrappers. The frontier is forming around stablecoins and credit, exactly where we are building.

Our vision is playing out, and the market is catching up.

You heard the next allocation date here first. Here is another exclusive: the hBTC cap size is now set.

hBTC opens its next allocation window on May 27 with a 75 BTC cap, adding 25 BTC of new capacity. The initial window filled in two days. This one opens on the same terms.

Deposit capacity is allocated to the waitlist, with invitations sent by email as capacity opens. Keep an eye on your inbox.

Early allocators can add to existing positions. Waitlisted users who missed the first window have another shot.

Not on the waitlist? The next allocation window is filling fast. Join the list while you can.

Everything is coming on-chain. $320 billion of assets are now tokenized.

Pantera Capital’s Q1 2026 State of Tokenization report puts the market at roughly $320 billion across 593 assets and 11 asset classes. The market has grown around 60% since 2024, and every major bank now has a tokenization strategy.

The headlines suggest a market in deep transformation, but there's a gap.

91% of tokenized assets are still gated at issuance and redemption. Only 2.7% reach Pantera’s “Native” tier of fully on-chain assets. Most tokenization is still in its “newspaper on a website” phase: legacy products with a new distribution rail. 

Two asset classes break the pattern.

Stablecoins operate at scale and with on-chain utility. They score 2.67 on Pantera’s tokenization index versus a 2.04 market average, and 14% reach the Native tier, the highest share of any category.

Private credit leads DeFi utilization at 64.3%, with nearly two-thirds of tokenized value actively deployed on-chain. Pantera attributes this to yield-bearing instruments designed from issuance to be accepted as collateral and looped through DeFi vaults.

The frontier, in other words, is where stablecoins, credit, and DeFi composability meet. That is where the category is becoming most functional.

USDh sits squarely at that intersection, pairing a stablecoin with yield from STRC, a Bitcoin credit instrument. In Pantera’s framework, that places it within the market’s two strongest categories.

The market is catching up to where we already are.

Weekly check-in:

hBTC: 4.3% APY
stUSDh: 8.9% APY

Yield engine's still on. See you next week.

Bitcoin traded from the low-$80,000s to the mid-$75,000s before settling near $77,300, driven by $1.209 billion in spot Bitcoin ETF net outflows since last Thursday. 

Equities outperformed Bitcoin, with the S&P 500 and Nasdaq closing May 20 at 7,432.97 and 26,270.36.

Data Summary:

Simple Moving Averages (SMA) in Figure 1:

Bitcoin is below the 7-day, 30-day, 180-day, and 360-day SMAs; the April recovery has lost momentum and the intermediate trend remains bearish. The key short-term zone is $77,600–$79,100; a reclaim would return Bitcoin to last week’s 180-day SMA test, while continued trading below that band makes $75,000 and $72,000 the next potential levels.

The 360-day SMA near $95,000 remains the major long-term resistance level, while the 200-week SMA near $61,200 remains structural cycle support, consistent with the support role it played near cycle bottoms in 2015, 2018, and 2022. Support levels are $75,000, $72,000, $67,000, and $61,200, while resistance levels are $77,600, $78,800, $79,100, $82,000, $86,000, and $95,000.

Net outflows totaled $1.209B this week.

Public ETF trackers show $1.039B in outflows from May 11-15, ending a six-week inflow streak, with roughly $635M leaving last Wednesday alone. The flows align with Bitcoin trading below the 180-day/200-day moving-average region near $80,000-$82,000.

Selling has not been concentrated in one legacy product; recent outflow days saw broad redemptions across IBIT, FBTC, ARKB, and GBTC. At the same time, SOL, XRP, and HYPE spot ETFs saw modest weekly inflows while ETH ETFs saw outflows, suggesting selective altcoin ETF demand. This aligns with Figure 2: aggregated altcoin market cap is down to $1T, while Bitcoin dominance remains above 60% despite a small weekly decline.

DVOL sits at 38.26%, essentially unchanged from last week’s 38.13%. Longer term, DVOL remains near the bottom of the 35%-45% range seen before recent geopolitical tensions. 

The market has rebuilt the same short-vol structure that existed before the selloff: covered-call supply, ETF-linked option selling, and market-maker hedging between listed equities and Deribit. The result is low realized volatility even as the directional trend weakens.

Basis is positive across all maturities. The equal-weighted spread rose to 2.34% APR from 1.79% last week, widening 55 bps even as spot fell. Basis remains well below the 5%-8% APR range typically seen during durable upside trends. 

Figure 6 shows a front-end kink with a normal back-end slope. The lowest-to-highest maturity spread is 1.51 percentage points. The elevated May 29 print suggests short-term hedging and expiration positioning rather than a broad leverage impulse, while rising perp funding confirms leverage is beginning to build at these prices.

The FOMC held rates at 3.50%-3.75%, citing elevated inflation, higher energy prices, and recent geopolitical developments. 

Equities remain near records despite higher rates, energy risk, and geopolitical developments, driven mainly by strong AI earnings. On May 20, the S&P 500 rose 1.08% and the Nasdaq rose 1.55%. NVIDIA reported $81.62B in revenue and guided to roughly $91B next quarter, reinforcing AI earnings momentum. Bitcoin, by contrast, remains range-bound below $80,000 because it lacks an earnings anchor and depends more directly on ETF issuance/redemption and treasury-company buying. 

The cross-asset message is mixed, not broadly bearish. Equity vol is contained and the AI complex continues to support risk appetite, but crypto flows are weak.

Sincerely,
The Hermetica Team