Summary

• Last week, the market switched from "war risk aversion" to "soft landing + interest rate cut expectations" trading. The ceasefire proposal in the Middle East released positive signals, and the earnings reports from AI and tech companies drove the Nasdaq index to rise 4.70% for the week; BTC broke through $82,000 under the continuous inflow of ETFs.

• The net inflow of BTC ETFs for the week was $632 million, with IBIT continuing to dominate institutional funds; the ETH ETF turned from negative to positive, with ETHA becoming the main source of incremental growth, and institutional allocation sentiment significantly improved.

• On-chain trading in TradFi was dominated by macro assets such as gold and crude oil, while the proportion of stock and ETF-related trading continued to rise; the number of CEX TradFi assets continued to expand, with the most significant growth in stocks.

• On-chain funds flowed back to leading DEXs and mature liquidity scenarios, with Uniswap and PancakeSwap as core platforms; the stablecoin market favored compliant, settlement, and cross-chain capable dollar assets.

• Aave is still digesting the impact of the rsETH event, with the lending market remaining weak; new scenarios such as MegaETH and Plasma began to attract incremental funds, with Solana LST being the first to benefit from the warming risk appetite.

• The derivatives market continued the "negative funding rate + high volatility" structure, with BTC's short squeeze phase being released; options trading volume and implied volatility expanded during the breakout phase, then cooled down again.

• In May, Gate's institutional spot trading volume increased by 14.54% month-on-month, and contract trading volume increased by 18.10%; CrossEx achieved record trading volume and asset scale for three consecutive weeks; Gate Institutional Circle Amsterdam station has entered the preparation stage.

1. Market Focus Interpretation

The U.S. proposed a ceasefire plan with substantial progress, covering 14 clauses including the suspension of Iran's nuclear enrichment activities, gradual lifting of sanctions, and cancellation of restrictions related to the Strait of Hormuz. Sources say this is the closest the two sides have come to reaching an agreement since the conflict broke out. The market reacted positively to this news, combined with strong earnings reports across various industries, especially in technology and AI companies, driving the Nasdaq index to rise 4.70% for the week, reaching a recent high. Meanwhile, although geopolitical conflicts provided support for gold and silver, the significant drop in crude oil prices due to easing supply disruption concerns (with WTI falling 7.68% for the week) limited gold's gains as inflation expectations cooled. In the cryptocurrency space, Bitcoin steadily broke through the $82,000 mark, driven by continuous inflows into spot ETFs and improved market liquidity. In the foreign exchange market, the U.S. dollar index weakened due to the Fed's dovish stance, supporting a slight rebound in the yen.

Despite the impact of the oil crisis, the latest labor market data still showed improvement. In March and April, non-farm payrolls increased for two consecutive months, reaching a nearly one-year high, bringing the average monthly job creation in the private sector to nearly 90,000 so far this year. Meanwhile, the unemployment rate has fallen from its peak in 2025, with the latest data for April showing an unemployment rate of 4.3%, unchanged from the previous year. Overall, the market has shifted from "war panic" at the beginning of the week to optimistic pricing regarding "economic soft landing" and "Fed interest rate cut space."

2. Liquidity Analysis

2.1 BTC ETF Scale Continues to Expand

Last week, BTC ETFs showed a "strong opening and weak closing" pattern, with net inflows recorded for the first three trading days, followed by net outflows in the last two days. The total net inflow for BTC ETFs for the week was $631.6 million, significantly higher than the previous week, indicating an overall positive market sentiment. The total net inflow for ETH ETFs for the week was $70.3 million, showing a clear improvement from the previous week, turning from negative to positive.

• Overall AUM Situation: As of May 8, the total net asset value of BTC ETFs was approximately $106.77 billion, with a historical cumulative net inflow exceeding $59.4 billion; the total net asset value of ETH ETFs was approximately $13.6 billion, with a historical cumulative net inflow of about $12.1 billion, and the net assets of ETFs accounted for about 4.94% of Ethereum's total market value. The scale of BTC ETFs continues to expand, with IBIT's single fund AUM reaching approximately $66.9 billion, accounting for about 66% of the entire BTC ETF market, surpassing most traditional commodity ETFs.

• Institutional Trends: This week, fund differentiation was evident. IBIT had a net inflow of $596.3 million for the week, leading the pack and maintaining its dominant position in institutional allocation; ARKB ranked second with $53.1 million, indicating some institutions still have interest in high beta strategy products. In contrast, FBTC had only a net inflow of $52.2 million for the week, with significant outflows recorded on Thursday and Friday, totaling about $226.6 million, reflecting a more cautious stance from institutions towards Fidelity products. GBTC continued to experience structural outflows, with a net outflow of $62.3 million for the week. In terms of ETH ETFs, ETHA led with a net inflow of $100.1 million, while FETH was dragged down by a single-day outflow of $62.3 million on Thursday, resulting in a net outflow of $32.2 million for the week, showing a clear divergence in the performance of the two mainstream ETH products.

2.2 TradFi Liquidity

• TradFi Perp DEX: In the past week, the trading structure of TradFi Perp DEX remained centered around commodities, maintaining a share of over 60%, indicating that macro assets such as gold and crude oil still dominate on-chain TradFi trading demand. Against the backdrop of ongoing geopolitical risks and risk aversion sentiment, funds clearly favored commodity assets with higher volatility and more direct narratives. Meanwhile, the proportion of Indices/ETFs and Stocks continued to stabilize and rise, reflecting that some funds have begun to re-engage with U.S. stock indices and ETF-related trading opportunities; traditional macro assets such as FX and Bonds continued to maintain low proportions. Overall, the current trading preference in TradFi DEX remains highly concentrated on the "macro trading" theme, with on-chain fund risk appetite not yet significantly switching to low-volatility assets.

• TradFi Perp CEX: In the past week, CEX TradFi perpetual contract trading volume remained high and volatile, with precious metals like gold continuing to dominate. The precious metals sector contributed the vast majority of trading volume, reflecting strong market enthusiasm for risk aversion and macro trading assets. Meanwhile, stock trading volume remained stable, indicating that funds are still focused on volatility opportunities in U.S. stock indices and tech stocks; commodities saw a temporary increase in trading volume driven by oil price fluctuations. Overall, the current trading structure in CEX TradFi remains centered around gold-driven dynamics, with macro events and risk aversion continuing to dominate market risk appetite.

• CEX TradFi Asset Count: In the past week, the number of asset categories in CEX TradFi further expanded, with the total number of TradFi assets (counting only TradFi and CFD segments, excluding perpetual contracts) increasing from 956 to 1,107, a growth of 15.80% since the end of April. The growth in stock assets was particularly notable, rising from 594 to 748, an increase of 25.90%; Gate's stock-related TradFi assets grew by 104 since the end of April, an increase of 38.95%.

• TradFi Order Book Depth: We selected XAUT, which has the highest trading volume in TradFi, to analyze its order book depth (Delta). In the past week, the depth structure of XAUT showed a clear "price increase, selling pressure thickening" characteristic. During May 4 to May 5, the order book Delta recorded positive values exceeding $1 million for several consecutive days, indicating a significant increase in buying activity, but prices still periodically retreated to around $4,500, reflecting strong support at lower levels. Starting from May 6, as gold prices quickly surged above $4,700, the order book Delta turned to sustained negative values, with liquidity outflows exceeding $1.5 million in a single hour on multiple occasions, indicating a significant increase in high-level sell orders, with some funds beginning to take profits or hedge. Nevertheless, the overall price of XAUT remained in a high volatility range, indicating that the market's demand for gold as a risk aversion asset remains solid. The depth structure has gradually shifted from the previous "active buying driving up" phase to the "high-level selling pressure and capital support game" phase, with short-term attention needed on whether liquidity support around $4,650 can be maintained.

3. On-Chain Data Insights

3.1 Funds Flowing Back to Leading DEXs, Trading Focus Shifting Back to Platforms with Deeper Depth

The DEX landscape in the first week of May showed strong characteristics of returning to the main stage, with PancakeSwap at the top, but incremental funds gave higher weight to trading scenarios with deeper liquidity like Uniswap and Aerodrome. The Solana side has not cooled down, with Meteora and Raydium still active, and trading is not solely reliant on a single meme narrative as in previous weeks. After Bitcoin regained a key psychological level, the entire market's risk appetite was reignited, and DEX trading became more active again. Notably, Grayscale removed Aerodrome from its DeFi fund quarterly rebalancing this week, reallocating to Ethena while retaining Uniswap as the largest weight, indicating that institutional funds still prioritize mature liquidity protocols before selecting new narrative directions.

3.2 Market Attention Returning to Compliant, Settled, and Cross-Chain Stablecoin Assets

Aside from the two leading stablecoins, USDT and USDC, this week saw payment-type, compliant stablecoins that can directly enter DeFi collateral and settlement processes occupying more prominent positions, while yield-oriented and experimental varieties saw a decline in popularity. This change resonates with policy developments, as Reuters reported that the Senate reached a key compromise on stablecoin rewards and yield provisions, prompting the market to quickly reassess which types of stablecoins best fit the next stage of regulatory frameworks. Notably, Circle has been actively participating in bridging reality, regulations, and ecosystems this week, obtaining relevant authorization under France's MiCA on May 4, submitting opinions on the GENIUS rules the next day, and connecting USDC with CCTP on Injective on May 7, further advancing along the lines of compliant distribution and cross-chain settlement.

3.3 ETH LST Leaders Stabilizing, Solana Side First to Catch Risk Recovery

The leading protocols on the ETH side have not yet experienced a strong recovery, with Lido showing some restraint, while Rocket Pool and StakeWise are relatively stable. In contrast, Solana's LSTs have been the first to benefit from the market's risk recovery, with assets like Sanctum and Jupiter Staked SOL being more actively supported, and funds are willing to reprice high-elasticity staking assets. Meanwhile, Lido received Web3SOC certification this week, continuing to promote institutional due diligence, governance transparency, and security framework, further strengthening its slow-variable advantage in institutional funds.

3.4 Aave Still Digesting the Aftermath of the rsETH Event, MegaETH Taking on New Loan Demand

Aave's lending data this week still bears strong traces of post-event recovery. The lending market in the Ethereum main market has shrunk again, with older main markets like Arbitrum, Base, and Ink also remaining weak, and the previous scene of multiple chains warming up together has not returned. In contrast, Plasma is strengthening, and the lending market for the new chain MegaETH has notably increased, with funds shifting from traditional main markets to newer scenarios and markets with more incentive space. Aave Labs directly pointed out in its monthly update at the beginning of the month that the rsETH event has interrupted the early growth rhythm of Aave V4. Subsequently, on May 5, Aave Lab's risk team promoted the cap increase for EURC on Ethereum and USDm on MegaETH. Aave is shifting its new growth points towards stablecoins with clearer regulatory attributes and lending markets on new chains that are easier to form closed loops.

3.5 Aave Core Assets Returning from Stress State, WETH Leverage Retreating Most Significantly

Compared to the rate hikes seen in the previous two weeks due to incidents, Aave's loan rates have significantly cooled down this week. The average borrowing costs for USDC and USDT have returned to normal ranges, while WETH has decreased even faster. When viewed alongside loan volumes, market demand has shifted from "snatching liquidity" back to "selectively borrowing liquidity." This also explains why EURC and USDm have been prioritized for supply cap increases, as stablecoin loan demand remains, but it is now more inclined towards structured arbitrage, regional currency demand, and incentive trading on new chains.

3.6 Protocol Revenue Returning to a Structure Based on Stablecoins, Derivatives, and Lending Elasticity

Tether and Circle's stablecoin issuance continues to contribute the most stable cash flow. This week, elasticity has mainly returned to on-chain derivatives and lending infrastructure, with Hyperliquid gaining significant attention, and Aave's revenue elasticity significantly stronger than the previous week, as trading and settlement demand have not cooled down due to the risk events in late April. Hyperliquid began to enter Bitcoin outcome markets on May 5, and Hyperliquid Strategies disclosed plans to expand HYPE reserves and promote validator cooperation, with the market pricing it as a signal of moving from perpetual contracts to a complete financial stack. On the other hand, Aave's revenue increase and the contraction of the lending market occurred simultaneously, reflecting the risk premium and capital repricing following the event shock.

4. Derivatives Tracking

4.1 BTC Funding Rate Deeply Negative with Rising OI, Short Squeeze Structure Continues to Strengthen

From May 4 to May 10, BTC prices continued to rise and maintain high volatility, moving from around 79K to above 82K, although it briefly retreated to around 80K around May 7 before recovering again. In terms of funding rates, most of the week remained in negative territory, especially around May 5 and May 6, where the negative values were deeper, indicating that bearish sentiment had not completely dissipated during the price rise, and the market still exhibited a certain "price strengthening but funding rate bearish" divergence structure.

Unlike the previous phase, OI quickly fell after peaking above approximately 29B on May 5, then fluctuated between 26B and 27B. The combination of negative funding rates and falling OI indicates that the previously crowded short structure has seen some release during the price rise, with some leveraged positions exiting either passively or actively. After May 7, BTC prices maintained high-level recovery, but OI did not return to previous highs, indicating limited willingness for new leveraged buying, as the market gradually shifted from the "shorts adding positions + prices not falling" accumulation phase to a "post-squeeze high-level turnover" state.

Overall, the current derivatives structure still leans towards bullish dominance, but the short squeeze momentum has seen some phase-wise digestion since around May 5. If prices continue to break above 82K, and OI rises simultaneously, it may re-establish a resonance between leveraged buying and short covering; however, if prices oscillate at high levels while OI continues to fall, it indicates that this round of upward momentum is more driven by previous short covering, and future support from spot buying or new long leverage will be needed.

4.2 Options Trading Volume Temporarily Expands, Monthly Contracts Remain Dominant in Structure

Last week, BTC options trading volume exhibited a clear pattern of high volume followed by low volume. From May 4 to May 6, trading volume remained high, peaking on May 5 at nearly 36K, and still around 33K on May 6, indicating that when prices quickly rose to the 81K-82K range, trading and hedging demand on the options side significantly increased.

Structurally, monthly and weekly options remain the main trading force, indicating that market participants are still primarily focused on medium to short-term directional layouts and volatility management. Notably, the proportion of daily options trading significantly increased on May 8, reflecting that during the high-level price oscillation phase, short-term event trading and near-expiry risk management demand have strengthened. However, from May 9 to May 10, trading volume significantly declined, especially on May 9, which fell to a weekly low, indicating that after prices temporarily entered a high-level consolidation, active trading enthusiasm has cooled down.

Overall, the options market concentrated pricing on the price breakout from May 4 to May 6, but trading enthusiasm subsequently declined, indicating that the market did not continue to chase higher volatility. The current structure is closer to "post-breakout high-level observation," and if BTC challenges the upper range again, whether options trading volume expands again will be an important signal to determine if the market enters a new round of directional pricing.

4.3 Implied Volatility Across All Expiration Dates Overall Rises, Term Structure Tends to Converge

Last week, the 25D Skew for BTC across all expiration dates remained in negative territory, indicating that the options market is still pricing down protection higher than up chasing, and risk appetite has not fully shifted to one-sided optimism. At the beginning of the week, the 7D Skew briefly recovered to around -2, significantly higher than other terms, indicating that during the rapid price rise phase, the premium for short-term put protection has decreased, and market panic sentiment has temporarily eased.

However, entering May 9 to May 10, the 7D Skew fell back to around -3.5, gradually converging with medium to long-term skews, indicating that after high-level price oscillations, short-term protection demand has risen again. The 30D, 60D, 90D, and 180D Skews exhibited relatively small fluctuations, mostly maintaining in the -3.5 to -4.5 range, indicating that the medium to long-term market still retains a certain defensive pricing and has not significantly shifted to a chasing structure due to price rises.

Overall, the Skew structure reflects that the market is not pessimistic about BTC's upward trend but remains vigilant about high-level pullback risks. The short-term Skew's shift from recovery to decline means that short-term traders are re-adding protection after price highs, and if prices cannot effectively break through the highs, protective demand may continue to support put option premiums.

4.4 BTC Volatility Index Stabilizes After Downward Fluctuation, Short-Term Volatility Compresses

Last week, the BTC Volatility Index (BVOL) initially saw a significant surge around May 4 to May 5, briefly approaching 41, then quickly fell back, dipping to the 37-38 range from May 8 to May 9. On May 10, the volatility index saw some recovery but remained around 38.5-39, below the early week peak. In terms of rhythm, the peaks of BVOL corresponded to the phases of BTC price rapid rise and options trading volume expansion, indicating that the market briefly raised volatility expectations during the breakout process. However, as prices entered high-level oscillations, OI fell, and options trading volume cooled down, volatility pricing rapidly compressed, showing a decrease in market expectations for short-term dramatic fluctuations.

Overall, the current state is characterized by "high-level price oscillation + volatility stabilization," indicating that the derivatives side's pricing for further unilateral breakouts is still insufficient. If BTC continues to maintain high-level consolidation, BVOL may remain in low-level oscillation; however, with funding rates still fluctuating and Skew remaining negative, once prices break through or fall below the range, there is a possibility of rapid repricing of volatility.

5. This Week's Outlook

6. Gate Institutional Dynamic Update

Trading Volume and Liquidity Performance

• In the first two weeks of May, overall trading volume maintained an upward trend, with spot trading increasing by 14.54% month-on-month and contract trading increasing by 18.10%.

• The market share of contract trading and the structure of institutional clients remained stable overall.

• Spot depth has recovered to near bull market levels, with significant rebounds in trading of small-cap assets; small-cap spot performance continues to outperform the market.

CrossEx Products and Infrastructure

• CrossEx achieved record trading volume and asset scale for three consecutive weeks.

• Demand for cross-exchange arbitrage, hedging, and single-lock strategies continues to grow, with significant optimizations in core exchange delays. CrossEx will add a new exchange in late May, supporting at least six exchanges by the end of Q2.

Brand and Ecosystem Development

• Gate Institutional Circle Amsterdam station has entered the preparation stage, which will continue to strengthen Gate's brand influence and ecosystem cooperation in the European institutional market.

Data Sources:

• Investing, https://investing.com/currencies/xau-usd-historical-data

• Gate, https://www.gate.com/trade/BTC_USDT

• CMC, https://coinmarketcap.com/real-world-assets/?type=all-tokens

• Coinglass, https://www.coinglass.com/pro/depth-delta

• Dune, https://dune.com/gateresearch/gate-tradfi#weekly-volume

• Dune, https://dune.com/gateresearch/gate-institutional-weekly-report

• Bybit, https://www.bybit.com/future-activity/en/tradfi

• Bitget, https://www.bitgettradfi.com/tradfi/XAUUSD

• CryptoQuant, https://cryptoquant.com/asset/btc/chart/derivatives

• Amberdata, https://pro.amberdata.io/options/deribit/btc/current/

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