Crypto Fund Outlook Magazine 3Q25

Download the Full Report

📄 Click here to access the complete PDF report

Intro

Produced by Crypto Insights Group (CIG), the Fund Outlook 3Q25 delivers allocator sentiment, fund manager perspectives, operational due diligence insights, and market trends shaping the evolving landscape of digital asset hedge funds.

Inside the full report you’ll find:

• Key fund and allocator themes from 3Q 2025
• CIO perspectives across fundamental, quant, DeFi, and Bitcoin-denominated strategies
• Allocator views on capital raising, fund structures, and operational standards
• Deep dives on Digital Asset Treasury companies, SMA platforms, and basis trade compression
• Survey insights from 50+ funds representing billions in AUM

Continue reading below for the full verbatim text of the report.

Page 1

Fund Outlook 3Q25
Insights Quarterly
July 2025

With Participation By:

• AIMA
• Arca
• Hyperion Decimus
• Starkiller Capital
• Psalion VC
• Camposr
• Tydal
• Atiltan
• Sandwell Capital
• Parataxis

Page 2 — Disclaimer

The content provided in this report, including all text, figures, data, and any other information, is intended solely for informational and educational purposes. It is not, under any circumstances, to be construed as financial, legal, tax, or investment advice. The information presented is not meant to serve as the basis for any kind of investment decision, nor does it recommend any specific financial products, services, or investment strategies.

The creators and distributors of this report make no representations or warranties, express or implied, as to the accuracy, completeness, reliability, suitability, or availability of the information contained in this survey report. The information is provided "as is," and any reliance you place on such information is strictly at your own risk. We disclaim all liability and responsibility arising from any reliance placed on such materials by you or any other visitor to the survey report, or by anyone who may be informed of its contents.

Market conditions, financial theories, and investment strategies are subject to fluctuating interpretations and can vary widely based on individual circumstances. Therefore, any information provided should not be considered universal or applicable to all individuals or situations.

Participants and users of the information provided by this report should conduct their own due diligence and consult with professional advisors familiar with their particular factual situation for advice concerning specific matters before making any decision. This includes seeking advice from qualified financial advisors, legal counsel, and tax professionals to understand the potential risks and rewards associated with any financial decision. Forward-looking statements in this document are valid only as of their respective dates and Crypto Insights Group is under no obligation to update them. These statements are inherently subject to many changing assumptions, risks, and uncertainties. Nothing in this document should be interpreted as investment, legal, tax, or any form of advice, nor should it serve as a basis for making investment decisions. Potential investors in digital assets, regardless of their experience or wealth, are urged to consult independent financial advice tailored to their specific situation. This document is intended for and available solely to professional clients.

By engaging with this report as a viewer, you acknowledge and agree that neither the creators nor distributors of the survey and survey report shall be held liable for any losses, damages, costs, or expenses, including legal fees, arising either directly or indirectly from decisions made based on the information provided. This disclaimer isn't all-inclusive and should be considered alongside any other relevant disclaimers, terms of service, privacy policies, and/or limitations that might apply to the report or the information supplied.

Please see CIG’s latest Terms of Service: https://www.cryptoinsightsgroup.com/terms-of-service

Please read this disclaimer and an additional disclaimer on page 32 carefully before utilizing any information derived from this Report.

If you have any questions, please email us at support@cryptoinsightsgroup.com

Page 3 — Foreword

The second quarter of 2025 delivered a healthy rebound for directional digital-asset fund managers, while market-neutral strategies extended their steady, dependable run. Dispersion across manager returns climbed, underlining the growing opportunity set for active approaches.

Looking ahead, most managers now expect bitcoin dominance to trend lower, and they anticipate that shift will affect active strategies in diverse ways. Bitcoin denominated funds remain in high demand, offering investors familiarity as well as liquidity.

At the same time, we are welcoming some of the world’s largest institutions onto the Crypto Insights Group platform. These allocators are exploring how active and passive instruments should coexist inside multi-asset portfolios and are asking us to guide them through rigorous due diligence of individual managers.

To facilitate that diligence, we’ve continued to broaden the Portal’s datasets and analytical tools so allocators can compare performance histories, gauge operational robustness, and benchmark managers against peers with greater precision.

Long-term growth requires more than favorable market structure. Institutional capital will only scale when diligence is frictionless, operational safeguards are provable, and reporting is transparent. By codifying these standards today, we can convert near-term opportunity into a sustainable, institution-ready asset class.

We remain inspired by the fast-moving digital asset landscape and invite institutions to reach out, whether they need a starting point or a partner to guide them through each step of their investment and operational diligence journey.

Andy Martinez, CFA
Founder, Crypto Insights Group

Page 4 — About CIG

CIG puts transparent fund analytics at your fingertips, so you can act on digital-asset insights faster.

• For Institutional Allocators: Benchmark, diligence, and discover top-tier managers faster with data and custom analytics.
• For Asset Managers: Streamline IDD and ODD workflows, support diligence needs, and stand out in allocator reviews with structured profiles and verified fund insights.
• For Fund Managers: Access complete analytics, benchmarking, indices, and one-click factsheets.
• For Service Providers: Connect with leading funds and allocators via trusted integrations and visibility across the ecosystem.

CIG Products:

• Investment Diligence
• Complete Analytics
• Benchmarking & Indices
• Automated Data Collection
• One-Click Factsheets
• Portfolio Tooling
• Operational Diligence
• Proprietary “Ops Readiness”
• Full ODD Review
• Guided Questionnaires
• Access to Experts

CIG is the leading meeting point between liquid funds and allocators. Its Portal provides institutional allocators with the tools and analytics needed to understand fund managers, operational diligence, and risk management standards.

Our customers have saved hundreds of hours of diligence time.

Our Partners: CoinDesk Indices, MarketVector, CF Benchmarks

Page 5 — 2025 Digital Asset Fund Benchmarking Data

None of this is investment advice. Please read through, in full, our disclaimers on pages 2 and 32, and our terms of service on our website.

Directional Funds (YTD -8.64%)

• Jan: -1.86%
• Feb: -18.83%
• Mar: -8.15%
• Apr: +8.59%
• May: +12.69%
• Jun: +2.04%

Market Neutral Funds (YTD +4.41%)

• Jan: +1.38%
• Feb: +0.59%
• Mar: +0.40%
• Apr: +1.51%
• May: +1.17%
• Jun: -0.70%

About CIG Benchmarks
CIG’s Portal aggregates performance data from across the digital-asset fund universe, powering benchmarks, risk metrics, analytic tools, and watchlists. Allocators and institutions can review the full methodology directly in the platform.

Want to unlock in-depth analytics across the crypto fund universe?
Reach out for a demo of CIG’s curated data and analytics. Built with input from leading allocators and fund managers, the CIG Portal streamlines fund discovery, due diligence, and ongoing monitoring of digital asset funds.

Page 6 — Key Fund Trends

01 Pockets of Consolidation across Hedge Funds
Directional funds are joining forces or adding affiliates to bundle market neutral engines alongside their flagship books, responding to allocator appetite skewed toward market neutral return streams. Consolidation lets LPs back a single firm for exposure, and allows GPs to have a diversified revenue stream across many strategies.

02 Bitcoin and Ethereum Share Class Launches
Family offices first used BTC and ETH share classes to earn yield on core holdings, yet managers now report corporate treasuries exploring large active allocations through these vehicles. Conversations suggest an emerging growth phase though commitment volumes remain early.

03 Mixed Participation in “Digital Asset Treasury” Trade
Participation in “DATs” is split. Some of the largest hedge funds are funneling significant capital into digital asset treasury deals, while others privately and publicly shun the trade. Established managers are getting early access and allocations, with BTC and ETH dominating DATs, however broader asset tail launches are emerging.

04 Thesis Driven Funds Guide the Market on Fundamentals
Fundamental focused hedge funds are collaborating to set clearer standards for token due diligence, championing initiatives such as the Blockworks Token Transparency framework. Their collective push highlights team quality, revenue and qualitative metrics, steering investors toward fundamentals over hype.

05 Increased Venture Firms Running Liquid Strategies
More venture capital firms are launching liquid sleeves, ranging from passive BTC, ETH and SOL holdings to actively traded shorter term horizon books that mimic how hedge funds are investing. This convergence is beginning to blur venture and hedge boundaries and forces allocators to rethink fund structures.

06 Directional Funds by Default are Benchmarked Against Bitcoin
Allocators still measure directional crypto funds against simply holding a Bitcoin ETF, making that performance hurdle explicit. If and when Bitcoin’s dominance drops later this year, relative returns could swing in favor of active managers and ease fundraising conversations for them to grow.

Page 7 — Key Allocator Trends

01 Family Office Interest Highest in Asian Countries, Increasing in U.S.
Asian family offices remain the most significant digital asset fund backers, writing larger tickets and completing diligence faster despite their discretion. However, momentum is shifting as more U.S. families begin exploring allocations, broadening the global capital base, with incrementally longer diligence cycles.

02 Family Offices Build Internal FoFs, Give Passive BTC to Active Funds
Family offices build what resemble in house crypto fund of funds, allocating across select managers for diversification. They are also disproportionately subscribing to BTC share classes, channeling passive core exposure into active vehicles while cementing deeper partnerships with preferred managers.

03 Increased number of Multi-Manager and FoF Launches
Demand for digital asset exposure has spawned a steady stream of new multi-manager and fund of fund vehicles. Most debut under $10M of AUM, but a select few pursue much larger raises. Some large traditional fund of funds are piloting strategies with proprietary capital before welcoming outside investors.

04 Multi-Managers Blend Internal and External Strategies
Relative to traditional multi-managers, which internalize fund managers, most multi-manager platforms in digital assets allocate capital to a blend of external managers via SMA structures, retaining near internal level visibility on risk and asset control. Yet those external teams still manage funds for other investors, blurring exclusivity.

05 Institutional Allocator Demand Driven by Client Requests
Traditional institutional allocators are approaching CIG because their end clients press for guidance on diligencing a crypto fund they want to invest in. This client driven pressure pushes gatekeepers to learn quickly and sparks broader exploration of active strategy opportunities.

06 Large Asset Managers Operate Rigorous Diligence Processes
Asset managers subject crypto funds to institutional grade reviews. Managers unprepared for multi-month examinations risk losing impatient end clients, underscoring the need for polished operations and data rooms before engaging heavyweight allocators that will take a zero-compromise approach.

Page 8 — Table of Contents

• Disclaimer 02
• Foreword 03
• About CIG 04
• 2025 Fund Benchmarking Data 05
• Key Trends 06
• Table of Contents 08

Fund View

• Building a Lasting Investment Firm 10
• Building Algorithms That Last 12
• Sourcing Yield in an Increasingly Competitive Market 13
• Managing Dozens of SMAs at Scale: Lessons from Psalion 14
• Implications & Effects of Basis Trade Compression 15

Allocator View

• The Silent Work Behind the Capital Raise 16
• Facts Versus Myths About Crypto Treasury Companies 18
• GP Capital Solutions in Digital Assets 22
• Putting Bitcoin to Work: Bitcoin Denominated Multi-Strategy Fund 24
• Custody in Focus: AIMA’s Push for Safer Digital Assets 25
• Creating a Stand Out Crypto Due Diligence Questionnaire 26

CIG Outlook

• Insights from the Fund Manager Survey 29
• Conclusion 30
• Special Thank You 31
• Disclaimer 32

Leadership:

• Vincent Molino, COO & Head of Operational Due Diligence — vin@cryptoinsightsgroup.com
• Andy Martinez, CFA, CEO & Founder — andy@cryptoinsightsgroup.com

Published on July 30, 2025

Page 9 — Fund View (Divider)

Section divider page.

Page 10 — Building a Lasting Investment Firm

Thejas Nalval — Chief Investment Officer, Parataxis

At Parataxis Capital, we’ve always believed that running a successful hedge fund is about more than just having the right pedigree or a good backtest. Long-term success requires disciplined alignment of business decisions with core values that reflect who we are as professionals and as a firm. In an industry often swayed by short-termism and hype, our commitment to these principles has guided us through multiple market cycles.

Some of these principles include:

Focusing on Our Strengths
Our edge lies in our ability to leverage decades of traditional finance experience to craft bespoke investment vehicles that outperform standard market offerings. When we identify dislocations, our team moves with precision and speed that many peers struggle to match. This agility stems from a lean operational structure and a deep understanding of market dynamics, allowing us to capitalize on fleeting opportunities.

Embracing an Operator Mindset
We run our business like operators, not just investors. This means actively managing our burn rate, minimizing unnecessary outsourcing that would result in additional fees to LPs, and controlling headcount during volatile periods. From day one, we’ve worn multiple hats—handling everything from development of investment strategies to operational risk management and trade execution—without ego. This hands-on approach has kept us nimble, allowing the firm to weather market storms while preserving investor capital.

Hiring High Skill and High Trust
We hire with a dual focus on technical excellence and unassailable character. A key pillar of onboarding new talent is a requirement that new team members excel in both analysis and research, but also embody the highest standards of integrity. Our employees represent Parataxis Capital both within our walls and in the broader world, and having the proper moral compass is as critical as any analytical skill set. This principle has fostered a culture of trust and accountability, enabling us to navigate complex markets with confidence.

Prioritizing Performance Over Perception
In an era where folks prioritize building public personas, often overshadowing substance, we’ve chosen a different path. Parataxis maintains a low public profile, focusing instead on research and risk management. This discipline allows us to avoid distractions and maintain a focus on investment performance. Our investors value this focus, knowing their capital is managed with a steady hand, free from the pressures of external noise.

Knowing Our Value
As our performance has drawn attention, we’ve fielded interest from those eager to capitalize on our brand and success.

Page 11 — Building a Lasting Investment Firm (continued)

But we’ve made a deliberate choice to prioritize long-term value over short-term gains. Selling out early might yield quick profits, but it would undermine the interests of both our general and limited partners. Instead, we’re committed to building a legacy, confident that our disciplined approach will compound value over time. This mindset has resonated with our investors, who value our approach in managing money, but also our focus on building a lasting institution.

Partnering with the Right Stakeholders
Our commitment to long-term success extends to the company that we keep. We partner only with firms and operators who share our values and align with our vision for sustainable growth. This selectivity has, at times, resulted in us forgoing high-profile but misaligned opportunities, a decision validated by the avoidance of fallout arising from certain well-known blow-ups in the crypto space. By choosing partners who prioritize integrity and stability, we’ve built a network that enhances our resilience and reputation, ensuring that the firm can be positioned for decades of success.

Fiduciary First
Above all, we view our role as fiduciaries as paramount. And as a fiduciary, risk management takes precedence over all. In the crypto markets, where volatility is a given, we accept temporary mark-to-market fluctuations as long as the upside potential justifies the risk. However, any potential for permanent impairment of capital—whether from poor counterparty management or operational lapses—is unacceptable. Our rigorous due diligence processes, such as vetting execution partners or using qualified custodians, have safeguarded LP capital through turbulent cycles and ensured delivery on our promise to act as fiduciaries.

These values are the bedrock of Parataxis Capital. They guide every decision that we make as operators, positioning us to thrive in the markets, and will continue to do so in the years to come.

Page 12 — Building Algorithms That Last

Contributor: Ohad Assoulin — Co-Founder & CTO, Tydal

In the world of algorithmic trading, one of the most frustrating phenomena is the rapid decay of once-profitable strategies. A model that performs brilliantly during backtesting and initial deployment can suddenly falter, leaving traders and investors puzzled and heartbroken. This concern is not just about poor strategy design—it reflects deeper structural and behavioral forces within financial markets. Although no strategy can be expected to work indefinitely, some principles can increase the likelihood of sustained performance. In this discussion, we’ll first examine the key reasons why algorithms tend to break down and then explore how to build long-lasting algorithms

Why Algorithms Stop Working

Alpha decay - Once a profitable edge is discovered, it's often quickly crowded out as other market participants adopt similar strategies. The result is diminishing returns or even negative performance.

Overfitting - the tendency to design algorithms that are too finely tuned to historical data. These models often capture noise rather than the true signal, resulting in strong backtest performance but weak generalization in live markets.

Extreme sensitivity to slippage, latency, and fees - Algorithms that operate on narrow profit margins may appear stable and profitable during testing and live trading, but even slight increases in fees, slippage, or execution delays can significantly erode their performance or render them unprofitable

Regulatory or structural market changes can break strategies overnight. Changes in tick sizes, trading rules, or access limitations can render formerly viable approaches obsolete.

Lacking risk management - Whether it’s mathematical or AI-based, all signals are based on statistics. At some point, any algorithm is likely to fall on the “bad” side of the statistics; without proper risk management, it might be impossible to recover.

How to Build Long-Lasting Algorithms

Simplicity - Design for generalization. simple, economically intuitive models that rely on broad, persistent patterns rather than specific historical quirks. For example, predicting long-term behaviors such as momentum or mean reversion.

Dynamic parameters - Avoid at all costs having “magic numbers” in your algorithm. Instead, rely on meaningful data, which shows that you found real indicators. Use statistical models, such as linear regression, and validate the behavior of your data.

Ensemble - Diversification across signals and timeframes reduces dependency on  any one source of alpha and enhances stability. One great method to achieve this is by using similar signals and combining them into a newer signal with stronger stability.

Validation & testing - Employ stress testing and out-of-sample validation. Test algorithms using walk forward analysis across different periods, markets, and scenarios to understand their true robustness. Use different statistical methods to validate that the results are consistent.

Continuous monitoring & retraining - Strategies should be reviewed regularly, with performance tracked and models refreshed as needed using new data.

Page 13 — Sourcing Yield in an Increasingly Competitive Market

Contributor: Leigh Drogen — Chief Investment Officer, Starkiller Capital

The frontier of DeFi yield never stays still, it simply migrates. Since February we’ve seen on chain stablecoin lending rates depress significantly towards 5-7% similar to ETH basis arb. One theory for this compression is the rise of Hyperliquid and the ability for on-chain traders to attain cheap safe leverage in DeFi without having to borrow stables against their beta positions. Right now, the richest pockets of yield sit in three very different neighborhoods, each young enough that incentives still outpace the capital chasing them.

Perp DEX funding pulses

Perp-dex venues such as Lighter and Hyperliquid are the newest magnets for directional traders, and their eagerness shows up in funding curves that can be arbitraged by borrowing cheap stables against long spot exposure to short perps. This delta neutral trade can be extremely profitable for traders who have a solid pulse on where the market is looking for leverage.

Several of these new perp DEXs, including Lighter, also run ongoing points programs designed to reward early liquidity. These points accrue alongside funding rate profits and are widely expected to convert into substantial airdrops.

For sophisticated strategies, this adds a second layer of yield, effectively turning short-term arbitrage into a longer-dated call option on future protocol value. When executed correctly, it creates a high-conviction basis trade with both immediate cash flow and upside optionality.

HyperEVM’s points economy

Elsewhere, HyperEVM is replaying the now-familiar “farm points, earn token” model, only with thicker margins. Early AMMs, lending markets, and even the chain’s own gas rebate system funnel users a double reward: real-time fees plus “HYPE” points that are widely expected to convert into an airdrop in Q4 2025. Hedging the chain’s native token turns the points stream into a free call option. There is upside if HYPE prices well and minimal directional risk if it does not. Until emissions slow down, liquidity providers are effectively paid twice for the same dollar of capital.

Fixed-income loops on Morpho and Aave vaults

Pendle’s principal tokens on major stables like USDC, USDE, and sDAI still at 9-10% APRs. Morpho and Aave vaults now accept these PTs at up to 80 percent loan-to-value. By borrowing against the discount and looping it two or three times, a 9 percent base coupon can quietly grow into double digits. There is no oracle liquidation risk because PTs accrete linearly to par. It is DeFi’s version of a repo trade: simple, repeatable, and refreshingly free of narrative risk. For those looping, it’s important to monitor stablecoin borrow rates as this trade can turn sour quickly if for whatever reason we see a renewed demand for stablecoin leverage.

Taken together, these strategies reflect a market where yield no longer lives in the headline pools of past cycles. It now resides in emerging rails, evolving incentive schemes, and novel fixed-income structures. The challenge is not to find a single winning farm but to stitch together dozens of short-lived edges into something durable, scalable, and risk-aware.

Page 14 — Managing Dozens of SMAs at Scale: Lessons from Psalion

Contributor: Alec Beckman — Vice President of Growth, Psalion

At Psalion, we have managed well over 100 separately managed accounts (SMAs) with a healthy seven-figure average size, focused on generating yield from crypto assets by providing liquidity on decentralized exchanges. As SMAs continue to gain popularity with both crypto-native and traditional investors, we’ve learned a lot about what it takes to manage them effectively and responsibly at scale.

Since launching our liquid yield strategy in 2021, we have made over 500,000 individual allocations and deployed over $10 billion in allocations into stablecoin, BTC, ETH, and SOL liquidity pools. Through it all, we have never experienced an allocation without a positive return. That consistency comes from extensive due diligence on each pool and pool organizers and participants, tight risk controls, deep knowledge of DeFi markets, post-allocation automated alarms and constant hands-on management.

Scaling an SMA strategy like this is clearly possible, but is not easy. Each account is managed individually, which means every allocation needs to be thoughtful and timely. Some positions may last just a few days, others a few weeks. Markets move quickly, and so do we. Our team uses a proprietary scoring system based on more than 25 criteria to evaluate each opportunity.

Managing a large number of accounts is not only about having the right tools, though we have built and use many of them: dashboards, alerts, monitoring systems, and more. But the true “secret sauce” is experience. Our team has been in DeFi since its early days, and we have extensive and successful procedures based on what works, what doesn’t, and when to rotate capital.

SMAs have become increasingly attractive to investors who want transparency, control, and bespoke strategies. We believe SMAs have a bright future with high-net-worth and institutional investors.

At Psalion, we have built a complex of systems and procedures which allows us to deliver performance without increasing risk, even while managing multiple accounts simultaneously. This has taken years of work, but the results speak for themselves.

Page 15 — Implications & Effects of Basis Trade Compression

Contributor: Piervanni Ugolini Mugelli — Partner, Campsor Capital

Basis trade compression—the reduction in yield from the cash and carry trade has fundamentally transformed crypto markets, forcing a migration from low-risk arbitrage to increasingly sophisticated yield strategies.

The compression stems primarily from institutional capital entering cash-and-carry trades. Even TradFi giants and banks with slow and complex compliance processes are exploiting the cash-and- carry trade via their own prop desk. These deep-pocketed entrants compress yields through efficient arbitrage, systematically eliminating the premium spreads that previously offered reliable returns.

Large contango was motivated by uncertainty and counterparty risk – nowadays it is possible to trade via the CME using regulated custody, so it’s fair to assume that the contango will trend towards the risk-free return in a mature market. Such yield compression forces market participants to adopt riskier strategies in search of returns.

The compression's impact became evident during the 2022 crypto collapse. During 2022, the basis compressed and, at times, turned negative (backwardation). Many firms used to easy gains from the basis trade, had to reinvent themselves by going to the far end of the risk tail to seek similar returns as in the past, but only by accepting a far greater risk. It’s fair to see this as one of the triggering causes of the collapse of Three Arrows Capital, Celsius, and BlockFi.

However, today's market differs fundamentally from 2022's amateur-dominated landscape. The "2022 purge" eliminated overleveraged players, leaving sophisticated institutions with proper risk management. Rather than simply accepting higher risk for yield, these remaining players are shifting their focus and pursuing more complex strategies looking for yield through derivative solutions.

The Arbelos acquisition by FalconX established a precedent for M & A deals in volatility desks, spurring new market entrants, also manifested by the sale of Deribit to Coinbase for $2.9 billion.

As spot and perpetual futures markets matured with institutional-grade liquidity, options emerged as the primary frontier for yield generation. Previously illiquid altcoin options now enjoy significant liquidity, with leading market makers providing coverage for top 100 altcoins, while the majors (BTC, ETH, SOL, XRP) show very tight bid-ask spreads manifesting market maturation, also seen in a 99% increase in YoY volume for options on Deribit in 2024.

Looking forward, compressed basis environments will persist as regulatory clarity and institutional adoption accelerate. Traders must adapt through an evolution of their strategy. The days of simple, high-yield basis trades have ended; success now requires sophisticated infrastructure, cautious risk management, and the ability to navigate increasingly complex derivatives markets. This maturation will further improve market efficiency and provide additional tools to Institutional players and funds like Campsor to access new instruments, liquidity and opportunities.

Page 16–17 — The Silent Work Behind the Capital Raise

Contributor: Will Forsyth — Head of Investor Relations, Black Lotus Capital / Hyperion Decimus

Establishing a global LP base in crypto presents a unique set of challenges and opportunities. Unlike traditional asset classes, digital assets are characterized by heightened caution among capital allocators, restrictive mandates, and evolving narratives. For funds seeking to build robust investor relations (IR) and business development functions in this space, success requires a disciplined, patient, and process-oriented approach. With the majority of investor demand for market neutral strategies, long-biased fundraising has proven difficult, as allocators often prefer to deploy capital when markets are surging, rather than when they’re poised for a mean reversion. Bitcoin dominance and benchmarking has only added to these respective challenges.

Investment committees (IC) lack established frameworks and mandates for our asset class. Outside of venture investments, the structural foundations within respective ICs need to be re-written to allow for liquid digital asset strategies to fit into a ‘bucket.’ Furthermore, data on allocator readiness in crypto is scarce, making it difficult to assess who is truly prepared to invest. Crypto IR teams face a landscape defined by uncertainty, requiring them to build relationships from the ground up through persistence and adaptability.

Outreach Fundamentals: Balancing Quantity > Quality

While the foundational skills of outbound engagement remain constant, the digital asset LP audience is distinct. Many institutional investors are still evaluating the role of digital assets within their portfolios. As a result, the approach is less about immediate persuasion and more about collaborative exploration.

• Audience Nuances: Identifying LPs actively allocating to liquid crypto strategies is challenging; many remain discreet about their interests and are in the early stages of evaluation. The majority need education first and foremost. While education is essential, it leads to longer sales cycles and commitments relative to traditional asset classes.

• Consultative Approach: Effective engagement prioritizes understanding LP mandates, constraints, and perspectives over aggressive pitching. The goal is to foster dialogue and build a mutual understanding. While larger, traditional finance firms can lean on deep pockets, building global LP relationships at a startup is something established firms simply don’t have to navigate. Face to face meetings are integral in any longstanding relationship, let alone when you’re looking for large checks.

Trust as the Cornerstone

While Bitcoin and Ethereum are firmly on the radar of institutional allocators, broader familiarity with the rest of the digital asset space remains limited. Their hesitancy to allocate is seldom due to lack of awareness; rather, it stems from substantive questions, stakeholder considerations, and operational friction. Building trust is paramount, and this is achieved through:

• Demonstrating genuine curiosity about LP priorities, mandates and constraints.
• Curating thoughtful, tailored emails and responses rather than generic sales narratives.
• Respecting the pace and process of each institution’s decision-making, even though patience is nearly impossible given how fast crypto moves.

The journey to building a global LP base in digital assets is marked by frequent setbacks and incremental progress:

• High Rejection Rate: A significant portion of outreach efforts have not yielded immediate results, with many conversations ending in deferment or non-commitment.
• Value of Small Wins: Occasional breakthroughs such as a follow-up meeting, a probing question, or a referral serve as critical motivators and evidence that sustained effort compounds over time.
• Effort as a Differentiator: In the absence of established brand recognition or substantial resources, consistent and meticulous effort becomes the primary driver of success.

It’s not rocket science; trust and credibility are built through:

• Thorough preparation for every interaction.
• Persistent, respectful follow-up.
• Accurate tracking of all communications and feedback.
• Maintaining a positive and professional demeanor, even during periods of limited engagement.

Over time, these practices foster authentic relationships, positioning organizations as reliable partners rather than transactional counterparties.

Building a global LP base in digital assets is inherently demanding, requiring patience, process discipline, and resilience. The rewards are not measured by rapid wins or headline-grabbing investments, but by the depth of relationships and quality of dialogue established with institutional partners. Organizations that embrace the grind, prioritize trust, and remain committed to authentic engagement will be best positioned to succeed as the digital asset landscape continues to evolve.

Page 18–20 — Facts Versus Myths About Crypto Treasury Companies

Contributor: Jeff Dorman, CFA — Co-Founder & CIO, Arca Investment Management

The rise of publicly traded U.S. companies buying Bitcoin and other digital assets has certainly been the talk of the town, but as usual, there are a lot of misconceptions. So we’ll do our best to parse through the facts and myths about these new buyers of digital assets.

Some are referring to these vehicles as “Bitcoin Treasury companies,” while others call them DATs (Digital Asset Treasury companies). Whatever you call them, they are basically just a new shell vehicle for holding digital assets. This differs from the original Bitcoin treasury companies. For well over five years, we’ve been discussing different public companies that were holding Bitcoin on their balance sheets for a variety of reasons. Some were regular companies that were experimenting with ownership of Bitcoin (i.e. Tesla and Block/Square), others were crypto-native companies like Coinbase and Galaxy that owned these assets via their natural business, and others were Bitcoin mining companies whose sole business was owning Bitcoin. The growth of Bitcoin on these balance sheets was easy to track and occasionally sparked a boost to the stock price, but in most cases, the ownership of Bitcoin did not overshadow their core business. Furthermore, until recently, the FASB accounting standards for holding Bitcoin on the balance sheet provided significantly more downside to EPS than upside. Conversely, these companies rarely provided a boost to the price of Bitcoin, because they were often not buying BTC on the open market. Most were simply accumulating it through regular everyday business, or for those who were buying it, it was a relatively small amount.

At the same time, Microstrategy (MSTR) was becoming the first true “Bitcoin company”, meaning its sole purpose as a public company was to acquire Bitcoin. We first wrote about MSTR almost five years ago, as it opened eyes after announcing the first of many BTC purchases, leading to a 20% price jump for MSTR stock. This certainly opened eyes.

While MSTR’s first BTC purchases were done using cash on the balance sheet, the true mastery of MSTR over the last five years shifted to how easily and frequently they tapped the capital markets. MSTR still had another core business, which generated anywhere from $50-150 million of EBITDA via its business intelligence and enterprise software analytics offerings, but this was quickly overshadowed by the Bitcoin purchases. The existing cash flow, which has nothing to do with Bitcoin, is a significant difference between MSTR and every other publicly traded equity vehicle that is now attempting to do the same thing.  

The cash flow from this ancillary (formerly core) business line enables MSTR to pay corporate expenses and interest on debt. By tapping the debt, convertible, preferred, and equity markets via new primary deals to buy Bitcoin, a whole new audience emerged that could now gain crypto exposure, which was previously unavailable.

Each subsequent round of financing, and Bitcoin purchase, added upward pressure to BTC’s price due to the size of these purchases and the signaling of future purchases, and also added to upward pressure on MSTR’s stock price as they made the market focus on “Bitcoin per share” and “Bitcoin yield”, new metrics that previously did not exist. Essentially, the sole goal of MSTR, the “company,” was now to grow its Bitcoin balance, and everyone along the way benefited. The convertible bond and preferred stock holders essentially were playing a “cheap vol” game, taking advantage of the volatility in both the MSTR stock and BTC’s price. The straight debt holders only cared about clipping their coupons, which was easy given the EBITDA that MSTR still generated from its old core business. And the equity investors benefited from the stock trading at a high premium to the net asset value (NAV) of Bitcoin on its balance sheet.

Everyone won!

Of course, when everyone wins, two things happen:

• Naysayers begin to rage-post, trying to find ways to discredit the strategy. We first began addressing some of the ludicrous claims in 2021, when many market participants were convinced that MSTR would become a forced seller of Bitcoin, demonstrating a complete misunderstanding of how debt covenants work and an even greater confusion between owning Bitcoin outright versus holding levered futures positions with liquidation prices. To this day, we still often have to contend with claims that MSTR poses a systemic risk to BTC, although we’ve largely given up trying to fight this battle because it is never-ending. We wish Jim Chanos a lot of luck on his recent long BTC, short MSTR trade (which also likely will not work for reasons we lay out here). “Shorting MSTR” is the new “shorting Tether”, a trade that makes everyone salivate due to the obvious low risk, high reward, but has a low probability of actually working.
• The copycats emerge. Welcome to the new era of crypto insanity. Let’s dive in.

“SPAC and Reverse Merger”

If 2024 was the year of the “crypto ETF”, then 2025 will be the year of the “SPAC and Reverse Merger”. I also acknowledged that it was a necessary evil to further adoption and interest, but the point is still true. There is a big difference between “blockchain the technology” and “crypto the asset”. We care a lot more about bringing the world’s most popular assets (stocks, bonds, real estate) onto blockchain rails than we do about jamming crappy crypto assets into outdated rails. But jamming crypto assets into equity shells is not going to stop. So let’s examine what is happening.

SPACs and reverse mergers have been around for a long time, but rarely have they been unilaterally used for a single purpose. But that is what is happening right now. If you have a publicly traded equity shell, it can be used to acquire crypto, with the hope of trading at a significant premium to its net asset value (NAV). These are new and often structured a little differently than MSTR. Some own just BTC and are trying to copy MSTR to a tee (though with far less brand awareness and capital markets expertise), while others are buying new assets – some own ETH, some own SOL, some own TAO – and many more are coming. Arca is currently getting 3-5 calls per week from investment bankers pitching us new ideas.  

These examples illustrate a growing trend among public companies to incorporate crypto assets into their financial strategies, often using proceeds from debt or equity offerings to fund these acquisitions.

But who is actually making money on these? Let’s break it down:

• The investment bankers, getting underwriting fees for raising PIPEs, or executing a reverse merger, are a pretty riskless strategy for them regardless of the success or failure of the deal. So they aren’t going to stop bringing these deals.
• The owners/management of the shell companies - Let’s say you raise $100 million in a new PIPE offering, and use $85 million to buy crypto assets, and keep $15 million back for “operating expenses”. Operating expenses include higher salaries – that’s a fat payday for management teams.

• The existing owners of the stocks BEFORE the reverse merger or SPAC announcement – Most of these shell public companies are trading with sub-$20 million equity market caps. And most of the owners of these stocks, prior to being repurposed into crypto equity shells, were likely just penny stock traders or retail investors. Anyone who owned these stocks prior, knowing that the stock would be repurposed into a crypto company, was likely trading on insider information; everyone else was just getting lucky. But make no mistake about it, this is where the real money is being made, as most of these stocks are jumping 500-1000% or more upon announcement.

What group is missing from the “money makers?” The new investors.

Unlike MSTR, where we now have 5 years of history showing that debt, convertible bond, preferred, and equity holders are making money, there is no evidence YET that new investors into these vehicles (those funding the PIPEs or SPACs) are going to make money. No one has lost money yet, as these deals are relatively new and most private investors in these vehicles have yet to convert their private shares to public shares (most take at least 90 days to do so). As a result, the deals will continue to come in, and investors will continue to buy them. And if shares do still trade at a significant premium to NAV once all new investors unlock, then we will see even more of these deals. But if these stocks start to trade straight down, maybe even below NAV, then the music stops.

We won’t know for a few more months as these unlocks start to emerge. But one misconception is already floating around. These unlocks are risks to investors in the equity of these shells, NOT risks to the underlying crypto asset. There are few, if any, mechanisms to force sales of the underlying crypto asset unless you raise money via debt and can’t pay interest (default). And none of the newer shells are big enough yet to access the debt markets. That trade has been exclusive to MSTR, and a few other larger players thus far. Equity and preferred holders have no rights unless a stock trades so far below NAV that an activist investor begins accumulating shares and tries to force a board takeover with the goal of selling the underlying asset (crypto) to buy back the shares. This will likely happen at some point in the future, but it’s not a big risk today, and once it happens one time, most stocks will close the gap to NAV because they know the playbook can and will be repeated.  

This is very similar to the Grayscale trusts prior to the ETFs. There was never a risk that Grayscale would be forced to sell its underlying crypto assets… The risk was that the trusts (stocks) would trade below their net asset value (NAV), which eventually happened, and was detrimental to equity investors but irrelevant for crypto asset holders.

And now, every crypto venture capital investor holding a massive amount of highly inflationary garbage tokens with massive unlocks and no secondary demand is discussing ways to stuff these tokens into an equity shell. But that doesn’t just automatically create demand, no different than how most new ETFs fail to garner demand. Creating a vehicle and creating demand are two separate things. The vehicles will continue to be created, but it is still too early to know if there will actually be demand for the stocks.  

Is there a world where these vehicles can sustain a premium to a NAV? Yes. Perhaps one day MSTR becomes the “Berkshire Hathaway” of crypto, whereby Bitcoin becomes such a sought after, scarce asset that companies are willing to take less in an acquisition from Saylor than they would from another company because he is able to pay with precious Bitcoin. And perhaps the same is one day true about other assets being jammed into these shell vehicles. But that’s a long-shot idea. Another way a premium to NAV could sustain is if these shell companies get more creative with what underlying asset they own – maybe they start to own HYPE, one of the best tokens ever created that currently does not trade on any centralized exchanges, thus opening HYPE ownership up to a new investor audience that will be willing to pay a premium for access. But that’s about the only reason why a premium to NAV would persist over long periods of time.

Regardless, some will work, some will not – just like ETFs. But the bankers need to start getting creative if they want the gravy train to persist. If you’re just going to stuff crypto into an equity shell, you need to keep innovating on what is stuffed into the shell – make it valuable and hard to accumulate in any other way.

But I see little reason why these equity shells will be net negatives for crypto assets themselves, at least not anytime in the near future. Without debt in the capital structure, there is no forced sale mechanism. And I feel like we’ll be trying to diffuse misconceptions about these vehicles for a LONG time, just as we still do with many crypto topics.

‍

Page 21 — Allocator View (Divider)

Page 22–23 — GP Capital Solutions in Digital Assets

Contributor: Gurjinder Johal — Managing Partner, Sandwell Capital

With institutional adoption trending higher for digital assets and competition from established players intensifying, GPs are at a key inflection point. We launched Sandwell in early 2025 as a private investment firm to address the significant, unmet capital needs of digital asset managers—primarily those managing hedge fund strategies. By providing growth capital and strategic support, we aim to accelerate a GPs transition from emerging managers into scalable, institutional-grade platforms—an essential step in capturing institutional inflows and building an enduring asset management business.

Through deep engagement with the broader ecosystem, our team has built conviction that digital asset managers represent a compelling opportunity. Underpinning our view is the long-term outlook for digital assets, which continues to be supported by secular tailwinds and positive structural shifts.

Built on that foundation, asset managers in the industry are still in an early expansion phase with leaders yet to fully emerge—similar to the formative years of alternative investment managers entering institutional portfolios and scaling platforms.

For GP investors, this creates an early and differentiated access point to digital assets with multiple levers driving returns—including exposure to overall digital asset growth, yield characteristics, and equity-like upside—all within an industry poised for future consolidation.

For traditional allocators still on the sidelines, GP investments provide a distinct on-ramp into the asset class and to support this, Sandwell will begin partnering with strategic co-investors later this year to bridge institutional capital into our growing GP ecosystem.

This is a defining moment for GPs to position themselves as institutional-ready platforms, but many remain undercapitalized. As the industry matures, allocators are likely to adjust portfolio exposure from passive and venture-style investments toward active management—setting the stage for crypto hedge funds, which currently represent about 2% of total hedge fund AUM, to capture a greater share of institutional allocations. To compete, managers must evolve beyond performance-driven models and build scalable, operationally robust businesses to capture institutional capital inflows.  

However, we continue to see top-tier teams with multi-cycle-tested performance still hampered by AUM growth—many firms remain below $100 million in assets, limiting their ability to reinvest in business expansion through fee revenues. Meanwhile, institutional allocators are applying the same standards used across hedge funds and private markets—prioritizing operational resilience, financial stability, and product diversity over performance alone.

GP capital options remain limited or outdated for the current cycle. GPs are now competing with well-capitalized incumbents from traditional finance and early movers in the space who have already reached relative scale. Yet, most still rely on self-funding or small pools of individual investors—an approach that may support early growth but ultimately constrains a manager’s ability to meet the rising capital demands required to attract institutional capital. Traditional GP capital providers have yet to enter the space meaningfully, held back by concerns around AUM scale and limited LP diversification. This gap has created a vacuum—one that Sandwell is positioned to fill with strategic capital aimed at strengthening balance sheets and helping digital asset managers build scalable, institutional-grade platforms.

To unlock long term value, GP capital must be aligned, flexible, and built for the realities of each manager’s business. In our view, GPs need capital solutions tailored to their specific strategy, ownership structure, and growth trajectory—which is what led to structuring Sandwell as a private investment firm, not a fund, to meet those needs.

Our flexible model allows for customized deal structures—preferred equity, revenue share, or hybrid—aligned to long-term business plans whilst management teams retain control whilst gaining a strategic partner.

At the same time, we believe GPs must recognize the inherent risks investors face in hedge fund-related platforms—particularly in liquid strategies—where performance and redemption cycles can be volatile, so a collaborative, well-aligned partnership benefits both sides.

Capital alone has limited impact as it must come with a partner offering a competitive edge in a fast-moving industry. As the pace of progress accelerates, Sandwell’s approach is to provide an additional lever for GPs to scale, backed by our diverse team, Advisory Council, and upcoming allocator partnerships. Leveraging data and ecosystem insights, we also help formulate strategies and partnerships to drive AUM growth, expand product offerings, enhance operational processes and support strategic acquisitions.

Our goal is to help GPs build scalable foundations and as our platform of GPs grows, we aim to harness the collective power of scale, unlocking new opportunities and attract top-tier partnerships.

Page 24 — Putting Bitcoin to Work: Bitcoin Denominated Multi-Strategy Fund

Contributor: Yuval Reisman — CEO, Atitlan Asset Management

As bitcoin enters, what is widely viewed as a long-term supercycle, the rise of BTCFi, bitcoin-native finance, is opening the door to a new generation of yield-generating strategies. Institutional allocators, family offices, and long-term holders are no longer just buying bitcoin for the sake of holding it. They're asking: how can bitcoin, like any other asset, be put to work safely?

We’ve been focused on crypto-quant strategies since 2017, and for much of that time, putting BTC to work was far from easy. Custody options were limited, and exchanges didn’t accept BTC as collateral. In 2020, Atitlan launched and managed one of the first BTC-denominated portfolios dedicated to crypto-quant strategies, but at the time, the universe of viable strategies was quite narrow.

By 2025, that landscape has evolved: With tier-1 regulators like the FCA and SEC now overseeing leading custodians, off-exchange trading has become significantly safer. Combined with major exchanges accepting bitcoin as collateral, investors can finally access sophisticated quantitative crypto strategies using bitcoin-while mitigating counterparty risk.

Earlier this year, Atitlan launched its Bitcoin Multi-Strat Fund, a bitcoin-denominated crypto-quant multi-strategy trading 100% off-exchange, while keeping assets with a UK-registered custodian.

In parallel, the yield from traditional BTC-based products, such as lending, staking, or platform-based earn programmes has mostly dropped below 3%, often with structural risks involved. By contrast, trading strategies such as arbitrage, momentum, and long/short, when implemented correctly, offer significantly higher BTC-denominated return potential with proper governance and risk controls. Crypto-quant is an attractive source of Alpha, which is finally accessible for institutional investors, thanks to off-exchange trading. These institutions begin accumulating bitcoin, and need no education about generating yield from their assets.

As new regulatory frameworks, including the GENIUS Act in the U.S., move the industry closer to regulatory clarity, the focus is shifting from “if” institutions will allocate to bitcoin, but “how”. For these allocators, avoiding exchange counterparty risk is as important as return potential. The memory of FTX – where some institutional investors found themselves caught in reputational crossfire, remains fresh.

Bitcoin is no longer just a store of value. It is capital - and as capital, it should be managed productively. The BTCFi economy is maturing, and with it comes a new standard: custody-first, infrastructure-led, and designed to unlock real and risk-adjusted yield on bitcoin.

Page 25 — Custody in Focus: AIMA’s Push for Safer Digital Assets

Contributor: Michelle Noyes — Head of Americas, AIMA

“Crypto Week” in Washington, DC marked a key milestone for digital asset regulatory clarity. The GENUIS Act, governing stablecoin legislation was signed into law on July 18th and the CLARITY Act, governing market structure legislation, passed the House with stronger-than-expected bipartisan support on July 17th.

Despite these wins, crypto regulation is still very much a work in progress both in the US and around the world, yet investment managers active in the asset class must navigate the incomplete rulebook.

The Alternative Investment Management Association’s Digital Assets Working Group (AIMA DAWG) is uniquely focused on issues that exist at the intersection of crypto and institutional asset management. Chief among our members’ concerns is the custody of digital assets.

AIMA welcomed the withdrawal of the SEC’s proposed 2023 rule on safeguarding advisory client assets, a result that we repeatedly advocated for including in our initial submission to the rule making consultation in May 2023, our response to the Crypto Task Force in March 2025 and letter to Chair Atkins in April 2025. We agree that the safeguarding of client assets is important and that the current custody rule under the Advisers Act needs improvement, however this proposed rule was not an effective way to achieve this goal and in fact had the potential to increase, rather than reduce, custodial risks.

AIMA DAWG continues to actively engage with the SEC and their counterparts around the world to develop a regulatory framework that reflects the material challenges crypto assets present to the traditional custody model, while still protecting investors and facilitating sophisticated trading strategies. We encourage the global alternative investment industry to lend their voice to this work.

This advocacy takes on greater urgency given the increasing number of institutional entrants to the market, including traditional hedge funds. According to AIMA and PWC’s 2024 Crypto Hedge Fund Report, nearly half (47%) of traditional hedge funds surveyed have exposure to digital assets, up from 29% in 2023 and 37% in 2022.

These investment managers are accustomed to prime brokerage (PB) arrangements including triparty custody agreement over assets held by the PB which are able to be traded by the client on various exchanges with which the PB has a relationship. The PB also offers additional functionality, such as the ability to utilize leverage and to engage in securities borrowing and lending. Hedge funds seek similar functionality when it comes to digital assets.

While custody regulation remains under development, it is useful to revisit core principles we set out in our 2022 guide on crypto assets custody. This guide, developed with a working group of crypto asset custodians and industry experts, provides industry perspectives on sound practices and key considerations around due diligence for institutional investors determining how to custody their digital assets. Key points of evaluation include asset safekeeping, track record, financial strength, insurance, security, disaster recovery protocols or similar, asset servicing, third party oversight, range of support, accessibility, control and reporting.

The full guide can be downloaded at https://www.aima.org/sound-practices/industry-guides/digital-asset-custody-guide.html

Page 26–27 — Creating a Stand Out Crypto Due Diligence Questionnaire

Contributor: Vin Molino — COO & Head of Operational Due Diligence, Crypto Insights Group

Working with emerging crypto managers has many professional rewards, in that doing so presents both immediate and long term tangible impacts. From helping lift an investment business from the ground, to eventually seeing it grow and invest in an industry of the future, there is always the end goal of providing a fair return on investment for a manager’s clients.

From the perspective of a due diligence process, one gets to dig deep into the business of an investment manager through understanding and assessing many parts of such enterprises. People, process and infrastructure are the core themes of what any due diligence covers, and more so for crypto strategies, as all three elements are interrelated in the management of digital asset portfolios; If for no other reason than crypto is an asset class that is both newly developing and requires technological skills, in front, middle and back office functions.

From a crypto manager's perspective, and across all its employees’ responsibilities, their day to day consists of perfecting an investment process, building the technology around such a process, and ultimately ensuring they market their unique skills and portfolio performance to discerning investors. However, all of that effort can be immediately lost upon a potential investor by not capturing the nature of their day to day correctly, within a well structured crypto due diligence questionnaire.

To take a step back, every manager is competing for shelf space with thousands of investment organizations looking for that same allocation of capital. Drill down further, and within a manager’s own strategy, they could be competing with hundreds of other funds. From an allocator’s view, many are churning through thousands of pages of marketing materials, one-pagers and other collateral that is somewhat superficial, but their job really begins when they start digging into a DDQ. And for many institutional investors, their scrutiny of a crypto fund’s DDQ is different from reading a DDQ of traditional asset classes, in that their brains will already be searching for the inherent risks of crypto investing, which is what a stand out crypto DDQ should address.

Based on experience in both managing a crypto fund of funds, being an, and representing numerous, institutional allocators, and conducting related operational due diligence, here are three key areas of focus all crypto managers, and particularly newer firms, should ensure they provide clarity within, through the above themes of people, process and technology.

• Investment and Settlement - For investors of traditional asset classes entering the crypto space (which most institutions are), heightened attention with respect to the process of crypto market execution is given to the facts of digital assets being volatile asset-types, trading into 24/7 markets (some centralized and some not), and the respective technology to handle such characteristics. Here, a sound DDQ should cover the technology, if either third-party or proprietary, used to set-up, execute and settle (meaning wallet storage) crypto trades, and the controls around key-type and wallet transaction authorization (either human or machine). In addition, and whether a manager’s execution methods are automated or manual-discretionary, details should also be provided on portfolio investment risk management, again, within the context of both technology and authorization (i.e., approval) for ensuring a fund or separate account has pre-designated guardrails for putting risk on or taking risk off.

• Counterparty Risk - Although we are nearing three years since the FTX meltdown (and events preceding such), most investors are still asking questions about counterparty risk management, with historic crypto failures in the back of their minds. Adding to that, many institutional investors are aware of the fact that a vast majority of crypto-native counterparties, either brokerages or exchanges, are privately backed, as opposed to being a public company (Coinbase is one rare example) or having deep balance sheets, and will therefore want to know how a manager handles such risks. Guidance for relevant DDQ responses with respect to this topic should include details on counterparty due diligence (both initial and ongoing), counterparty diversification specific to a particular fund or account, and as is often a common request, monitoring counterparties from a regulatory perspective. Again, all of these specific matters should be addressed through people, process and technology.

• Cybersecurity - It is surprising, and candidly a bit concerning, how many crypto managers, for all of their incredible proprietary infrastructure, still do not conduct cybersecurity tests, such as penetration testing and phishing exercises. Yet, those basic functions are often brushed over or responded to with a “we plan to do it,” which doesn’t show well for a business whose purpose is to invest in and manage technological assets. However, as there are those crypto managers that realize cybersecurity is table-stakes for an investor, and for those who want to provide an additional layer of detail for this topic, other matters to address in a DDQ should include underlying protocol/project cybersecurity (yes, institutional investors ask about this), smart contract audits for the DeFi strategies out there, and internal change management controls and authorization.

There are other nuanced crypto-related matters which should also be considered in DDQs, such as the incorporation of smart order routing within an investment execution process (due to the above stated nature of crypto trading), being clear as to whether or not crypto brokerage accounts are segregated in the name of the account holder or are omnibus accounts, having relevant crypto asset valuation processes documented within a valuation policy (a regulatory requirement for many managers), and ensuring fund services providers (i.e., fund administrator, auditor and legal counsel), are properly experienced in servicing crypto strategies.

In conclusion, the matter is clear for crypto managers looking to attract and engage institutional capital… Ensure you address and properly engage those questions which are top of mind for potential crypto investors - So that in addition to showcasing one’s investment edge, one doesn't overlook the day to day that goes into running such a business, by making clear you are aware of, and responsive to, the operational risks that matter for managing a digital asset portfolio.

Page 28 — CIG Outlook (Divider)

Page 29 — Insights from the Fund Manager Survey

Contributor: CIG Survey Team

The Monthly Fund Manager Survey Report

On a monthly basis, CIG conducts surveys targeted toward liquid fundamental fund managers. These managers are living and breathing the digital asset markets. The results culminate into 10+ page reports representing billions of dollars of AUM.

Market Views: Ethereum, Bitcoin, and Digital Asset Treasuries

Capital Views: Growth Expectations

ETH/BTC Ratio outlook tilts toward ETH significantly outperforming BTC over the next 6 months
The ETH/BTC ratio is currently 0.025. What do you expect this to be in 6 months?
Source: Crypto Insights Group, July 2025

Survey participants now see ETH taking the relative lead over the next six months, with blended expectations of ETH/BTC at 0.033. This marks a potential inflection point of sentiment for the Ethereum ecosystem, with momentum behind tokenization, stablecoin, and DeFi fundamentals narratives.

Our May 2025 survey shows managers clustering their expectations for capital commitments around the second half of 2025, with the most common view pointing to a late-year allocation window.

The timing reflects expectations that institutions will need several more quarters of due diligence before writing larger tickets. The split in expectations from fund managers and allocators suggests opportunity for well-prepared managers, but patience and building long-term relationships with institutional allocators remains essential.

Fund managers optimistic of capital commitments in back half of 2025

Timeline for Crypto Corporate Treasury trade narrows to months not years
How much longer will the “Crypto Treasury Company” trade last?
Source: Crypto Insights Group, July 2025

Crypto treasury companies have absorbed meaningful flows, but managers now see the window to monetize them closing quickly. Most fund managers expect the trade to peak within the next three to six months before premiums begin to fade or less money is raised initially for the trade.
Source: Crypto Insights Group, May 2025

None of this is investment advice. Please read through, in full, our disclaimers on pages 2 and 31, and our terms of service on our website.

Page 30 — Conclusion

(No named contributor)

Liquid digital asset strategies are set to thrive as market infrastructure deepens, transparency improves, and regulatory clarity grows. This aligns squarely with institutional priorities.

Allocators who engage early can source abundant alpha, and shape emerging operational best practices. Crypto InsightsGroupremains a data‑driven partner, ready to support that institutional journey toward lasting opportunity.

Page 31 — Special Thank You

Contributors listed:

• Thejas Nalval (Parataxis)
• Gurjinder Johal (Sandwell Capital)
• Ohad Assoulin (Tydal)
• Yuval Reisman (Atitlan)
• Leigh Drogen (Starkiller Capital)
• Michelle Noyes (AIMA)
• Alec Beckman (Psalion)
• Vin Molino (CIG)
• Piervanni Ugolini Mugelli (Campsor)
• Will Forsyth (Black Lotus / Hyperion Decimus)
• Jeff Dorman (Arca)

Page 32 — Disclaimer (Continued)

THE SERVICES AND CONTENT ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY. INFORMATION AND DATA INCLUDED IN THE CONTENT ARE OBTAINED FROM VARIOUS SOURCES AND ARE PROVIDED ON AN "AS IS" BASIS.THE COMPANY DOES NOT PERFORM ANY ADDITIONAL AUDIT OR VERIFY THE INFORMATIONPROVIDED BY THIRD PARTIES. THE COMPANY IS NOT RESPONSIBLE FOR AND DOES NOTWARRANT THE CORRECTNESS, ACCURACY, OR RELIABILITY OF THE DATA IN THE CONTENT.THE COMPANY DOES NOT WARRANT THAT THE DELIVERY OF THE DATA RELATING TO THECONTENT WILL BE UNINTERRUPTED OR FREE FROM ANY VIRUSES OR OTHER HARMFULCOMPONENTS OR DEFECTS.

THE INFORMATION IN THE COMPANY CONTENT DOES NOT CONSTITUTE AN OFFER, SOLICITATION OR A RECOMMENDATION TO BUY OR SELL ANY SECURITY OR FINANCIAL PRODUCT OR DIGITALASSET OR CRYPTO ASSET OR VEHICLE WHATSOEVER OR ANY TYPE OF TAX OR INVESTMENTADVICE OR RECOMMENDATION. PAST RESULTS OF ANY CONSTITUENT RESPONSES WITHIN THECONTENT IS NO INDICATION OF FUTURE RESULTS. THE COMPANY DOES NOT ACT AS AN INVESTMENT ADVISOR OR FIDUCIARY. THE COMPANY DOES NOT SPONSOR, ENDORSE, SELL, PROMOTE OR MANAGE ANY INVESTMENTPRODUCTS OR INSTRUMENTS, INCLUDING INVESTMENT PRODUCTS OR INSTRUMENTS OFFEREDBY THIRD PARTIES THAT ARE BASED ON THE CONTENT.

THE SERVICES ARE PROVIDED ON AN AS-IS AND AS-AVAILABLE BASIS. YOU AGREE THAT YOURUSE OF THE SERVICES WILL BE AT YOUR SOLE RISK. TO THE FULLEST EXTENT PERMITTEDBY LAW, WE DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, IN CONNECTION WITH THESERVICES AND YOUR USE THEREOF, INCLUDING, WITHOUT LIMITATION, THE IMPLIEDWARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ANDNON-INFRINGEMENT. WE MAKE NO WARRANTIES OR REPRESENTATIONS ABOUT THE ACCURACYOR COMPLETENESS OF THE SERVICES' CONTENT OR THE CONTENT OF ANY WEBSITES ORMOBILE APPLICATIONS LINKED TO THE SERVICES AND WE WILL ASSUME NO LIABILITY ORRESPONSIBILITY FOR ANY (1) ERRORS, MISTAKES, OR INACCURACIES OF CONTENT ANDMATERIALS, (2) PERSONAL INJURY OR PROPERTY DAMAGE, OF ANY NATURE WHATSOEVER, RESULTINGFROM YOUR ACCESS TO AND USE OF THE SERVICES, (3) ANY UNAUTHORIZED ACCESS TO ORUSE OF OUR SECURE SERVERS AND/OR ANY AND ALL PERSONAL INFORMATION AND/ORFINANCIAL INFORMATION STORED THEREIN, (4) ANY INTERRUPTION OR CESSATION OFTRANSMISSION TO OR FROM THE SERVICES, (5) ANY BUGS, VIRUSES, TROJAN HORSES, ORTHE LIKE WHICH MAY BE TRANSMITTED TO OR THROUGH THE SERVICES BY ANY THIRDPARTY, AND/OR (6) ANY ERRORS OR OMISSIONS IN ANY CONTENT AND MATERIALS OR FORANY LOSS OR DAMAGE OF ANY KIND INCURRED AS A RESULT OF THE USE OF ANY CONTENTPOSTED, TRANSMITTED, OR OTHERWISE MADE AVAILABLE VIA THE SERVICES. WE DO NOTWARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR ANY PRODUCT ORSERVICE ADVERTISED OR OFFERED BY A THIRD PARTY THROUGH THE SERVICES, ANY HYPERLINKEDWEBSITE, OR ANY WEBSITE OR MOBILE APPLICATION FEATURED IN ANY BANNER OR OTHERADVERTISING, AND WE WILL NOT BE A PARTY TO OR IN ANY WAY BE RESPONSIBLE FORMONITORING ANY TRANSACTION BETWEEN YOU AND ANY THIRD-PARTY PROVIDERS OFPRODUCTS OR SERVICES. AS WITH THE PURCHASE OF A PRODUCT OR SERVICE THROUGH ANYMEDIUM OR IN ANY ENVIRONMENT, YOU SHOULD USE YOUR BEST JUDGMENT AND EXERCISECAUTION WHERE APPROPRIATE.

TO THE MAXIMUM EXTENT PERMISSIBLE BY APPLICABLE LAW, THE COMPANY EXPRESSLYDISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, OR OTHERWISE, INCLUDING,WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULARPURPOSE AND NON-INFRINGEMENT. YOU ASSUME ALL RISK OF DAMAGE OR LOSS RESULTINGFROM THE USE OF THE SERVICES AND CONTENT.

LIMITATIONS OFLIABILITY

IN NO EVENT WILL WE OR OUR DIRECTORS, EMPLOYEES, ORAGENTS BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY DIRECT, INDIRECT,CONSEQUENTIAL, EXEMPLARY, INCIDENTAL, SPECIAL, OR PUNITIVE DAMAGES, INCLUDINGLOST PROFIT, LOST REVENUE, LOSS OF DATA, OR OTHER DAMAGES ARISING FROM YOUR USEOF THE SERVICES, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCHDAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, OURLIABILITY TO YOU FOR ANY CAUSE WHATSOEVER AND REGARDLESS OF THE FORM OF THEACTION, WILL AT ALL TIMES BE LIMITED TO THE AMOUNT PAID, IF ANY, BY YOU TO US DURING THE THREE (3) MONTH PERIODPRIOR TO ANY CAUSE OF ACTION ARISING. CERTAIN UNITED STATES STATE LAWS ANDINTERNATIONAL LAWS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES OR THEEXCLUSION OR LIMITATION OF CERTAIN DAMAGES. IF THESE LAWS APPLY TO YOU, SOME ORALL OF THE ABOVE DISCLAIMERS OR LIMITATIONS MAY NOT APPLY TO YOU, AND YOU MAYHAVE ADDITIONAL RIGHTS.

Indemnification

You agree to defend, indemnify, and hold us harmless, including our subsidiaries, affiliates, and all of our respective officers, agents, partners, and employees, from and against any loss, damage, liability, claim, or demand, including reasonable attorneys’ fees and expenses, made by any third party due to or arising out of use of the Services, including but not limited to (1) breach of these Legal Terms; (2) any breach of your representations and warranties set forth in these Legal Terms; (3) your violation of the rights of a third party, including but not limited to intellectual property rights; (4) your violation of any laws, rules, regulations, orders, or statutes, or (5) any overt harmful act toward any other user of the Services with whom you connected via the Services. Notwithstanding the foregoing, we reserve the right, at your expense, to assume the exclusive defense and control of any matter for which you are required to indemnify us, and you agree to cooperate, at your expense, with our defense of such claims. We will use reasonable efforts to notify you of any such claim, action, or proceeding which is subject to this indemnification upon becoming aware of it.

Page 33 — Meet the Team

Crypto Insights Group

Frequently Asked Questions (FAQ)

What is the Fund Outlook 3Q25?
The Fund Outlook 3Q25 is a quarterly research publication by Crypto Insights Group (CIG). It provides allocator sentiment, fund manager perspectives, operational due diligence insights, and survey data from active liquid digital asset fund managers.

Who contributed to this report?
Contributors include leaders from across the digital asset industry such as Andy Martinez (CIG), Thejas Nalval (Parataxis), Ohad Assoulin (Tydal), Leigh Drogen (Starkiller), Alec Beckman (Psalion), Piervanni Ugolini Mugelli (Campsor), Will Forsyth (Black Lotus/Hyperion Decimus), Jeff Dorman (Arca), Gurjinder Johal (Sandwell), Yuval Reisman (Atitlan), and Michelle Noyes (AIMA).

What trends are highlighted in 3Q25?
The report identifies consolidation among hedge funds, the growth of BTC and ETH share classes, allocator demand for operational excellence, and mixed participation in Digital Asset Treasury (DAT) trades. It also tracks allocator shifts toward liquid strategies, new multi-manager launches, and the growing role of BTCFi (Bitcoin-denominated finance).

What does the Fund Manager Survey show?
CIG’s survey of 50+ funds (representing billions in AUM) reveals managers expect ETH to outperform BTC in the next six months, that capital commitments will likely cluster in late 2025, and that the Crypto Treasury Company trade may peak within 3–6 months.

Why does this report matter to allocators?
It highlights where family offices, funds of funds, and institutions are deploying capital, the operational standards they expect, and the evolving products (like tokenized funds, multi-manager structures, and SMA platforms) shaping allocator decisions.

How does Crypto Insights Group support allocators and managers?
Through the CIG Institutional Allocator Portal and monthly research, allocators can benchmark managers, conduct diligence, and track fund performance. Managers benefit from verified fund profiles, operational readiness reviews, and greater visibility to institutional investors.

‍