In this edition, Andy Baehr from GSR explores how advisors are strategically enhancing crypto allocations amid market stagnation, moving past Bitcoin and embracing broader comfort with the asset class. Meanwhile, in ‘Ask an Expert,’ Patrick Velleman of Valdora discusses guiding financial advisors through durable crypto investments.
While crypto markets appear lethargic, beneath this facade, investors seek long-term homes within the sector. As we anticipate market shifts, the pertinent question arises: ‘What should I actually own when adding some crypto?’
Before diving into recommendations, let’s assess the current landscape. Cryptos have seen gradual price increases; however, these movements lack momentum. Bitcoin ($79,960.87) has risen from mid-$60,000s to high $70,000s, Ethereum (ETH) from around $1,800 to near $2,300, and Solana (SOL) in the mid-$80s. This scenario is marked by progress devoid of vigor, with several rallies dissipating prematurely.
Ambivalence pervades the market, prompting us to devise a Conviction/Ambivalence gauge. Q1 2026 registered peak ambivalence. Other indicators corroborate this sentiment: persistently low or negative funding rates on perpetual futures and DeFi borrow rates on Aave nearing 3% post-exploit, compared to pre-2024 election highs of over 20%. Meanwhile, volatile assets like oil and equities attract more attention.
Contrastingly, last year’s Q2 and Q3 saw robust rallies led by Ethereum, with Solana gaining momentum in late summer. The GENIUS Act further fueled this market conviction.
Despite the slow pace, a significant shift is underway: long-term investors and advisors are increasingly comfortable incorporating crypto into their portfolios. This change isn’t as visible as funding rate spikes but holds greater importance over time. Advisors now face demands beyond Bitcoin, as clients seek exposure to broader blockchain developments including tokenization and stablecoins.
So, what constitutes a robust core? Our recommendation is straightforward: BTC, ETH, and SOL. These assets represent distinct themes—BTC as the macro asset, with ETH and SOL as foundational layer-ones. The GSR Crypto Core3 ETF (BESO) integrates these assets along with staking rewards for ETH and SOL, coupled with active weekly rebalancing.
Andy Baehr, managing director of Asset Management at GSR, notes that digital asset trading offers unparalleled transparency since all activities are blockchain-recorded, unlike traditional markets. This visibility shifts the client-advisor dialogue to include custody setup and operational risks. Additionally, price discovery is continuous, contributing to non-stop volatility. Self-custody empowers investors but also places significant responsibility on them.
Patrick Velleman emphasizes that vaults reshape investment strategies by offering more durable yields compared to fleeting high APYs of past cycles. Vaults facilitate market participation without manual intervention and provide liquidity unlike traditional locked funds, marking a shift towards sustainable long-term allocations.
Velleman also highlights that as automated vaults handle trading mechanics, advisors pivot from selecting winners to curating risk profiles. This involves assessing market offerings through human judgment, evaluating factors like strategy performance and team credibility.
Investors should carefully consider the objectives, risks, charges, and expenses before investing in these assets. For a detailed prospectus or summary prospectus, please visit gsretps.io/etf/beso. Investments carry inherent risks, including potential principal loss. Crypto currencies, being nascent innovations, face unique challenges such as market volatility and validator risks.
In conclusion, while the crypto landscape is marked by ambivalence, strategic shifts toward more comprehensive allocations are emerging, promising a resilient future for long-term investors.