Summary

  • Crypto markets stabilized in December following November’s drawdown; BTC consolidated between $84k and $94k with dominance holding around ~60%.
  • The U.S. Dollar Index (DXY) was stable and ranging around the 98 mark.
  • SPX hit another all-time-high around Boxing day, though the liquidity was thin on the day.
  • Gold and silver remained bid, with Gold hitting a new all time high (ATH) around $4.5k/oz, reflecting ongoing demand for macro hedges.
  • HumidiFi’s Token Generation Event (TGE) with the $WET token was the first to increase 4-5x in price in many months, a positive signal for the market rewarding projects with durable models. The Solana ecosystem project has substantial decentralised exchange (DEX) market share, and processes $1b of volume daily.

Macro Backdrop

December macro data reinforced an uncertain late-cycle environment. U.S. growth indicators softened modestly while inflation remained sticky. The Fed cautiously dropped rates by 25bps on December 10th, with the markets anticipating one or two further rate cuts in 2026.

The DXY held firm into year-end, providing little relief for global liquidity conditions.

DXY remained range-bound at elevated levels through December, continuing to act as a headwind for global risk assets.

Macro uncertainty also increased due to geopolitical and regional risks, including renewed geopolitical risk, contributing to concerns around energy markets, sanctions, and broader emerging market stress.

U.S. equity markets consolidated in December. Both the S&P 500 and Nasdaq traded sideways following strong gains earlier in the year, as investors reassessed earnings expectations, interest rates, and geopolitical risk.

We believe that a new catalyst is needed to drive markets higher; this may be a dovish FED chair and/or the return of quantitative easing to markets. Crypto remains correlated to equities and is not independently strong despite the substantial bid in Gold prices.

U.S. equities entered a consolidation phase after strong year-to-date performance, with momentum slowing into year-end.
Gold and Silver reached new highs reflecting macro uncertainty and the loss of confidence in governments to be able to service debt payments.
Gold and Silver - Precious metals held firm, reflecting sustained demand for inflation and geopolitical hedges amid macro uncertainty.
Following November’s sharp correction, crypto markets moved into a consolidation phase in December. Bitcoin traded in a narrower range with declining realized volatility.
BTC volatility compressed significantly in December following November’s drawdown.

Bitcoin dominance remained near ~60%, reflecting continued preference for large-cap assets over higher-beta tokens.

BTC dominance remained stable at elevated levels, signaling risk-off positioning within crypto.

ETF Flows and Institutional Positioning

Institutional flows into BTC and ETH ETFs stabilized, with fewer extreme outflow days compared to November.

Chart: Crypto ETF Flows (BTC, ETH, SOL)

Strategy Discount and Structural Pressure

MSTR traded in a narrower range throughout December following November’s sharp drawdown. While the stock remains significantly below mid-year highs, reduced volatility suggests that immediate forced-seller concerns have eased.

We continue to expect elevated discounts to net asset value (i.e. digital asset treasuries) across crypto-exposed public vehicles to drive balance-sheet restructuring, asset sales, and M&A activity into 2026 as firms seek to close valuation gaps and optimize capital structures.

M&A Activity in Crypto markets. Source: Architect Partners

HumidiFi ($WET) TGE

HumidiFi is a Solana-based PropAMM, which uses a dark-pool model with private capital to deliver centralised exchange (CEX)-like liquidity, tight spreads, and low slippage on DEXs. It handles ~50% of Solana’s SOL-USD spot trading and ~60% of overall Solana DEX volume, generating about $30k–$50k per day (with higher spikes on volatile days like 10/10/25).

Its native token, $WET, launched in December 2025 via Jupiter’s DTF ICO, selling 10% of supply (4% whitelist, 3% JUP stakers, 3% public) with 6-month unlocks over 2 years and no inflation; token utility includes staking for tiered fee rebates, governance, and liquidity incentives.

The project was built by Temporal, a high-performance trading infrastructure firm with notable Solana contributions, led by founders and contributors with strong HFT backgrounds (including Kevin Pang, formerly Jump/Paradigm/SCP.

The broader Solana “prop AMM” category has rapidly grown since late 2024 to dominate 60–80% of DEX volumes (~$40B+ monthly), and HumidiFi has shown strong traction since mid-2025.

The upside case centers on expanding cross-chain tradability on Solana, moving into long-tail assets via inventory loans (wider spreads), and market-making from day-one listings (e.g., Monad in Q4 2025 and upcoming TGEs like MegaETH/Base), potentially lifting revenue toward $100k/day in 2026 and supporting >$400m FDV—while key risks include intensifying competition, reliance on sustained trading volume, and spread compression that could squeeze margins and market share.

The project’s strong token launch is a signal that the market rewards revenue-generating protocols that deliver value to users. This bodes well for several of our portfolio companies that fit that bill, including Solana category leaders, Pump.fun, Kamino Finance, OnRe.

Closing Thoughts

Markets consolidated in December. Importantly, in the wake of October’s major crypto liquidation event, leverage has been reduced and token fundamentals are increasingly prioritized, while improving macro conditions could provide a tailwind.  

We remain cautiously optimistic, with a strong preference for assets and protocols that demonstrate real use cases, disciplined economics, and resilience across market cycles.

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