Thank you for visiting Blockchain Hedge by Hyla Fund Management. Our biweekly newsletter is designed to help you navigate the complexities of hedge fund strategies in blockchain and AI technologies.

Market Analysis:

Bitcoin remains range-bound beneath the $110k–$115k band as derivatives activity and macro calendar keep rallies fragile. Options open interest has hit all-time highs, a sign of concentrated positioning and hedging rather than a clean bullish breakout. On-chain signals are mixed: institutional-scale accumulation in Ethereum contrasts with large profit-taking on other chains, while miners push leverage to fund capacity and AI/HPC pivots. At the policy level, the EU’s latest sanctions package targets crypto avenues used for sanctions evasion, highlighting heightened regulatory risk for cross-border flows. Below are the market drivers, positioning, and tactical implications.

Market movers this week

1) Price & positioning, Bitcoin: tight, hedged, options at record OI

• Price action: BTC oscillated under the $110k mark this week; technical resistance sits in the $113k–$115k area. Recent intraday spikes have been met with immediate profit-taking. (Market data & price feeds).
• Derivatives: Bitcoin options open-interest has reached record levels (Deribit reported notional OI north of $50B; aggregate data providers show OI near ~$60–63B). The clear market dynamic: large notional positions are being written and bought as both directional bets and protection.
Record OI + concentrated strikes imply proof-of-conviction, participants are funding hedges and insurance at higher prices, which makes rallies fragile (selling into strength) rather than self-reinforcing breakouts.

2) On-chain flows, defensive hedging vs selective accumulation

• Glassnode / net-premium flows: Glassnode’s net-premium data show concentrated selling/hedging between ~$109k–$115k; recent strength is being used to hedge, not to fully rotate into spot exposure.
• Whale behaviour: Large buyers re-entered Ethereum (reported single whale buys ~US$32m in ETH), while a Solana whale was reported to have sold roughly ~$93m, suggesting heavier rotation into ETH versus other L1 speculative positions.
Net flows point to a defensive posture: institutions and derivatives desks are hedging upside, while selective institutional accumulation in ETH persists.

3) Macro & liquidity, CPI, ETFs, and systemic flows

• Macro calendar: Markets are digesting incoming US CPI/Fed-sensitive prints and positioning ahead of event data; this compresses directional conviction and raises demand for options as event hedges. (Macro calendar context.)
• Institutional plumbing: Major institutions continue integrating crypto into traditional credit plumbing, notably JPMorgan is moving to permit institutional clients to pledge BTC/ETH as loan collateral (a global program relying on third-party custodians). This is structurally important for credit-market access to crypto holders.

4) Miners & infrastructure, leverage cycle and capacity build

• Miner debt: Industry debt has surged materially (VanEck cites miner debt rising from ~$2.1B to ~$12.7B year-over-year, a ~500% increase) as miners raise capital to upgrade rigs and to expand into AI/HPC hosting. This raises execution and refinancing risk if BTC weakens or rates rise.
• Capacity growth: HIVE announced a 100 MW hydro expansion in Paraguay to target ~35 EH/s in 2026, another indicator miners are betting on scale and renewable power.

The miner cohort is aggressively leveraged into hardware and new revenue verticals (AI/HPC). That is bullish for long-term hashrate and security, but raises short-term sectoral credit risk.

5) Adoption & product launches, banks, tokenized deposits, and custodial credit

• Programmable banking: Pave Bank closed a $39m Series A (backed by Accel / Tether Investments among others) to scale a programmable bank combining fiat and digital assets regulatory licensing in Georgia (and Singapore coverage in some reports). This is a concrete example of banking infrastructure integrating crypto rails.
• Tokenized deposits/bank rails: Vantage Bank / Custodia announced a tokenized deposit platform for U.S. banks, another incremental step toward mainstream stablecoin/stable-deposit rails.
• Institutional infrastructure: OKX launched “Rubix,” a modular solution for banks to integrate crypto services while remaining compliant with frameworks like MiCA / MiFID II in Europe. Expect more incumbents offering modular rails rather than building from scratch.

6) Tokenomics & projects, supply defence and treasury moves

• Covalent: announced a multi-year Strategic Reserve funded by on-chain/off-chain revenue and CXT buybacks (target ~10% of supply). This is a market-stability move that follows a broader trend of protocol buybacks and reserves
• Solana treasury: reports indicate the Solana treasury (c.$396m) is being augmented with institutional validators, signalling an institutionalization of infra support despite the token’s price volatility.

7) Regulation & geopolitical risk

• EU sanctions: The EU adopted its 19th package targeting Russian energy, shadow-fleet actors and crypto tools used for sanctions evasion, notably an A7A5 stablecoin ban and measures on platforms and issuers linked to sanctions circumvention. That elevates compliance friction for cross-border stablecoin rails and illustrates regulators using sanctions to constrain illicit crypto finance.

8) Security & fraud, continued operational risk

High-profile enforcement and incident headlines continue: exchange hacks and fines (WazirX resuming trading after a previous hack; substantial fines for AML failures in other venues) underscore that operational risk remains an important allocation consideration. (Press & enforcement coverage).

The market is in a consolidation phase where derivatives positioning and macro data will determine the next directional leg. Record options open interest and concentrated net-premium hedging point to fragile rallies and profit-taking at $110k–$115k. Institutional adoption pathways, from programmable banks to major banks accepting crypto as collateral, are progressing and provide structural tailwinds. Countervailing risks are elevated: miner leverage and regulatory actions (sanctions and AML enforcement) create volatility and operational risk. For allocators, the near-term rewards favour disciplined exposure (structured entry, hedged positions, and selective ETH accumulation), while product teams should accelerate custody, compliance, and bank-integration capabilities to capture the institutionalization wave.

Market Overview at the time of publication (according to coincodex):

• Total crypto market cap: $3.96 trillion

• BTC dominance: 57.83%

• Bitcoin trading volume (24h): $241.68 billion

• Ethereum dominance: 12.80%

• Ethereum trading volume (24h): $52.37 billion

• Fear & Greed Index: 42 (Neutral)

Hello friends,

Thank you to everyone who joined our panel at Soho House Mexico City last Monday. It was wonderful to reconnect with so many friends and innovators during Mexico City’s Tech Week, an inspiring moment for the blockchain and AI ecosystem in Latin America. Your presence and thoughtful contributions made the evening truly special.

For those interested in continuing the conversation on the intersection of digital assets, AI, and emerging markets, I encourage you to reach out. My team and I at Hyla Fund Management are always eager to collaborate, exchange insights, and support meaningful initiatives shaping the future of finance and technology.

In the decade since Bitcoin’s genesis block, over a billion dollars have been invested in optimizing blockchain infrastructure, faster consensus, more efficient execution engines, modular architectures, and novel scaling solutions.
Yet one layer of the stack has remained conspicuously untouched: the physical network layer.

Blockchains are, by definition, globally distributed systems. Every transaction, validator message, and piece of data still travels across the same congested public internet infrastructure that carries Netflix streams and social media traffic. For a technology defined by decentralization, the industry has largely accepted a dependency on centralized bandwidth providers.

That’s where DoubleZero (DZ) enters.

What Is DoubleZero?

DoubleZero is a decentralized physical infrastructure network (DePIN) designed to accelerate the flow of data across blockchains by leveraging dedicated, high-performance network links, essentially private fiber capacity.

For decades, only the world’s largest firms Jump, Citadel, Two Sigma, Meta, and Google, could afford to build or lease private network routes for low-latency connectivity. DoubleZero makes this capacity accessible to anyone through a permissionless bandwidth marketplace, enabling owners of fiber, microwave towers, and undersea cables to contribute unused capacity and earn fees in the network’s native token, 2Z.

Why It Matters

1. The Physical Network as Alpha
   Just as high-frequency traders gained an edge by investing in private fiber, blockchain networks can achieve measurable performance gains when validators communicate across dedicated links. Faster data propagation means faster consensus, fewer orphaned blocks, and improved market efficiency, particularly relevant to high-throughput networks such as Solana, where milliseconds influence trading outcomes.

2. Alignment Between Infrastructure and Incentives
   DoubleZero introduces a model where physical bandwidth becomes an on-chain economic asset. Network providers earn 2Z for provisioning bandwidth, while users spend 2Z to transmit data. This closes the loop between digital value and physical infrastructure, something that traditional ISPs and centralized clouds never achieved.

3. Strategic Integration and Early Adoption
   The first customer is the Solana mainnet-beta, with integrations across its three major clients (Agave, Firedancer, Jito). Other infrastructure providers, including Jump Trading, Galaxy, and RockawayX have already committed fiber capacity to the network. The implication is clear: the highest-performance blockchain is now running, at least partially, on a decentralized physical layer.

4. A New Regulatory Precedent
   On September 29, 2025, the U.S. SEC’s Division of Corporation Finance issued a No-Action Letter (NAL) to DoubleZero an important milestone for the DePIN sector. The NAL clarifies that certain programmatic transfers of the 2Z token, as structured, will not be treated as securities transactions under U.S. federal law.
   This provides regulatory clarity for U.S. participants and sets a reference point for how token-based infrastructure incentives can operate compliantly within existing frameworks.

The Broader Implications

If successful, DoubleZero could become a foundational layer for both decentralized and centralized systems.

While its immediate focus is blockchain performance, the same architecture could serve any latency-sensitive digital service from real-time gaming and video streaming to global AR/VR systems and financial data transmission.

For allocators, this signals the emergence of a new investable category: bandwidth as digital infrastructure, priced, traded, and rewarded on-chain.

The project is still early, but its potential to become the “backbone protocol” for decentralized networks positions it as a strategic inflection point for blockchain performance and institutional adoption.

As the digital asset industry matures, value will migrate down the stack from speculative tokens toward the physical and computational rails that make decentralized systems possible.
DoubleZero could represent that shift. It brings Web3 closer to the hardware layer, creating a market where capital can finally flow into the bandwidth that powers the open internet.

For long-term investors, understanding these foundational shifts is key to identifying where durable alpha will emerge next.

We are excited to continue sharing relevant insights on the digital assets space. For more information about our investment offerings, feel free to contact us at invest@hylafunds.com. We look forward to continuing this journey with you as we explore the future of finance together.

The views expressed in this newsletter are solely those of the authors and should not be considered as investment advice or recommendations. They are not intended to influence any investment decisions.