Gate Institutional Weekly: BTC Leveraged Longs Under Pressure, Gate Officially Launches Stock Trading

Summary

• The market is repricing Fed rate hike expectations, continuing to pressure the crypto market. BTC fell approximately 4.3% WoW, while ETH fell approximately 4.8% WoW. Global crypto ETFs saw net outflows for the second consecutive week, totaling $2.54 billion.

• Total trading volume on TradFi Perp DEXs fell back to approximately $12 billion. Gate officially launched its stock trading service, supporting over 10,000 US stocks and ETFs. The total number of TradFi assets continues to grow, with the expansion of stock categories leading the industry.

• On-chain capital is concentrating on platforms with deeper liquidity and higher execution efficiency. PancakeSwap's trading volume has overtaken Uniswap. The overall stablecoin supply has seen limited change, with funds not flowing into any single type of yield-bearing stablecoin product. The LST sector is cooling down, while the SOL ecosystem remains relatively stable.

• DeFi risk appetite remains cautious. Lending volume on Aave continues to decline, and lending rates for Aave's three core assets have generally stabilized.

• In the derivatives market, BTC is exhibiting a pattern of "falling prices, positive funding rates, and compressed volatility," indicating that leveraged long positions are still holding onto expectations of a rebound.

• Next week, the market will face key macroeconomic data tests, including May non-farm payrolls and the ISM Services PMI. In terms of token unlocks, significant attention is required for HYPE's large unlock of approximately $684 million, which could have a major impact on market liquidity and sentiment.

1. Market Focus Interpretation

The Fed's monetary policy stance remains the market's primary focus. The US PCE inflation rate rose to 3.8%, its highest level since August 2023, with core PCE also increasing. This has sparked market concerns about a Fed rate hike. According to the CME FedWatch tool, approximately 68% of traders anticipate at least a 25bp rate hike by the end of 2026, with zero probability of a rate cut for the year. The 30-year US Treasury yield broke above 5.14%, and the 10-year Japanese government bond yield reached 2.8%, indicating structural loosening in the global fixed-income market. In the energy market, the US-Iran conflict has not completely subsided. A new round of attacks on May 27 pushed oil prices up and exacerbated inflation expectations, further dampening market risk appetite. In the equity market, the S&P 500 and Nasdaq performed relatively strongly, with tech stocks driven by the AI sector continuing to attract capital. Bitcoin, however, significantly underperformed equity markets. Some institutional analysts point out that capital is shifting from crypto assets to AI tech stocks.

In the crypto market, BTC declined steadily from $77,027 on Monday, briefly falling below $73,000 on Thursday, with a 7-day decline of approximately -4.3%. ETH also fell, reaching a weekly low of $1,967, a decline of approximately -4.8%. Global crypto ETP products saw net outflows for the second consecutive week, totaling a high of $2.54 billion over the two weeks, with the US accounting for the vast majority. Institutions are generally adopting a "de-risking" approach. The consecutive net outflows from ETFs mark the longest streak since December 2025, and overall market sentiment is cautious. On the regulatory front, there are reports that Bitcoin and Ethereum have risen amid regulatory progress. Federal regulators spoke at the 2026 Bitcoin Conference, aiming to provide regulatory clarity on key current issues. These factors combine to create a complex macroeconomic environment characterized by persistent inflation concerns, an unclear Fed policy outlook, and ongoing regulatory developments impacting the cryptocurrency market. Notably, Gate recently officially launched stock trading, allowing users to trade assets from major US securities markets directly on the platform using USDT. It currently supports over 10,000 stocks and ETFs.

2. Liquidity Analysis

2.1 BTC and ETH ETFs Continue to Exhibit Significant Capital Outflows

BTC ETFs have seen net outflows for 14 consecutive days, breaking the record for the longest streak of net outflows since December 2025. CoinShares data shows that global crypto ETPs saw total net outflows of $2.54 billion over the past two weeks. The capital flow pattern displays clear characteristics of "macro hedging + tactical position reduction." Multiple institutional analysts point out that the ETF outflows are essentially institutions rebalancing their portfolios treating BTC as a macro risk asset, rather than an endogenous sell-off in the crypto market.

ETH ETFs continued their net outflow trend last week, recording 11 consecutive days of net outflows as of May 28, the longest streak since March 2025. Overall, ETH ETFs underperformed BTC ETFs and did not show signs of significant institutional block buying. Alternative ETFs like XRP and SOL recorded net inflows during the same period, suggesting some institutional capital rotation into non-BTC/ETH assets.

As of May 29, the total assets under management (AUM) of BTC ETFs stand at approximately $94.17 billion, representing 6.38% of Bitcoin's total market cap, with a historical cumulative net inflow of $55,714 million. The total AUM of ETH ETFs is approximately $11.40 billion, with a net asset ratio of about 4.5% and a historical cumulative net inflow of $11,404 million. From the perspective of institutional dynamics, capital flows are showing clear divergence: BlackRock's IBIT was the primary source of BTC outflows last week, with a single-week outflow of $966.3 million. However, its ETH product, ETHB, bucked the trend and recorded net inflows, indicating a subtle shift in institutional allocation focus among different assets.

2.2 TradFi Liquidity

• TradFi Perp DEX: Over the past week, total trading volume on TradFi Perp DEXs declined significantly from the April highs, dropping to approximately $12 billion, a near two-month low. However, structurally, the market isn't experiencing a broad-based cooldown but rather a clear rotation among asset classes. Commodities remain the dominant sector, accounting for over 60% of total volume, but activity has notably cooled from the previous $15-20 billion stage, reflecting a pullback in the demand for safe-haven assets like gold. Concurrently, stock trading volume maintains a growth trend with a continuously increasing share, indicating that as US stocks hold at highs, on-chain investors are gradually shifting their trading interest towards individual stocks and equity-related products.

• Gate TradFi Perp: Last week, volatility was quite pronounced, exhibiting a pattern of "rapid volume surge pullback volume surge again." Precious metals remained the absolute dominant sector. Trading volume notably increased on May 27 and May 28, with daily total volume approaching $550-600 million levels, before pulling back. This indicates that market funds are still primarily revolving around gold-related products, reflecting the persistent appeal of gold as a safe haven and trading instrument in the current macro environment. Meanwhile, the trading share of stock-based contracts increased, showing significant thickening on multiple trading days. This suggests rising user participation in US equity-related perpetual contracts. Especially with US stock indices near historic highs and the sustained activity in AI and tech stocks, TradFi Perps are beginning to fulfill part of the demand from crypto users looking to participate in the US stock market. Notably, Gate has been steadily advancing its stock tokenization, TradFi asset integration, and multi-asset trading system. Looking at the changes in trading structure, TradFi Perps are gradually evolving from a single gold-focused market towards a dual-core structure of "Gold + US Stocks."

• CEX TradFi Asset Count: Over the past week, the number of CEX TradFi asset categories expanded further. The total count of TradFi assets (only counting TradFi and CFD sectors, excluding perpetual contracts) across three major CEXs increased from 1,174 to 1,184, a MoM increase of 0.90%. Stock categories saw the most significant growth, rising from 809 to 819, a MoM increase of 1.20%. Of this, the increase in stock count was contributed by Gate, whose TradFi stock count grew by 10, a 2.3% increase.

• TradFi Order Book Depth: We selected XAUT, the highest trading volume TradFi asset, to analyze its order book depth (Delta). Market depth exhibited significant phase-based changes, broadly divided into two stages: "liquidity replenishment in the first half of the week, liquidity withdrawal in the second half." In the first half, the order book consistently recorded positive Delta, with a large number of buy and sell orders entering the market. Net liquidity added per hour often exceeded $1 million. Meanwhile, XAUT's price oscillated in the $4,500-$4,550 range, providing a relatively stable trading environment. In the second half, the liquidity structure weakened markedly, with the order book Delta remaining in negative territory for extended periods. Although the price stayed around $4,500, market depth continuously declined, suggesting some liquidity providers began reducing their risk exposure or taking profits. Looking at the relationship between price and depth, XAUT experienced a brief pullback during the week that was quickly repaired, but order book liquidity did not recover concurrently; instead, it continued to weaken. This implies current price support relies more on active buying pressure than deep resting liquidity. Should gold prices experience further fluctuations, the shallower order book structure could amplify short-term price swings. In the near term, attention must be paid to whether liquidity flows back and the ability of the $4,450-$4,500 range to absorb selling pressure.

3. On-Chain Data Insights

3.1 DEX Trading Shifts Towards Liquidity Concentration, PancakeSwap Overtakes Uniswap

Overall DEX trading volume remained at relatively high levels last week, but the structure showed a new change. PancakeSwap saw a significant increase from the previous week, surpassing Uniswap again. Although Uniswap experienced a slight decline, it maintained a high trading volume, indicating persistent spot turnover demand for major assets. Meanwhile, protocols within the Solana ecosystem like Raydium, Meteora, and PumpSwap performed relatively weakly, with trading activity related to Memes and high-volatility assets cooling off compared to before. In the context of the market environment, spot BTC ETF daily net outflows are also at elevated levels, and risk appetite in traditional market funds has decreased. However, on-chain capital hasn't exited the trading market simultaneously; instead, it is further concentrating on platforms with deeper liquidity, lower transaction costs, and higher execution efficiency.

3.2 Stablecoins Enter a Phase Dominated by Compliance and Payments Narratives, USDC's Infrastructure Advantage Continues to Strengthen

Overall stablecoin supply saw limited change last week. Neither USDT nor USDC showed significant expansion. Assets like USDS, USDe, PYUSD, and USD1 maintained localized growth, but funds did not concentrate on any single type of yield-bearing stablecoin product. Compared to supply changes, competition at the stablecoin infrastructure level is more noteworthy. Circle launched ChainBench on May 27, further advancing multi-chain development, USDC integration, and agent-based financial infrastructure. Previously, Circle also continued to expand USDC's application scope within ecosystems like Hyperliquid, strengthening its role in collateral, settlement, and cross-chain fund transfers. Meanwhile, legislation related to stablecoins and market structure is still progressing. The ongoing struggle between the banking system and the crypto industry over profit distribution, issuance models, and regulatory frameworks will continue to influence future product design.

3.3 LST Sector Cools Down but Remains Stable, Market Reprices Cross-Chain and Security Premiums

Last week, the LST sector entered a moderate adjustment phase. TVL for ETH-side protocols like Lido and StakeWise showed varying degrees of decline. Rocket Pool adjusted relatively more significantly, though short-term changes are also influenced by factors like asset prices, TVL calculation methods, and capital reallocation. In comparison, the SOL ecosystem performed relatively robustly. Protocols like Sanctum, Jito, and Jupiter Staked SOL largely maintained levels from the previous week. From an industry perspective, Lido recently explained its choice of Chainlink CCIP for cross-chain expansion, with core focus points being cross-chain security, issuance control, and risk isolation mechanisms. Following market discussions triggered by risk events related to KelpDAO and LayerZero, institutional capital has significantly increased its focus on bridge security, redemption mechanisms, and governance transparency.

3.4 Aave Lending Balances Continue to Decline, Risk Appetite Recovery Still Underway

Last week, Aave's lending scale continued its slight decline. Major markets like ETH Main Market, Plasma, Arbitrum, and MegaETH were all below previous week's levels. Although lending demand still exists, the market has not yet returned to the expansion pace seen before the April risk events. The Ethereum market remains the absolute dominant player. Markets like Plasma and MegaETH, which had previously absorbed some capital inflows, are also entering a consolidation phase. Overall, the current lending market performance aligns with the lower risk appetite environment. Meanwhile, Aave is engaging in governance discussions around optimizing USDC liquidity buffers, unfreezing WETH and restoring LTV ratios, and rotating Emergency Guardian signers. This reflects the protocol's ongoing efforts to refine its risk management framework and institutionalize lessons learned from past emergency response.

3.5 Aave Core Asset Rates Return to Normal Range, Market Moves Past Liquidity Shock Phase

Lending rates for Aave's three core assets have generally stabilized. Borrowing costs for USDC and USDT have pulled back from earlier levels, while the WETH rate remained range-bound at low levels. USDC remains the most closely watched pool. Although there were episodic rate increases during the week, they were short-lived and the overall fluctuation amplitude was significantly weaker than during the previous high-utilization phase. The governance discussions around increasing USDC liquidity buffer capacity are fundamentally about enhancing the protocol's stability and supply recovery ability under extreme utilization scenarios. On the other hand, WETH borrowing costs have not notably increased, indicating the market has not re-established large-scale directional leveraged ETH positions. Overall, current lending demand is more focused on stablecoin circulation, arbitrage, and position management. Panic sentiment has receded, but the market remains somewhat cautious about tail risks.

3.6 Protocol Revenue Returns to Financial Services Drive, Stablecoins and Trading Infrastructure Show Stronger Resilience

Tether and Circle continue to top the revenue charts, with the stablecoin issuance business remaining the industry's most stable source of cash flow. Although Hyperliquid's revenue cooled slightly from the previous week, it still maintained high levels, indicating that demand for on-chain derivatives trading hasn't weakened significantly. In contrast, protocols dependent on front-end traffic and Meme trading activity, such as Pump, PumpSwap, Phantom, and Axiom, generally saw revenue declines, signaling a gradual cooling of speculative sentiment. Aave V3's revenue fell slightly, largely consistent with the consolidating lending scale and normalizing interest rates, and has returned to a normal operating phase. Looking at the revenue structure, the notable change last week was the market shifting back from flow-driven to financial-services-driven. Capital is still willing to pay for settlement capabilities, leverage demand, liquidity services, and trading execution efficiency, but the willingness to pay for pure traffic entry points and short-term attention assets is declining.

4. Derivatives Tracking

4.1 BTC Funding Rate Remains Positive While Price Weakens, Leveraged Longs Under Pressure

From May 25 to May 31, 2026, BTC's price exhibited a low-level consolidation structure following a unilateral decline. The price started the week near $77K but gradually weakened, falling to the $73K-$74K range from May 28 to May 31. Diverging from the price trend, the funding rate turned positive after May 26 and rose to its weekly high around May 28-29, peaking near 0.01.

This combination of "falling price but persistently positive funding rate" suggests the market did not quickly shift to bearish crowding during the decline. Instead, it indicates some leveraged long positions are trying to buy the dip or are holding onto their positions