Hi readers, In today's newsletter, Joshua de Vos of CoinDesk Data breaks down the July digital assets report and touches on corporate treasury adoption, the digital assets dominating the headlines and the role of benchmarks in capital decisions.
Then, DACFP's Ric Edelman shares insights from a recent white paper explaining the substantial upside in bitcoin's price and why the risk/reward ratio strongly favors a significant crypto allocation – certainly one that's far higher than a measly 1 or 2 percent.
Thanks for joining us. |
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Q2 2025: From Balance Sheets to Benchmarks |
What looked like a rebound at first glance reflected something deeper; a change in the nature of demand. As digital assets rallied, institutional flows became more targeted, and corporate balance sheets emerged as a key driver of market structure. Bitcoin rose 29.8%, reaching a new all-time high in June, according to CoinDesk Data, but it was the nature of the buyers, not just the size of the move, that marked a turning point. With public companies increasing their BTC holdings by nearly 20%, and expanding into assets like ETH, SOL and XRP, corporate treasury adoption has entered a new phase, with the potential to reshape the asset landscape. Corporate treasuries take the lead Bitcoin's performance in Q2 was not led by retail flows or leveraged positions. Instead, capital came from corporate treasuries. Public companies added nearly 850,000 BTC to their balance sheets by quarter-end, marking a 19.6% increase. For the third consecutive quarter, corporates outpaced ETFs in net accumulation, reinforcing the shift in long-term holders. The message from listed firms was clear: bitcoin is moving from speculation to allocation. |
Bitcoin is no longer the only asset benefiting from this trend. Public companies now hold over $1.4 billion in altcoins. ETH accounts for the majority, but firms are increasingly looking beyond the top two. Solana has seen corporate accumulation, while TRX, XRP and even BNB are beginning to feature in strategic announcements. Nano Labs, for example, unveiled a $1 billion initiative to accumulate BNB. Meanwhile, Tridentity and Webus.vip are planning substantial capital raises to support XRP buys. This level of activity, previously confined to BTC, is now spreading across the broader market. ETH reclaims market share, Aave tops index rankings Ethereum, which had lagged in earlier quarters, reclaimed its footing with a 36.4% rise in Q2, CoinDesk Data shows. Flows into ETH ETFs turned positive, and have now remained so for eight consecutive weeks. Adjusted for market cap, these flows are nearly on par with BTC, marking a convergence in sentiment. The 30% uplift in ETH/BTC hinted at a strategic rebalancing, with allocators rotating back into ether. |
Beyond ETH, Aave delivered the strongest performance within the CoinDesk 20 Index, gaining 72% in the quarter based on CoinDesk Data, as lending activity hit all-time highs and vePENDLE collateral was added to the protocol. Institutional relevance is beginning to take shape here too. The upcoming Aave v4 upgrade, along with the Horizon initiative aimed at tokenised real-world assets, positions the protocol for greater adoption beyond crypto-native circles. Solana keeps pace, but loses spotlight Solana returned 24.3% in the quarter, according to CoinDesk Data, and retained its position as the leading chain by application-level revenue. However, it underperformed both bitcoin and ether. Despite solid fundamentals, investor flows were directed elsewhere. Capital concentrated in assets with more mature ETF infrastructure and longer-established treasury narratives. Even the launch of the REX-Osprey Solana staking ETF, which attracted $12 million on its debut trading day, was not enough to reignite momentum. That said, investor interest is still building. The recent Pump.fun token generation event is drawing attention from both ends of the spectrum. On one side are speculative participants, while on the other are value-driven investors assessing the project's revenue potential. Treasury activity also continues to rise, with over one million SOL now held by corporations such as SOL Strategies and DeFi Development Corp. Narrower gains, clearer signals The second quarter confirmed what the first quarter had suggested: leadership in digital assets is narrowing, and the market is rewarding clarity. The CoinDesk 20 Index rose by 22.1%, although only four constituents outperformed it: Aave, bitcoin cash, ether and bitcoin. The CoinDesk 80 declined by 0.78%, while the CDMEME Index ended the quarter up 27.8% despite a 109% spike in May (based on data from CoinDesk Indices). Outside the majors, most assets lacked consistent inflows or structural support, leaving them prone to retracements. |
Bitcoin and ether both saw their index weights decline by over five percentage points. This made space for assets that posted stronger returns, but it did not meaningfully change the composition of leadership. Aave and BCH still represent a small fraction of the index, reflecting the reality that outperformance alone is not enough to shift structural weightings. Liquidity and credibility remain prerequisites. Benchmarks as allocation tools As adoption broadens and corporate behaviour becomes more material to price action, benchmarks are playing a more active role in capital decisions. With more than $15 billion in cumulative trading volume since launch, the CoinDesk 20 is now both a measure of market direction and a foundation for building structured exposure. The rally in Q2 was real, but more importantly, it was orderly. Allocators are not trend-chasers. They are building frameworks. Benchmarks, indices and ETFs are at the centre of this evolution. As digital assets move from the edges of portfolios to their core, tools that bring discipline and structure become increasingly important. For full performance details and constituent analysis, you can explore the Q2 Digital Assets Quarterly Report. Disclaimer: All price, index and performance figures references are sourced from CoinDesk Data and CoinDesk Indices unless stated otherwise. |
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It's Time to Promote the Correct Crypto Allocation |
Let's be honest. Last month, I released a white paper explaining that conservative investors should allocate 10% to crypto, moderate clients should invest 25% and aggressive investors should place 40% of their portfolios into crypto. Bitcoin has outperformed every other asset class for 12 of the past 15 years, and it's highly likely that it will continue to do so for years to come. Institutions are investing like never before. Congress and the administration now fully support crypto, and we're beginning to get the regulatory clarity we've wanted. The SEC and FINRA's prohibitions that blocked brokerage firms from trading or custodying crypto have been rescinded. The OCC and the Fed have revoked similar prohibitions against banks, and the Department of Labor has rescinded its objection that prevented 401(k) plans from offering bitcoin as an investment option. Despite the growth and performance of bitcoin, I keep seeing suggestions that people ought to allocate only 1 or 2 percent to crypto. In my opinion, that is no longer enough. Crypto is no longer speculative. It is no longer niche. It now deserves to be treated as a core allocation. Consider this hypothetical illustration, comparing a traditional 60/40 portfolio of stocks/bonds to portfolios that hold 10 percent, 25 percent or 40 percent in bitcoin. Let's assume we invest $100 for five years, earning 7 percent annually in the 60/40 allocation. Let's also look at two extreme outcomes: bitcoin either becomes worthless, or it rises in five years to $1 million (roughly a 10x increase from today). As you see in the chart below, the $100 invested in the 60/40 portfolio rises to $140 after five years. Not bad. But the portfolio with a 25 percent bitcoin allocation could be worth more than 250 percent more. Even if bitcoin were to become worthless (and you held it all the way to zero), your portfolio would still be profitable – with a value above your original investment. Seems to me that the risk/reward ratio strongly favors a significant crypto allocation – and certainly one that's far higher than a measly 1 or 2 percent. Potential Range of Portfolio Returns Based on Bitcoin Allocation |
Bitcoin's price appreciation isn't speculation – it's just supply and demand. In Q1 2025, public companies purchased 95,000 bitcoins – more than double the new supply. And that's from just one category of buyers – it ignores additional demand from retail investors, financial advisors, family offices, hedge funds, institutional investors and sovereign wealth funds. This massive imbalance between supply and demand is driving bitcoin's price to all-time highs. I predict that bitcoin will reach $500,000 by 2030 – a 5x increase as of this writing. The adoption curve has tremendous room to run – supporting the thesis that there is substantial upside yet to come in bitcoin's price. Read the white paper for more. |
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