Matrixport Market Observation: BTC and ETH May Maintain Volatility, Structured Tools Become Key Hedging and Gain Methods

In the third quarter of 2025, the digital asset market is caught in a tug-of-war between macroeconomic conditions and capital flows. The fluctuations in inflation and interest rate policies, massive inflows of capital and short-term profit-taking, along with the hedging signals from the derivatives market, collectively shape the price trajectories of BTC and ETH.

Macroeconomic Environment: A Tug-of-War Between Easing Expectations and Uncertainty

Recent U.S. inflation data has become the market focus. The July CPI remained stable year-on-year at 2.7%, below the expected 2.8%, while the core CPI year-on-year was 3.1%, with a month-on-month increase of +0.3%, indicating that inflationary pressures are gradually weakening. This trend reinforces expectations for a rate cut by the Federal Reserve in September, with federal funds futures showing a probability of over 80% for a rate cut. Meanwhile, the growth rate of broad money (M2) in major global economies continues to rebound, with an index tracking eight countries rising by 5% since April, maintaining a high correlation of 0.9 with BTC prices. Ample liquidity and potential monetary easing provide support for the medium- to long-term performance of risk assets.

However, some data keeps the market cautious. The July PPI surged 0.9% month-on-month (far exceeding the expected 0.2%), with a year-on-year increase of 3.3%, and the core PPI also exceeded expectations, indicating significant wholesale inflation pressures. This raises concerns that the Federal Reserve may "maintain high interest rates for a longer time," further corroborated by strong employment data (initial jobless claims at only 224,000). The coexistence of favorable and constraining macro factors ultimately leads to increased short-term market volatility.

Capital Flows: Intertwined Institutional Buying and Profit-Taking

The dynamics of capital flows are an important factor supporting the rise of digital assets. CoinShares data shows that mid-July saw a record net inflow of $4.39 billion into digital asset investment products in a single week, bringing the total industry assets under management to $220 billion. Notably, ETH saw inflows of up to $2.12 billion in recent months, setting a new record, with cumulative inflows of $6.2 billion in 2025, surpassing the total for the entire previous year.

The influx of capital is driven not only by easing expectations but also by favorable policies and institutional support. U.S. President Trump signed an executive order allowing 401(k) retirement funds to invest in digital assets, potentially unlocking $8.7 trillion in capital. Wall Street giants like BlackRock are actively increasing their stakes, with the iShares BTC Trust reaching a scale of $10 billion, and the spot ETH ETF saw net subscriptions for eight consecutive days in early August, with daily inflows exceeding $1 billion, driving ETH prices to break new highs for the year. Meanwhile, the number of publicly listed companies holding BTC is rapidly increasing, with Japan's Metaplanet making a notable purchase of 775 BTC in one go.

However, after a strong rally, the market has also shown signs of short-term profit-taking. Since mid-August, ETH ETF products have recorded a net outflow of approximately $197 million, and BTC has also seen a slight pullback. Nevertheless, large inflows of stablecoins into exchanges (up to $1.8 billion in a single day) indicate that institutions and whales are still accumulating on dips. Overall, the main theme of capital flows remains "incremental capital continues to enter the market."

Derivatives Market: A Divergent Pattern of Short Positions and Long Positions

The options and futures markets reveal investors' complex sentiments. The 30-day implied volatility of BTC has risen to 35%, significantly higher than the historical volatility of 25%, indicating that investors are willing to pay a premium to hedge against future risks. The 25-Delta skew indicator for options has surged to +11%, with a large amount of downside protection being purchased, reflecting concerns about short-term pullbacks.

The sentiment for ETH is even more volatile. In early August, driven by ETF optimism, short-term options exhibited a strong bullish skew, with the risk reversal indicator quickly flipping from -11% to +4.8%. However, as prices rapidly pulled back, short-term sentiment returned to bearish, reflecting a retreat of speculative buying. Nonetheless, the long-term bullish skew remains, indicating that investors' confidence in ETH's long-term prospects has not changed.

In the futures market, the funding rate for BTC perpetual contracts turned negative after reaching a high, indicating a cooling of bullish enthusiasm, but the annualized premium for three-month futures remains in the 6%-7% range, with ETH even experiencing an inverted futures premium, showing strong buying momentum. Overall, the market presents a "short-sell in the short term, long-buy in the long term" scenario: strong short-term hedging demand exists, but long-term optimism remains.

On-Chain Data: Long-Term Capital Continues to Enter

On-chain indicators show that chips are concentrating in the hands of long-term holders. Over 92% of newly added BTC is being absorbed by wallets holding for more than 155 days, while the BTC balance on exchanges has dropped to 2.903 million, accounting for 14.6%, marking a multi-year low. In other words, the available selling chips are decreasing, leading to reduced selling pressure.

ETH's on-chain activity has also reached new highs, with an average daily transaction volume exceeding 1.5 million and active addresses nearing 600,000. More importantly, gas fees remain at moderate levels, indicating that the increase in activity is driven by steady demand rather than speculative trading. Institutional capital is accelerating its entry, with ETH's total value locked (TVL) climbing to $97 billion, the highest since 2021. The low inflation or even deflationary supply mechanism of ETH, combined with continuous capital inflows, significantly improves its supply-demand structure.

The flow of stablecoins also provides sentiment signals. Before BTC surged to $124k in August, exchanges recorded large inflows of stablecoins, becoming an important precursor to price increases. This logic has been validated again, suggesting that future market movements can continue to monitor stablecoin trends as a leading indicator.

Investment Strategy: Using Structured Products to Smooth Returns

Under the influence of multiple factors such as the macroeconomic environment, capital flows, the derivatives market, and on-chain data, BTC and ETH prices are likely to maintain a wide-ranging oscillation pattern in the future. We believe that investors should not be fixated on a single directional judgment but should flexibly use structured products for strategic allocation based on their market views and risk preferences. The Matrixport platform offers a variety of tools (such as Accumulator, Decumulator, Daily Dual Currency) that can achieve a balance of offense and defense under different market conditions.

In this era of volatility and opportunity, those who skillfully use tools can seize the initiative. In the current intertwining of macroeconomic conditions and market sentiment, crypto assets are in a high-level oscillation phase, and investors need to find a balance between opportunities and risks. A prudent approach is to use structured products to hedge volatility and optimize capital efficiency. For Matrixport clients, these structured tools are not a single choice but can be combined as strategic modules. By reasonably pairing different products, investors can achieve excess returns during upward trends and steadily increase income during oscillations or adjustments, creating a balanced investment portfolio. In this process, risk management is particularly crucial: controlling individual exposures, clarifying asset allocation goals, and operating under the guidance of a professional team are essential to ensure a balance between returns and safety.

Author: Daniel YU, Head of Asset Management (This article represents the author's personal views only)