Key Insights: All About That Hedge

Derivatives positioning drove the week’s crypto narrative. After BTC reclaimed $90,000 and ETH pushed back above $3,000, funding rates briefly surged to their highest levels since November. Open interest declined on the week, with BTC OI down -2.67% WoW and ETH OI down -2.81%. This reinforces the view that participants remain tactically positioned and unwilling to chase upside in a low-liquidity environment.

Institutional flows turned negative on the week, with net outflows of -$736m, driven primarily by redemptions in Bitcoin-linked products. While the near-term signal looks challenged heading into 2026, total assets across digital investment products remain elevated at approximately $113.8bn, highlighting that recent withdrawals reflect positioning adjustments rather than a breakdown in institutional engagement.

At the sector level, privacy led the complex (+9.4%), with ZEC at the forefront as the privacy meta continues to assert itself as a durable 2026 theme. Perp DEXs (+7.1%) also outperformed, led by HYPE (+7%), as token unlock concerns faded and attention shifted toward the Lighter TGE and the conclusion of its pre-TGE trading incentives. In contrast, more speculative segments lagged, with Memecoins (-2.7%) under pressure, underscoring investors’ preference for the revenue narratives.

Our Take: Crypto continues to trade choppy, but the underlying structure is improving. Liquidity remains thin, and much of the macro uncertainty that weighed on markets earlier this year, from tariffs to government shutdown risk to questions around US economic durability, is still being digested. In that context, with positioning cleaner, the setup increasingly favors patience over momentum chasing as the market builds a base for the next phase.

Onchain rates continued to soften. Stablecoin supply yields moved lower, with USDC and USDT APYs down -4% and -6% WoW, driven primarily by increased stablecoin supply rather than a resurgence in borrowing demand, consistent with capital being parked defensively as risk appetite stabilized. The mix remains more supply-driven than demand-led, but the relative improvement in ETH rates is consistent with early-stage re-risking rather than outright leverage expansion.

Chain netflows reflected broad dispersion, but with a clear leader. Arbitrum (+$1.7bn) saw the largest net inflows on the week, driven in part by users depositing capital onto Arbitrum as a staging ground for activity on Hyperliquid, a dynamic that points to traders beginning to re-risk selectively rather than exiting onchain entirely. Outflows were concentrated in Ethereum (-$827m) as the flow profile continues to prioritize execution. RWA flows weakened at the aggregate level, with total AUM down -12.86% WoW, driven largely by drawdowns in smaller and non-core allocations. Within that, Paxos (+7.05%) stood out, benefiting directly from the sharp rally in gold and precious metals, which continues to drive demand for tokenized commodity-linked products. Maple (+2.82%) and Ondo (+0.83%) also attracted modest inflows, while Securitize (-0.30%) remained broadly flat, suggesting the pullback reflects rotation and rebalancing rather than waning structural interest in RWAs.

Our Take: Onchain signals suggest risk appetite is building selectively. Capital is beginning to deploy toward equity perpetuals, where leverage offers opportunity amid the ongoing run in equities, while tokenized precious metals are emerging as the clearest real-world bridge for RWA adoption amid the surge in gold and silver. Together, these two vectors represent the most immediate sources of incremental onchain demand.

The surge in commodities has been one of the defining macro themes of the year, and it has accelerated meaningfully since the end of QT. Broad-based strength across precious metals and industrial commodities has pushed gold, silver, and copper to all-time highs, driven by a combination of elevated geopolitical risk, renewed safe-haven demand, and easier monetary conditions. With the Fed pivot complete and markets increasingly pricing additional easing into 2026, non-yielding real assets have reasserted their role as macro hedges. Layered on top of this is a persistent structural supply tightness across several key commodity markets, reinforcing the durability of the move rather than framing it as purely cyclical.

That backdrop has translated directly onchain. Tokenized commodities have reached exit velocity, with total AUM nearing $4B, an all-time high. The market remains highly concentrated, with Tether Gold (~$1.76B) and Paxos Gold (~$1.63B) together commanding over 85% of total tokenized commodity AUM. The growth profile has steepened notably over the past year, reflecting both rising underlying commodity prices and growing comfort with tokenized wrappers as liquid, onchain access points to real assets. Importantly, this growth has occurred alongside broader RWA adoption, but at a pace that now clearly separates commodities from other RWA verticals.

Our Take: Tokenized commodities are shaping up to be the least volatile and most durable segment of RWAs. While gains may not compound at the same pace seen during the sharp repricing of 2025, the trajectory remains structurally higher over time. As more commodities move onchain and distribution expands across wallets, venues, and institutional channels, tokenized commodities are likely to continue absorbing capital steadily.

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