Analysis: Introducing Strategy Watch

Glassnode occupies a unique vantage point in the rapidly evolving market, providing on-chain and wider market intelligence to traders, funds, and asset allocators since 2018. The market landscape has undergone significant changes, with institutional capital flows becoming increasingly complex.

To navigate this complexity, Glassnode has launched Strategy Watch, a new monthly newsletter dedicated to the analysis of fund-level performance and allocation trends in digital assets. The report is structured across six core sections, each focused on a distinct dimension of institutional activity in digital assets.

The State of Institutional Capital Flows

Since late October 2025, capital flows to BTC, ETH, and Stablecoins have turned negative sharply. Bitcoin, Ethereum, and Stablecoins have seen a clear slowdown in capital inflows, signalling weakening demand and a structural contraction in liquidity. All three assets have now shifted into net outflow, with Bitcoin at –$8.4B per month, Ethereum at –$3.8B, and stablecoins at –$6.4B.

ETF & DAT net flows remain positive, but weakened, signalling slowing institutional demand. Net flows into these vehicles act as a proxy for institutional demand. In Q4 2025 and early January, institutions were net sellers through the ETF channel, with Bitcoin ETF outflows approximating –35.8k BTC per month and Ethereum ETF flows around –257.6k ETH per month.

DeFi TVL and Stablecoin Cap: A Contrasting Trend

DeFi TVL on Ethereum has been declining since August 2025, signalling softer conviction in DeFi yield curves. DeFi has served as another active playground for institutional capital through strategies such as liquidity provisioning, collateralized lending, and structured yield harvesting. Total Value Locked (TVL) on Ethereum, began to shrink from August 2025 onward, and is now declining at approximately –$15.3M per month.

A contraction in TVL implies that larger allocators are withdrawing from on-chain financial services, reducing liquidity depth and signalling softer conviction in DeFi yield and risk-adjusted returns relative to alternative venues. Conversely, stablecoin capitalization has seen a significant increase, indicating growing institutional interest in stablecoins as a risk-off asset.

CME Basis Yield Contraction: Implications for Market-Neutral Strategies

Another key dimension of institutional engagement is the CME Basis Yield, which measures the difference between the CME futures price and the spot price. The recent contraction in CME Basis Yield has implications for market-neutral strategies, which rely on the difference between futures and spot prices to generate returns.

The contraction in CME Basis Yield indicates a decrease in the premium investors are willing to pay for futures contracts, signalling reduced demand for market-neutral strategies. This decrease in demand may be attributed to a combination of factors, including the recent slowdown in capital inflows and the shift in institutional demand towards risk-off assets.

Conclusion

The launch of Strategy Watch provides a comprehensive view of institutional capital flows, enabling investors to make informed decisions. The analysis presented in this report highlights the complexities of institutional engagement in digital assets, including the slowdown in capital inflows, the contraction in DeFi TVL, and the implications for market-neutral strategies.

Investors and market participants can use this analysis to adjust their strategies and make more informed decisions. The report will be updated monthly, providing a continuous view of institutional capital flows and trends in digital assets.