Stablecoin

Alpha

Polygon (Old)

Chains

<h2 id="b-tldr-b">TLDR:</h2>
<ul>
 <li>Artemis stablecoin factor posted 83.6% annualized returns with minimal dependence on Bitcoin direction.</li>
 <li>The strategy gained 6.8% monthly across BTC down months, showing resilience during crypto market weakness.</li>
 <li>Mid-cap chains including Polygon and Sei generated 84% of total stablecoin factor returns over five years.</li>
 <li>Stablecoin flows remained Artemis’ least-correlated alpha factor with only 6.1% variance overlap.</li>
</ul>
<a href="https://blockonomi.com/ethereum-comeback-gains-momentum-as-activity-and-stablecoin-flows-return-to-l1/" rel="noopener noreferrer nofollow">Stablecoin flows</a> are emerging as one of crypto’s clearest signals for layer-1 market rotation.&nbsp;
New research from Artemis shows capital moving through stablecoins consistently preceded stronger relative returns across major chains. The firm’s five-year backtest found the strategy remained largely detached from broad crypto market direction.&nbsp;
Results also showed the factor produced gains during months when Bitcoin posted losses.
<h2 id="b-stablecoin-flows-predict-l1-returns-across-market-cycles-b">Stablecoin Flows Predict L1 Returns Across Market Cycles</h2>
Artemis said its weekly rebalanced long-short factor generated a 1.67 Sharpe ratio over five years. The model delivered an annualized return of 83.6% during the test period.
The same backtest recorded a maximum drawdown of 43.9%. A volatility-targeted overlay lowered drawdown to 31.9% while reducing Sharpe to 1.17.
The <a href="https://research.artemisanalytics.com/p/crypto-factor-model-analysis-launching-ae0" rel="noopener noreferrer nofollow">data pointed</a> to minimal dependence on Bitcoin’s broader trend. Artemis reported a market beta of -0.03 and an R² of 0.1%.
That structure became more visible during weaker crypto conditions. Across 30 BTC-negative months, the factor returned 6.8% monthly while <a href="https://moneycheck.com/peter-brandt-warns-strategy-investors-as-bitcoin-drops-below-key-level/" rel="noopener noreferrer nofollow">Bitcoin fell</a> 10.9%.
Artemis also measured annualized alpha at 73.8% after controlling for market exposure. The reported t-statistic reached 3.31 with significance at the 1% level.
The firm noted the strategy’s out-of-sample Sharpe estimate still held at 0.96 after applying a degrees-of-freedom haircut. That kept stablecoin flows among its strongest market-neutral crypto signals.
<div class="embed-twitter">
 <blockquote class="twitter-tweet">
 <img src="https://s.w.org/images/core/emoji/17.0.2/72x72/1f6a8.png" alt="🚨">New research: stablecoin flows are a clear leading indicator for L1 performance.
 Our latest factor: – 1.67 Sharpe over 5 years – Near-zero market beta – Profits in down markets (+6.8%/mo when BTC averages -10.9%).
 Launching Stablecoin 1
 Full breakdown:… <a href="https://t.co/1GzXgdHaQn" rel="noopener noreferrer nofollow">pic.twitter.com/1GzXgdHaQn</a>
 — Artemis (@artemis) <a href="https://twitter.com/artemis/status/2042609306332238167?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">April 10, 2026</a>
 </blockquote>
</div>
<h2 id="b-mid-cap-chains-drive-stablecoin-factor-alpha-b">Mid-Cap Chains Drive Stablecoin Factor Alpha</h2>
Most of the gains came from the long side of the book. Artemis said 84% of returns originated from long exposure to chains attracting positive stablecoin inflows.
Mid-cap networks dominated the return profile. <a href="https://coincentral.com/polygon-labs-explores-100-million-funding-for-stablecoin-venture/" rel="noopener noreferrer nofollow">Polygon</a>, Mantle, Optimism, BSC, and Sei contributed 84% of total factor returns.
The research also showed limited overlap with Artemis’ broader factor suite. Maximum pairwise correlation across the stack measured only 0.16.
Even after spanning regression against all other factors, the stablecoin signal retained a 2.54 t-statistic. Artemis said just 6.1% of variance overlapped with other models.
Performance also stayed resilient through distinct market phases. The factor returned 262% in 2021, 47% in 2022, and 315% in 2025.
Its only negative year came in 2024 with a 13% decline. Artemis linked that period to stagnant aggregate stablecoin supply growth before recovery resumed.
The post <a href="https://blockonomi.com/stablecoin-flows-emerge-as-leading-signal-for-l1-market-performance-research/" rel="noopener noreferrer nofollow">Stablecoin Flows Emerge as Leading Signal for L1 Market Performance: Research</a> appeared first on <a href="https://blockonomi.com" rel="noopener noreferrer nofollow">Blockonomi</a>.

Stablecoin Flows Emerge as Leading Signal for L1 Market Performance: Research

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