12/22/25 - Defensive Rotation Into Large Cap, Volatility Divergence, USDT Funding Repricing
This episode covers the defensive rotation across capitalization tiers and factor exposures in the final full trading week before the holiday season. Bitcoin outperformed higher beta majors by up to five point two percentage points, while Infrastructure assets fell ten point four percent against a near flat Non Programmable sector. The CF Ultra Cap Five index returned zero point two percent as the CF Broad Cap Diversified Weight index fell one percent, creating a one point two five percentage point gap that mirrored the negative one point five percent Size factor return and positive two point five percent Liquidity return. The CME CF Bitcoin Volatility Index rose two point zero three volatility points even as realized volatility compressed two point five nine points, narrowing the realized premium to four point five seven volatility points. USDT funding rates repriced three hundred eighty four basis points higher at the session tenor while BTC session rates declined nine basis points, widening cross currency funding spreads to eight hundred eighty four basis points at the one week tenor. The episode synthesizes these dynamics as evidence of concentration risk management, forward hedging demand, and stablecoin funding dislocation heading into year end.