From Skepticism to Allocation: How Institutional Investors Are Building Crypto into Their Portfolios

Good. Well, let's move on. The climate diagram didn't pass yesterday. So, we see a struggle between the old world and our world world and our world . Bitcoin was a mothership , but nothing special until it exceeded 75,000.

And the question of whether institutions are entering this space is no longer a question. It's no longer the institutions that distribute funds, it's the question of how. Uh question of how. Uh , how do they do it? So, we have a nice soft product.

A regulated ETF for investing money. Uh, we have an amazing infrastructure that was built on a custodian exchange. So, everything is at the institutional level institutional level , and today I have with me a group of experts, distributors, fund managers, uh, who have been working in this area for a long time. And uh, who will help me dive deep into this distribution, the question this distribution, the question , the real question, is where the money is and where it's going. So, at Blockstone, to give you a little background, we've been allocating resources in this space since 2017.

We have allocated resources to nearly 30 teams of experts in this field, and we will share all of this knowledge. So let me get you started. 1 minute each. What brought you to digital assets and what did you do before? You start.

Yes, thank you, Karl. I am Stefan. I'm, um, the CEO of ISO Technologies. I have been working in blockchain or cryptocurrency for about 13 years. Hmm, and, um, then 13 years.

Hmm, and, um, then when I attended the first Ethereum Devcon in London, I was really impressed with what could be done in terms of distributed, um terms of distributed, um , financial systems, um, local currencies, etc. But we also saw, um, in our project that, um, the data has Zurich, that the problem is that you need to exchange it for certain values. And then suddenly you have something like the value of money, and people started speculating. And then you saw that volatility was a big topic, and we had amazing people in the group; They have backgrounds in complexity science, computer science, and have developed new machine learning models with Professor Coleman at New York University and others. And they managed to significantly reduce the forecasting errors of idiosyncratic volatility, as well as profitability, to almost 50% of forecasting errors.

And that was a huge achievement, wasn't it? Ultimately, we built a company that provides all types of machine learning prediction models and corresponding agents to monitor your portfolios for optimization and more. Thank you very much. Rani more. Thank you very much.

Rani , allow me to introduce myself. Yes, of course. I mean Rani Jabban mean Rani Jabban , Deputy CEO of Arab Bank Switzerland, and I started studying cryptocurrencies and digital assets in general, as well as blockchain back in 2017 during the ICO boom. So we put this issue aside for a while, and in 2019 we came back and started storing digital assets. So we were one of the first banks in Switzerland, private banks in Switzerland, to do this.

I mean, it was the same time that Signum or Amina were starting, for those who know the Swiss ecosystem and are pure crypto pure crypto players. And I mean, for us, for me, I was convinced that blockchain would change a lot in finance in general, and that we couldn't do without increasing our experience and offerings, and without expanding our know-how in this area, without working with cryptocurrency. So, that's how it all started. So, storage was the cornerstone of the proposal. And then obviously, once you have storage, you can plug in anything you want: trading, staking, lending, and asset management.

And it's all been quite a long journey since 2019. Thank you very much, Thomas. Hello everyone. Um, 3iQ Hello everyone. Um, 3iQ is a digital asset management company, and its goal is to absorb the complexity of investing in digital assets.

Um, how did I get started in digital assets? Um, I traded in a macro hedge fund in 2019, 2020. Um, about 4 years. And I traded BTC simply because it was moving strongly. And, um, you could, you could generate interesting results.

And then I became fascinated with the concept of digital gold. Hmm, and then I had the opportunity to join 3iQ, which was, um, one of the first companies in this industry companies in this industry . They were the first to launch an ETF in North America. The first to release an ETF with staking. And then we moved to the active market.

And I realized that, hmm, BTC realized that, hmm, BTC is not a commodity, not a technological story technological story , not an asset class. Or the cryptocurrency market for digital assets—it's not an asset class. This is, in fact, a market that is developing in front of us. Hmm, and the reason it looks so good when you optimize it by adding it to the 60/40 portfolio is because of the nature of this wave of adoption, which comes and goes as the market evolves. And I'm sure we'll talk about that later.

Yes, we can leave that for later. Carl, I'll let you start and introduce yourself. Thank you for inviting me, and thank you for being here. Hmm, I'm fairly new to this field compared to my fellow panelists, but like most of us in traditional finance traditional finance , I started my career on the sell side with UBS and Goldman Sachs. Eventually, I switched to the buyers' side with Mubadala, a sovereign wealth fund in Abu Dhabi.

So I experienced firsthand how large institutions underwrite risks. Meanwhile, I also co-founded a digital wallet and remittance platform in 2021, and we were already looking at remittances in the stablecoin format stablecoin format . So I also had experience with digital assets, more from an infrastructure perspective, and understood how blockchain technology helps move money where the banking sector has failed in many developing countries. So today at XBTO I find myself at the intersection of both. We have been in existence since 2015.

We are a regulated institutional digital asset platform regulated from Bermuda and Abu Dhabi. We offer storage and trading, but more importantly, active strategies in digital assets, ranging from market-neutral to trend-driven and yield-oriented Bitcoin. The problem we are solving today is not about access to an asset class. I think access is resolved, and, uh, we can thank, uh can thank, uh , ETF for, uh, resolving this for us. But we really saw what we saw for the institution, and the biggest challenge for them today is integration.

Right? How do you look at this asset class, if we can call it an asset class, uh, and we help them, uh we help them, uh , hold, execute, and generate returns on digital assets in the same way, using the same principles of governance, custody, and risk that you would have for other asset classes. So, that's what we're here for. Thank you, Kan. Andre.

Yes, a very warm welcome from me. Thank you for inviting me. My name is Andre Dragos. I am the head of the European department. Excuse me, I'm the Head of Research in Europe at Bitwise.

So, my personal journey actually began in 2014. Back then, I was still a traditional cross-asset financial analyst. But my first professional experience started in 2018, and I've been working full-time in cryptocurrency since 2020, so essentially 4 years now. Bitwise itself was founded in 2017 , almost 10 years ago. We are specialized crypto asset managers managing approximately $13 billion USD, subject to market volatility.

But, 13 billion... I have about 150 colleagues who work from San who work from San Francisco, USA, New Francisco, USA, New York, London. I myself live in Frankfurt. Hmm, yeah, so a lot of experience, it seems, about 265 years of combined experience with crypto assets. What do we offer?

So, we offer crypto ETPs, exchange-traded products, ETFs in the US. We have one of the largest Bitcoin ETFs in the US. But we also offer staking services. We already manage several billion dollars in staking alone. As well as vaults and, more recently, so- called automated token portfolios.

So, we have a number of different business different business areas, business areas, business lines. Yes, but yes, I look forward to our conversation. Perfectly. Thank you very much, Sam. A wealth of experience, as you can see, people from technology, hedge technology, hedge funds, hmm, with experience funds, hmm, with experience .

This is what cryptocurrency is. Hmm, it's a combination of people coming together to build institutional-level infrastructure , governance, uh, but also, uh, we need good returns, uh, across the asset class. So we're going to dive into this. But first, when we talk about an institution, uh, Andre an institution, uh, Andre , what do we call an institution in this area? Are we talking about sovereign wealth funds, endowments, pension funds endowments, pension funds that allocate money to active management, or are we talking about banks, family offices, ultra-high family offices, ultra-high net worth assets?

What do you see, uh, from your side? So you're looking at all the data, the whole flow. So it's interesting to see where the money comes from. Yes, that's a very good question. I mean, you can ask the question of where the money comes from.

After all, they come from the money printing press, right? I mean, in terms of flows, investment flows, I think the even more interesting question during this bear market is where the money didn't come from , right? I think what we've seen between the fourth quarter of last year and now is that most institutional investors, including asset managers, financial advisors, they've actually held their positions, right? Most of their, uh, investments in ETPs, particularly ETF investments, they've weathered the storm ETF investments, they've weathered the storm . They held on, yes, through this bear market.

One of the biggest, uh, cohorts that actually sold were hedge funds, right? And we, I mean, we have a very good understanding based on the 13F filings in the US that they were one of the biggest sellers during this bear market. And one of the key reasons, of course, is that the base rate has collapsed, right? So, this is the difference between the futures price and the current spot price, and you can create market- create market- neutral strategies neutral strategies by selling a futures contract short and buying a spot position. And this base rate, uh, during a bull market, is typically in the double-digit is typically in the double-digit , uh, percentage points per annum.

And it fell below 5%. It collapsed, essentially, below money market rates. And therefore, for crypto hedge therefore, for crypto hedge funds, as well as traditional hedge traditional hedge funds, participation in this type of trading has become less attractive. And that's why we've seen a lot of outflows. But I think that, uh, one of the key lessons during the bear market is from an institutional perspective.

And, uh, there was a funny remark, I think, from Eric Balčunas, the kind of boomers who invest in boomers, right? Who invest in, uh, these ETFs to buy Bitcoin, they're the new owners, right? I mean, we've had about a 50% decline since October, right? About. The maximum decline was, I think, 54% in Bitcoin.

But the cumulative net outflow from global Bitcoin ETPs was only 15%. Right? So most of these, uh, institutional investors kept their positions. And to me, it just shows, uh, that they've matured in their understanding of this asset class. They know it's volatile, right ?

But it is also a long-term asset long-term asset . It's volatile in the short term, but I think in the long term you benefit from that kind of efficiency skew, right? Um, and we all know that the distribution of efficiency is positively skewed towards growth in the long run. Yes, we see Bitcoin rising 25% in August, and trading makes sense from a portfolio building perspective. Karl, for your part, you are based in the Middle East.

What do you see there? Um, um, money going into long positions in ETFs? Are they also starting to look for active management? And if they distribute the money, or more, the local family office and banks? This is a good question, and we tend to misuse the term " institutionalization."

I mean, it's obvious that it benefits us, and we need institutions, and I'm one of the first to abuse that term. And I think it's important to distinguish between what type of institution and what type of distribution, right? Obviously, thanks to the ETF, this solved the access problem that we had a few years ago. And most institutions, at least the ones we talk to in the Middle East, have dipped into this asset class through this tool. When we talk about traditional institutions like pension funds and insurance companies, I think they are already far beyond what is possible.

They haven't really accepted it yet. I mean, I'm talking about the Middle East, Europe, and Asia again, and I'm sure Thomas can add more information about what's going on there, on the other side of the ocean. But I think these traditional institutions have not yet distributed their assets. So, I see three types of institutional investors who have embraced digital assets. The first and obvious one, as we have already discussed, is sovereign wealth funds.

I mean, it's public. It is no secret that companies like Mubadala or the Abu Dhabi Investment Board have invested billions in the last 2 years, mostly through ETFs, IBITs or others, but also holding the coin itself. So they started to get more comfortable working with the existing infrastructure, right? This is institutional, it has been tested in battles. This is one thing.

The second type is family offices, where their implementation is more widespread, but with smaller distributions, right? Most family offices we spoke to say that if they invested, they invested between 1% and 5% invested between 1% and 5% of their total portfolio in this space. And again , most of this is also passive, better exposure, but it's becoming more comfortable, and more often than not indirectly they have this exposure through hedge funds that they have positions in that also have an allocation to digital assets. So this is an indirect impact. Now the most underrated and third channel, and I'm glad Ronnie is representing a private bank on the panel, is actually wealth managers, particularly Swiss private banks, who have been quietly building a custody and trading infrastructure for years to offer their high net worth and family office clients access to digital assets.

Yes. And now, in addition to storage and trading, they are starting to offer lending secured by Bitcoin and others. They are also starting to offer yield products to increase returns for those Bitcoin holders who hold assets with them . And we obviously . And we obviously announced earlier this year a partnership with our bank in Switzerland where we offer them a separate mandate and generate revenue from Bitcoin for their clients.

You're making my transition, so I was going to ask Ronnie a question to understand what his customers are asking. Is it still storage, or are they looking for a more active mandate now? How have you developed, because we see that Switzerland was one of the first to adopt cryptocurrency, but it's still a very conservative place, but it's ahead of, I would say, Europe in terms of cryptocurrency adoption and active governance active governance . I mean, you have different types of customers. You have clients from the cryptocurrency world who are still allocating some of their wealth to a safe place and storing it in Switzerland, and they are very conservative in managing their digital assets and cryptocurrencies, particularly Bitcoin.

So that's how we looked at the proposition, offering a whole range of services aimed at people who tend to be Bitcoin maximalists. And they want to hold their Bitcoin for as long as possible. So we're trying to adapt to what they need, which is they need, which is to get some income from their bitcoins, to give them, obviously, banking security, to be able to use bitcoins as collateral, and also to be able to manage their inheritance issues, maybe create trusts, maybe also happily give them the foundation of the banking industry so they can easily manage their inheritance. So, that's the side of things that we see. On the other hand, ETFs have changed the rules of the game.

It wasn't enough to simply provide storage and access directly to the coin, although I was surprised that people were still buying Bitcoin directly rather than ETFs directly rather than ETFs . At least not everyone. So, we had to adapt and offer them some more strategies. I mean, in our bank and in Switzerland in general, hedge funds are still not the trend of the month. But it all depends on the client's profile and the bank.

So, that's why what we tested with XBTF, having managed accounts, would be the right decision to create a managed accounts platform. It is not as popular among family offices and external asset managers, but less popular among private banks. But it's happening, and I think it's the right decision to adapt to this changing environment. Thank you very much. Thomas Som wanted to talk about the 60/40 ratio of where the money comes from.

So we need to build a portfolio, integrate digital assets from a portfolio building perspective. So, within the distribution, do you think it's coming from stocks, gold? Can you elaborate on these aspects and why a 5% or 10% distribution might make sense? Yes. So, um, I'm just focusing on the focusing on the beta.

If you put, um, Bitcoin, let's take Bitcoin as an example, we can use digital assets in general in the portfolio optimizer in a 60/40 portfolio, you'll see that, um, you'll get better results. Er, either better returns, or better volatility units, better risk-adjusted properties. The problem is that you see it from an optimizer's perspective, but you as a human have to explain it, right? So, uh, is BTC digital gold? But if so, why did BTC fall sharply when gold rose sharply ?

Uh, and okay, so is BTC a diversifier? But if you look at the correlation of BTC between different assets, it is constantly changing. Sometimes it correlates with gold, sometimes with stocks, Nasdaq. Therefore, it is very difficult to find a justification for this. But if you think about it, once you have a diversified portfolio, the second best thing you can add to a portfolio is convexity , portfolio is convexity , which is a fancy term that means your portfolio is more likely to make money when it goes up than it is to lose money when it goes down.

Uh, and the best way to add bulges to a portfolio is options, but they're very expensive. You are spending a lot of money, and overall, if you are lucky enough to hold a position long enough to make money on it make money on it , it will probably be a loss. So I would argue that digital assets are the most effective way to add convexity to a portfolio. And the reason why it adds to the bulge is because this is a market, as I said, that, uh, takes in waves, right? There are times when it goes out of style and times when everyone wants to invest in it .

If you look at Bitcoin's returns over the last 10 years, that is, over 120 months, about 60% of the months, about 60% of the annualized return annualized return , uh, all of that came in 12 months. If you take away the best 12 months, the return will be zero. So, this is an asset class that does nothing or loses a little money most of the time, and then suddenly grows rapidly. So, to also expand on that, if you look at August, it's 25%, you see that showing up on your report at the end of the month if you're not allocated. It's only been 3 days of trading that brought this profit.

The rest of the time he was a certain equal he was a certain equal . So that's why allocation and understanding that you need to allocate funds to either an alpha to either an alpha strategy or a beta strategy, if you can handle and survive the volatility, that's the way, that's the way to do it. So now we understand that okay, you get access, you get storage get storage , you build, you connect to the rail, you build your technology stack, you can launch your distribution, but what does, um, the management of the manager that you would allocate the funds to do? So why do you choose one manager over the others? What do you look for, um, in your DD What do you look for in your DD before distributing money to someone?

Well, we look at the track record, and obviously there are different rules, that's why. And we look at profitability, cost structure, management and volatility that goes beyond the low volatility of the strategy. Good. And Karl, so you passed the Swiss private bank due diligence check. Um, Tomasso, you passed the due diligence check of, um, a sovereign bank.

So, can you share a little bit about that experience? What do you need to pass this due diligence process? And what should the company look like? So, we talked about, for example, the $ 100 million threshold , which in our field is not $2 million in revenue as a management fee management fee , it's probably about $1 million a year, so please walk us through that. I'll start with, perhaps, a painful truth, but, um, I mean, I'll be talking about the period before, um, January 2024 and after January 2024.

And I chose this because, despite the fact that we have been working in this field for over 10 years, since 2015, we only became customer-centric at the end of 2023. And when I talk about customer orientation, it's a whole set of things that have to happen for you to be ready for it. It's not just about marketing materials, it's about building the right operational stack, the infrastructure that any outside investor, when they're about to start their due diligence due diligence , will be comfortable with. And this is not an easy process that takes time. So, after 2024, in early 2024, most of our clients, other than those who are busy with founders' money, were crypto clients, right?

Uh, crypto- right? Uh, crypto- original companies that were sitting on their allocations and looking to get some alpha, and entrusted it to us. For them, infrastructure mattered, but not that much, right? What really mattered was profits. In the end, it all comes down to money.

How much can you return to your investor. Therefore. So, after that, when you want to talk to sovereigns, when you want to talk to private banks, profitability is important, but more importantly, when they do their due diligence due diligence , operational performance is the biggest part of it, right? Understanding that you are regulated, understanding that you have a fund administrator, that your metrics are audited, that your infrastructure, your custody, your cross-exchange settlements, what risks you are taking , the counterparty, the exchange, etc. And it takes time, and these comprehensive checks comprehensive checks , uh, usually take time.

So take time. So , we went through a long process with Arab Bank Switzerland and many other clients, profitability is important, but it's not that important. It opens doors, but it's not what gets you distribution. And another thing is a track record, right? Verified track record.

We had a track record that was verified based on our own funds. This was ineffective. This was not enough for the institutions. They want a proven track record. So now we have over 2 and a half, almost 3 years of real track record, and that makes conversations easier.

And then, in addition to that, you obviously add the assets under management that you mentioned. Unfortunately, if you are a small manager managing a few tens of millions of dollars, it will be very difficult to get an appropriation from an institution because their ticket is 10 to 20, 50 to 100 million. So suddenly they become their biggest appropriation. So that does n't work either. So there's a bit of a chicken and egg story.

But, but, but that was our experience. I do n't know, Tomasso. Yes. Tomasso, I'll tell you later. I want to talk to Stefan about AI first.

So, it's a completely black box. How do you see an institution researching AI, and can you walk us through it? How do you explain that, um, robots and algorithms deal with everything... deal with everything... Where's the human, and, um, forward?

So, I mean, in the industry we already use all kinds of risk models, right? But a lot of strategies right now are still based on types of momentum, ahem, or risk prediction. Hmm, and you'll see that the problem with momentum strategies is often that they always come late, especially in cryptocurrency. Hmm, now you have predictive models and tools to predict asset risks and returns. And these things work, right?

I mean, we've been tracking Bitcoin and Cash setups for 2 years now. Hmm, and, um, on October 1st of last year, the machine switched to the highest, um, cash distribution. Hmm, and now obviously it's always a little bit harder to get the growth potential initially, but they're really good at identifying based on the data when the downturn is going to start , hmm. And this is a bigger problem for many fund allocators and investors because, basically, everyone wants to participate in medium- and long-term growth, but no one wants the sharp declines no one wants the sharp declines that we see in the market. And if you can actually use modern AI techniques to better predict them, then that's something the industry ultimately wants and needs to embrace.

Then you obviously need all the precautions. You need to make sure the data is correct. You have the right types of models. You are constantly retraining them. Uh, what we also need to show is the importance of features, which means that we track every day, every new model, which in some way influenced the distribution of models, why.

Today we have an agent from above. Obviously, the agent can monitor this in real time and explain everything in natural language, so you no longer need 20 dashboards to understand it. You have an agent that somehow controls this in real time. And this is something that is now possible to have either in a straight Bitcoin strategy straight Bitcoin strategy , or you can have it in a multi-asset portfolio where you dynamically allocate Bitcoin across these strategies. And that's what you want, right?

Perfectly. Thank you very much. So, yes, Thomas, your score. So, the demand is high, so the fund high, so the fund is one place where you can invest money. For the allocator, you also have the option to offer SMA ( to offer SMA ( outsourced direct auctions) to the portfolio manager.

So, you have a managed account platform. So, having one SMA is one thing, one access, quite simple after defining storage on the exchange side. Then have several SMAs. Can you tell us how this is going on your end? How can you offer a multi-manager, and how does the comprehensive review and reporting for the investor take place?

Yes, and this goes back to the previous question about what institutional allocators are looking for. And, um, when a sovereign invests capital, it's not a speculative bet. This is a structural rate. And they are going to ride cycles. They just want to make sure that the focus is on capital return, not capital appreciation.

So, of course, they want a return, but they want to make sure there 's a succession plan 's a succession plan . They want to make sure that all operational risks are minimized. And the platform is very well suited for this because you eliminate or reduce the risk of a key person. You do not distribute funds between one trader or one team. You distribute funds among multiple teams.

You can manage from an efficiency, margin, operational perspective, you can find better counterparties. This is not just an audit. This is an audit from the top four, right? This is becoming important. And risk control, asset security, all of this is usually better on a platform than with a single manager.

One manager will always outperform the platform at some point in time, but if you've been working for 10 years and don't want to choose, the platform is the better choice. Perhaps the only parallel I would point out is looking at hedge funds. It started, you know, in the ' started, you know, in the ' 90s, early 2000s, it was about looking at a single hedge looking at a single hedge fund, a health care expert, or a statistical arbitrage expert, or whatever strategy it was strategy it was . And today, most of the money goes to platforms with multiple strategies multiple strategies , and fund managers are very comfortable with this . Thank you.

So yes, we explained that for almost ten years we have been conducting a comprehensive review of over 200 teams. And so, it all comes down to institutional structure, proper regulation, timely provision of navigational data, a clear understanding of where alpha comes from, and team strength. But that's not all. We need to return the money at the end of the day. And, uh the money at the end of the day.

And, uh , one of the sad parts is that a parts is that a year has passed, 9 months, a year, a year and a half , depending on the manager, but some of the alpha is no longer present in active management active management , in what we used to do. And what we're seeing, and it's important to share, is that even some of the leading firms in this industry are losing assets under management because they don't care about not having a profit. So I'd like to dig a little deeper now into where the juice lies. Uh, what brings in money in our field? And maybe, Carl, could you start talking about one of the good ways to raise money–which is Bitcoin?

Uh, cryptocurrency is easier to convince an investor to allocate money and put it to work than allocating US dollars or euros to digital assets. So, what do you see from the Bitcoin side? Uh, back to beta and active use. So, beta is a great way to get access to this asset class at a very low price at a very low price , right? Today, access to it costs a few basis points.

Uh, but most institutional investors can't stand the volatility that beta provides, right? Especially subsidence. Now, regarding Tomasso's point, they invest for the long term, usually when you are a sovereign bond, you invest for a 10-year cycle and more. So if you're a family office, you're the family office, you're the CIO of a family office, if your stock is down 50% your stock is down 50% in a year, I mean, your position is at risk, right? So what alpha does or should do is provide better risk-adjusted returns.

You shouldn't beat the market when the market is just rising, but you should beat the market when the market is falling. Because if you're just a manager offering a 0.9 correlation to Bitcoin, you're just a high-beta just a high-beta play, right? And you have to justify the fees you charge by 1/10 or 2/20 charge by 1/10 or 2/20 . Where we see the potential alpha that we generate, and we're talking about Bitcoin, and that's one of our flagship strategies, is using the options markets, right?

The options market is a very liquid market, where Bitcoin, Ethereum, and to some extent other coins are represented, but let's talk about Bitcoin. It's the ability to generate income beyond what you already have, and I'm talking in Bitcoin equivalent. I'm not talking in dollar terms because when you talk in dollar terms, that's not what the manager is bringing you. Paid in Paid in beta, you get paid at the end of the year. And today, when it comes to options, I mean the ability to sell put options, for example, the volatility of selling Bitcoin is maybe a little less than the last few months, when we saw volatility go down as low as 20%, but in an asset class that has about 50-60% that has about 50-60% volume, it's an interesting way to accumulate premium, and if you practice owning coins at a level that you're comfortable with.

And that's one of the main, uh, strategies that we use, which appeals to the treasurer at one of these institutions, because you're adding maybe 2.3% volatility, but you're targeting, uh, you know, mid- single-digit returns in terms of bitcoin. Good. So, Andre, how do you see, uh, how much do you think this profitability depends on the regime? So there is some correlation between the bull market, for example, people who were running the underlying trading had an amazing uh 2024, and they just don't work from 2025.

So what do you see, what do you see there? I mean, I just want to go back very quickly to Carl's remarks. Uh to Carl's remarks. Uh , I think, uh, the taste of the months actually changes over time, right? I mean, what creates alpha depends on the cycle, right?

I think 2014 was similar to Bitcoin me too coins like Dogecoin. 2017 was the ICO boom, there were smart smart contract platforms like EOS, etc. 2021 during the bull market was the year of DeFi and Ethereum, everything related to DeFi, essentially. 2025 was the year of treasury companies, wasn't it? Bitcoin treasury companies, but also debt in general, i.

e. digital asset treasury companies on Ethereum, Bitmain, etc. And I think this cycle, if we talk specifically about Bitcoin, will probably be Bitcoin treasury companies. Where there is juice, where you can create a lot of leverage. Play with Bitcoin?

Playing with leverage on Bitcoin is essentially playing on Bitcoin with a high beta high beta coefficient, right? But debts in general, right? I mean, what we've seen over the last few months is you've seen Ethereum outperforming compared to Bitcoin, for example, so debt has outperformed as well. Hmm outperformed as well. Hmm , so I think you're seeing a resurgence of this type of DeFi this type of DeFi trading.

Is that so? Platforms like Aave, Morpho, everything related to tokenization is experiencing a kind of renaissance. Do you see DEX trading as hyperliquid, lightchains, and all these decentralized exchanges? So I think they...I think the narrative is actually expanding.

We talked a lot about basement trading, did n't we? Institutional implementation during the last cycle. But now it seems like it's expanding to things like tokenization, stablecoins, and everything related to that. And I think one of the key beneficiaries will obviously be Ethereum because they have the highest TVL of all blockchains. But I think that's where the main advantage will be during this cycle.

So I think it will be treasury companies and most likely anything related to RWA and tokenization. But here we are talking about something very volatile. So, Bitcoin already has 50-60% of its volume Bitcoin already has 50-60% of its volume . So we're aiming for something that you really need to be able to experience. Hmm, this is an inefficient market where you can apply a neutral market strategy, do cross-exchange arbitrage, you have a systematic long/ systematic long/ short strategy, trend following.

Hmm, I mean, you can do options or futures stacking, which reduces volatility, but also you can create, for example, a framework like this. And what we've seen in the market is it's a challenge, if you keep volatility low and you don't want any drawdown, it's very, uh, difficult, let's say, over the last 12 months, to get the money back to the investor. Uh, whereas from a distribution perspective, you don't just want a single-digit number. You expect mid- tens, uh, returns as an allocator. Ronnie, what do your customers demand?

So, what risk profile are they willing to take? They come with US dollars. Would they be comfortable making, uh, 5-6% for their digital asset distribution, or would they rather invest it in a Treasury bill, uh, waiting for something better? Uh, what's your opinion? Well, it depends.

If they invest their existing Bitcoin portfolio, uh Bitcoin portfolio, uh , they're looking at a low-digital Bitcoin. So, but for those who go all out and invest in digital assets, obviously they come with the idea that they need very high returns high returns to accept the volatility that's there . But we're trying to show them the different types of strategies they can have and, uh, show them the benefits of digital asset allocation not just on returns but on their risk and return profile. So now we're looking at a more diversified, as I said, active management platform active management platform , uh, managed accounts and strategies. And, uh, we also want to introduce, a little bit of what Carl said, derivatives, whether on structured products or managed accounts or active strategies, are very important to really move to a more, uh, I would say, traditional way of thinking about managing digital asset allocation.

Good. So we got your answer, how do you develop your portfolio to target these profitability gains, manager diversification. Uh, can you let us know, uh, Stefan, what you're doing, uh, on your end? We're running out of time and this is the last panel before lunch. So let's quickly look at, for example, 30 seconds, what would be a deal for 30 seconds that you would offer to a distributor who is targeting that kind of, uh, profitability?

For example, with private banks, we're now talking about active strategies up to 10%, uh, dynamically in Bitcoin, uh, in a multi- asset context. But there are also new types of products, investment products, uh, uh, for which we are now launching an ETP with our partners in Switzerland, a risk-optimized Bitcoin ETP that is fully liquid. It is traded on the SIX exchange. It is fully collateralized by Swissquote in Switzerland. And, uh, these are the types of products that, uh, the community wants now , and more and more institutional distributors want, because they're optimized for real- time risk, they're liquid, uh, they're secured, uh, and that's where it's all going.

Good. Tomasso. What is a deal for you? Same thing, you run a multi-manager, so there is diversification, but where do you see the alpha today? For example, a winning manager in your portfolio.

The main deal is to be exposed to an asset class. To Ronnie's point, if you invest in an ETF equivalent to 100 BTC, after 5 years you have 99 BTC, simply because you still have to pay ETF fees pay ETF fees . If you can earn even 5% on your BTC, you will get 125, 130 BTC. This is one. And secondly, if you are a little more adventurous and want to get in on the momentum, this is the best place to do it now, when you are in the bear market exit phase.

So you may have better growth potential given the downturn. Hmm, that would be the best place for that. Thank you. Karl. What makes money on Bitcoin right now?

Hmm, a neutral market Hmm, a neutral market is when it's doing well, um, at least from what we see from other managers and from ourselves. Uh, it's been a tough market for trend strategies, uh, the last year or so. Uh, what continues to work well is again, you want to be able to build up compound funds on your bitcoin. You just do n't...It's not just about, uh, holding one bitcoin and storing it there, it's about being able to build up compound funds.

And the only way to do that today, without lending your bitcoin or taking on other, uh, risks, is through derivatives markets. And I think private banks are also seeing a big appetite for structured products with, uh, different types of payouts. Good. Andre. I see we're running out of time, but running out of time, but , um, I think in order to accumulate your Bitcoin and create alpha, at least during this bull cycle, I think, um, the buy-and-hold strategy is probably to buy Treasuries.

But I think even normal beta investments in Bitcoin and other major crypto assets will be successful in this cycle. During a bull cycle, especially if you are still skeptical and haven't allocated funds yet, I think just set a small strategic allocation. You can control volatility in your portfolio just with simple rebalancing, right? This is essentially a cheat right? This is essentially a cheat code.

If you like monthly rebalancing, you will find that you are essentially limiting both growth and, especially, decline. And that's why I think it's actually a cheat code. Just set a strategic allocation because, um, ultimately, time in the market trumps time in the market, right? As we know. This is very difficult to do.

So, thank you very much, Jens. In conclusion, I would like to tell our partners that there is not just one way to make money with cryptocurrency. There are many ways to " many ways to " skin a cat." There is a lot of alpha available, both market- alpha available, both market- neutral and systematic with higher volatility. The beta volatility.

The beta game with Bitcoin is working. The distributor must understand what his risk profile is and what he is buying. Where alpha comes from, and to have a fund with a 50% alpha comes from, and to have a fund with a 50% beta return since the beginning of the year is really good. It doesn't sound very good It doesn't sound very good . But this is if you have 50% .

But this is if you have 50% beta to Bitcoin, which has gone down 50%, then at the end of the day you are generating a lot of alpha, but it may not be 100% of your investment. You have a market-neutral strategy with annual growth, like 10-12% this year, hmm, for best- in-class performance, but the same. One manager wants to outperform others year after year. We saw this in market making. You see how the alpha just shrinks.

So you need to be able to be a giant, to always communicate with different teams and have a very clean package. So thank you for your time. Thank you, Jens, for the informative conversation, and see you later.