Data & Insights: Gold not Digital; Hyperliquid's Halving

Physical Beats Digital

• Bitcoin, often touted as “digital gold”, has severely underperformed physical gold in terms of absolute returns for roughly two months by now.
  • In the middle of August 2025, the BTC/GOLD price ratio stood at 36.7
  • Since then, this figure has fallen by roughly 30%, with the ratio sitting at ~25 per the time of writing.
  • Over this period, the price of Bitcoin declined by over 12% while the price of Gold increased by ~30%.
  • The BTC/GOLD ratio is also at its lowest point since the peak Liberation Day tariff events in April 2025.
• There are likely a number of reasons for why gold has become one of the best performing investable assets in recent months.
  • The most obvious reason is a “risk-off” rotation due to headlines around tariffs and broader global trade frictions that pushed investors toward “hard” safe-haven assets, which gold traditionally is.
  • BTC, on the other hand, is more of a high-beta risk-on asset.
  • The second reason is the “debasement” narrative, which is the belief that governments will steadily erode the value of fiat money via persistent deficits, money-supply expansion and negative real rates
  • This narrative has become increasingly popular in recent times, especially with the federal reserve expected to cut interest rate cuts further next year.
  • Gold has seemingly maintained a steady structural bid from this debasement narrative, be it from individuals, central banks or sovereign reserves.

The Lion Revenge Traded and Died

• Following last week’s devastating liquidation event, open interest (OI) on Hyperliquid nearly halved and has not failed to meaningfully recover since.
  • Prior to the liquidation event, Hyperliquid OI stood at ~$13.8 billion, with over 1/3rd of that being altcoins (excluding BTC, ETH and SOL)
  • The liquidation cascade decimated over ~$7.4 billion of OI on Hyperliquid alone, with nearly $3 billion coming from alts.
  • A week since the event, OI on the platform has slightly increased from the bottom, yet still a far cry from its pre-cascade figures.
• Taking a granular look at the volume traded on Hyperliquid pre- and post- liquidation events paints an interesting, albeit slightly haunting, picture.
  • In the seven days prior to the liquidation cascade, Hyperliquid averaged ~$10 billion worth of daily volume traded across all trading pairs.
  • In the week following the liquidation event, this figure was 17% higher than the week prior, despite OI being over 30% lower.
  • This discrepancy indicates increased trading activity from traders, possibly in an effort to “make it all back” as soon as possible, also known as revenge trading.
  • Looking at the platform’s daily liquidation figures, it does not seem like this strategy has been going well at all for most people.
  • In the seven days post-liquidation cascade, daily liquidations on Hyperliquid proceeded to increase by an average of 70% per day, indicating the majority of traders on Hyperliquid have failed to immediately “ make it all back”, and are likely in an even worse financial situation right now than they were last week.

Stacking Sats

• Spot Bitcoin ETFs have demonstrated resilience during recent market volatility, with trading volumes reaching $34 billion last week. This uptick in activity underscores sustained investor engagement with these products, even as broader crypto markets faced pressure.
  • Despite elevated volumes, the ETFs recorded nearly $1 billion in net outflows over the same period, suggesting that while trading activity remained robust, the directional flow leaned toward redemptions rather than new capital allocation.
  • Since their January 2024 launch, spot Bitcoin ETFs have become among the most successful product introductions in ETF history, allowing issuers to accumulate substantial assets under management and providing traditional finance investors with straightforward Bitcoin exposure.
• Interestingly, market share dynamics among issuers have shifted, with BlackRock's IBIT seeing its volume dominance moderate from approximately 80% to 70% in recent months. This suggests that while IBIT remains the clear leader, other products are capturing a larger portion of trading activity as the market matures.
• The proliferation of Bitcoin exposure vehicles raises questions about structural changes in how capital flows into the asset. Beyond ETFs, Digital Asset Treasury companies, which are typically Nasdaq-listed entities that pivot their strategy to accumulate crypto, offer another layer of indirect exposure.
  • These intermediary structures may create second-order effects on spot market dynamics. Research from 10X Research estimated that retail investors paid approximately $17 billion in premiums by purchasing shares in these treasury companies rather than acquiring Bitcoin directly since the DAT boom began.
  • Had this capital flowed directly into spot markets instead, it could have generated different price dynamics. The divergence between indirect exposure mechanisms and spot buying represents a structural shift that may dampen immediate price impact from new capital, as investment flows are increasingly filtered through financial products rather than manifest as direct spot purchases.
• While these products democratize access to Bitcoin for traditional investors, the growing layers of intermediation introduce new market dynamics that may have a lessened effect on upwards price momentum.

AAVE-iously Growing

• Aave has solidified its position as the dominant lending protocol on Ethereum, now accounting for 82% of all outstanding debt on the network. This market share has grown steadily since 2021, reflecting the platform's ability to attract and retain users across multiple market cycles.
  • The chart tracks the distribution of outstanding debt across Ethereum lending platforms, effectively showing where users choose to borrow against their collateral. Aave's expanding share indicates both growing absolute usage and market consolidation around the protocol.
  • Aave currently serves nearly 1,000 unique borrowers daily, facilitating approximately $25 billion in outstanding loans on Ethereum. The protocol's total value locked stands at roughly $50 billion, with the difference between TVL and debt representing supplied assets that remain available for borrowing.
• As a money market protocol, Aave enables users to deposit crypto assets to earn yield while simultaneously allowing others to borrow these assets by posting collateral. This mechanism forms a foundational layer of DeFi infrastructure, enabling leveraged trading, yield farming strategies, and capital efficiency across the ecosystem.
  • Beyond basic lending and borrowing, Aave offers features like flash loans (uncollateralized loans that must be repaid within a single transaction) and efficiency mode, which allows higher leverage for correlated assets. These capabilities have made the protocol essential for sophisticated DeFi strategies.
• The lending market exemplifies a broader trend of consolidation across crypto verticals, though this represents a flight to quality rather than formal mergers. Users gravitate toward platforms with the deepest liquidity, longest track records, and most robust security practices.
  • The protocols' concentration around Ethereum underscores the network's continued role as the center of DeFi lending and borrowing activity.
  • Aave's entrenched position suggests it will likely remain the market leader, though emerging protocols with novel mechanisms or risk parameters may carve out niches.

Respect the Pump

• Pump.fun is another vertical leader that has reclaimed near-monopoly status, now commanding 95% market share based on daily token graduations. This marks a significant recovery from earlier this summer when competitors like LetsBonk, Believe, and Moonshot collectively challenged its dominance.
  • Token graduation refers to when newly launched tokens reach sufficient liquidity thresholds to transition from launchpads onto established decentralized exchanges like Raydium. This metric effectively measures which platforms are generating tokens with genuine traction rather than those that fail to gain market interest.
  • The launchpad model has expanded beyond Solana, with platforms like four.meme on BNB demonstrating that the token creation and discovery framework can work across different blockchain ecosystems.
• Overall launchpad activity has contracted in recent months, with total volume now hovering around $100 million and roughly 100 tokens graduating daily across all platforms. This decline reflects broader market conditions as attention has shifted away from memecoin speculation.
  • Despite this downturn, Pump.fun continues generating approximately $1 million in daily revenue, down from $3 million in September but still substantial given the reduced market activity.
  • The platform's ability to maintain user engagement during market downswings underscores the stickiness of its user experience and network effects.
• Pump.fun's resilience positions it as the entrenched leader in the memecoin creation vertical. While speculative interest may ebb and flow with market cycles, the platform has established itself as the primary infrastructure for token launches within its niche. The gap between Pump.fun and its competitors suggests meaningful competitive advantages, whether through superior discovery mechanisms, liquidity, or community resilience, that may prove difficult for rivals to overcome even when memecoin activity eventually rebounds.