In today’s newsletter, GSR’s Andy Baehr explores how, amid stagnant markets, advisors are quietly building durable cryptocurrency allocations beyond BTC and finding more comfort in this asset class.
Then, in Ask the Expert, Valdora’s Patrick Velleman provides commentary on how financial advisors can navigate the growing trend of durable cryptocurrency allocations.
– Sarah Morton
Summer is coming. Build your core.
The cryptocurrency market has a low-energy and ambivalent feel to it. However, beneath the surface, investors are looking for a suitable long-term home in cryptocurrencies. It’s time to prepare for the changes next season.
This question will eventually find its way to every cryptocurrency person. Friends, relatives, clients ask: “I want to add some cryptocurrency. What should I actually own?”
Before we answer, let’s take an honest look at the current environment.
Rally without booster rockets
Good news: Cryptocurrency prices are moving higher. The not-so-good news: they’re just drifting. Bitcoin From around $60,000 to around $70,000, Ethereum (ETH) rose from around $1,800 to $2,300, and Solana (SOL) was around $80. Movement without motivation. Pulseless progression – and more than a few sad trombone rallies disappearing before they can establish themselves.
Feel…… Ambivalence...so obvious that we developed a Belief/Contradiction scale. In the first quarter of 2026, our ambivalence reached its highest point. Other signals point in the same direction. Financing rates for perpetual futures (a clear indication of appetite for leverage) have been low or negative. Prior to the latest attack, DeFi borrowing rates on Aave had been tipping toward 3%, compared with over 20% in the weeks following the 2024 election, and more typically rates of 5% to 7%. The fast money is elsewhere: oil, stocks, prediction markets. Volatility is both a magnet and a product of hot markets, and currently, cryptocurrencies lack both.
The belief scale measures the average ratio of weekly returns to daily returns. Source: Jinshajiang
This is in stark contrast to last year’s second and third quarter rebounds, which were characterized by speed, power and breadth. Ethereum led the way higher. SOL pushed hard in August and September. The Genius Act adds fuel to the fire. It was a confident market.
Slower transitions are more important
Beneath the surface, however, something more permanent is happening: Long-term investors and their advisors are quietly becoming more comfortable distribute encryption. This shift won’t swamp X like a spike in financing rates. No one has posted a chart of advisors quietly building allocations, but what matters is the tip of the iceberg. The results will show up over time and are long-lasting.
For these allocators, BTC alone is no longer the answer. Its role has been clearly defined as a macro asset, and it may even act defensively when markets contract. But advisers are being asked to go further. Customers want to understand the growth story of blockchain: tokenization, stablecoins, the layer 1 infrastructure that is now making headlines in business news.
So what should the core actually be?
Our answer is simple: BTC, ETH and SOL. A powerful trio. Loop survivor. There are two distinct themes across the three assets: BTC as the main macro asset, and ETH and SOL as the underlying assets in the blockchain growth story. The two sides are evenly matched, a real competition, and we believe that both sides are likely to win.
However, a solid core support should do more than just sit there. Proof-of-stake assets like ETH and SOL can generate revenue through staking, a return stream that passive holders often forego. You want a product that is tilted toward the market: one that reads different environments and adjusts weights to seek excess returns, rather than maintaining fixed weights under every regime.
There are many questions to ask. So we launched ETFs to simplify this.
The GSR Crypto Core3 ETF (BESO) packages core BTC, ETH, and SOL and offers staking rewards for ETH and SOL, as well as active, research-driven weekly rebalancing. Over time, investors will look to satellite holdings – sectors, themes and factors. But Core3 aims to do job one right: a beta version of the core crypto market with built-in staking and active management.
gsretps.io/etf/beso
– Andy Baehr, Managing Director, GSR Asset Management*
Ask the experts
Q: How is digital asset investing and trading different from traditional assets?
The biggest practical difference is that everything happens on the blockchain. Holds, trades, strategies, and even the behavior of the protocol over time, all are visible. Anyone with a wallet address and a block explorer can see what you own and what you did. This is a level of transparency that traditional markets simply cannot provide. This changes the information environment in which the client/user is operating.
The second difference is that price discovery runs 24/7, which means volatility is never interrupted either. Then there’s self-preservation. In traditional finance, custody is someone else’s problem and is usually insured. In digital assets, it’s your problem whether you want it or not. This is empowering because you truly own the asset and there is no middleman controlling your access to it. It is also more dangerous because the responsibility for keys, backups and operational security falls on the holder. A lost phrase is a permanent loss, which is one of the reasons why people like CZ (former Binance CEO Changpeng Zhao) vouch for storing assets on centralized exchanges.
For advisors, this means conversations with clients are broader than allocations, as it also covers hosting setups, key management and operational risks like never before.
Q: How do vaults and on-chain finance change the investing vs. trading debate?
It’s no longer a question of investing vs. trading, I see the market actually debating which yields are real and which are not. After several cycles of degraded farming, triple-digit annual returns, and collapsing protocols, most serious players have moved from the question of “how much money can I make” to “how durable is this?”
This is why vaults are becoming more and more popular. A well-designed vault allows funds to remain in the market without manual rotation. So if you deposit into a strategy and it works, there will be fewer moves, fewer clicks, and less emotional decisions. For those who don’t want to trade, this is a clear improvement over what was previously available on-chain (mainly passive holdings or active yield farming).
Another important part is liquidity. Many traditional income products lock up your capital. For example, private credit funds have redemption periods ranging from one week to one quarter. Vaults that issue liquidity tokens based on your deposits will give you something different. Your capital is making money, but you can still move it if needed. This is a real change in the long-term allocation structure.
The path this establishes may be less interesting, but more sustainable, than the gains cryptocurrencies have historically provided. But at least boredom won’t make you lose interest.
Q: As automated treasury processes technology “trades” (rebalancing, compounding, liquidation), does the advisor’s value-add shift from “picking winners” to “curating risk profiles”?
Yes, and well done.
When the strategy mechanics are handled by smart contracts, execution work is no longer where advisors add value. Rebalancing happens automatically, compounding happens automatically. Liquidation triggers operate according to their own logic, with no human involvement in the loop required.
What it really needs is one person in the loop as the judgment layer at the top. Someone has to look at what’s actually available on the market, review it and decide what’s worth investing customer money into. This is more of a due diligence issue. Who built this vault? What is the following strategy doing? What are the custody arrangements? How does it perform under pressure? Is the team trustworthy? Is the audit trustworthy? What happens if a dependency breaks?
You can then understand your client’s risk appetite and adapt it to what the available vaults actually risk. Conservative clients may want a tokenized treasury vault and a stablecoin yield vault. More adventurous clients may embrace the DeFi Income Vault or the FX Strategy Vault. Controlling risks is the job of humans in the cycle.
-Patrick Velleman, Valdora Chief Marketing Officer Chief Marketing Officer
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*Risk Disclosure
Investors should carefully consider the investment objectives, risks, charges and expenses before investing. For a prospectus or summary prospectus containing this and other information, please call 888-999-5958 or visit our website at gsretps.io/etf/beso. Please read the prospectus or summary prospectus carefully before investing. Investing involves risks. Loss of principal is possible.
Cryptocurrency Risks (Bitcoin (“BTC”), Ethereum (“ETH”) and Solana (“SOL”) (collectively, the “Reference Assets”)). Reference assets are relatively new innovations that face unique and significant risks. Cryptocurrencies are a subset of digital assets that represent blockchain-based tokens that serve primarily as a medium of exchange, store of value, or unit of account, while digital assets more broadly include any electronically representative asset with economic value, such as tokens, stablecoins, and other distributed ledger-based instruments. Digital asset/cryptocurrency market volatility risk. The price of the reference asset has historically been highly volatile. The value of the Fund’s reference asset exposures (and therefore the value of the Fund’s investments) may decline significantly without warning, including to zero.
Market beta risk. The Fund seeks to provide core exposure to the cryptocurrency market (“market beta”) through allocations to BTC, ETH and SOL. Accordingly, the Fund’s performance may be significantly affected by movements in the overall digital asset market, and the Fund’s value may decline when the overall cryptocurrency market declines. The cryptocurrency market is highly volatile and changes rapidly. Staking and validator risks. When funds stake reference assets that leverage proof-of-stake consensus (currently Ethereum and Solana), these assets are often subject to the risks that come with staking, such as illiquidity, reliance on third-party service providers, slashing, missed rewards, validator issues, and errors. Staking is the process of placing digital assets on a blockchain network to earn rewards and enhance the security of the protocol. By helping the blockchain run more smoothly and securely, you can earn rewards through native blockchain tokens. Potential staking rewards are earned by the trust rather than issued directly to investors. Liquidity risk. Depending on network conditions, the unstaking period for the pledged reference asset may vary from days to weeks. Concentration risk. The Fund’s assets will be concentrated in one or more sectors or an industry or group of industries allocated to the Reference Assets, which will subject the Fund to the risk that economic, political or other conditions that negatively impact those sectors and/or industries may have a greater negative impact on the Fund than if the Fund’s assets were invested in a broader range of industries or industries. Foreign Securities Risk. If the Fund invests in foreign securities, they may be subject to additional risks not generally associated with investments in domestic securities. Indirect investment risks. Neither the Reference ETF nor the Reference Asset is affiliated with the Trust, the Adviser or any of its affiliates and is not involved in this offering in any way and has no obligation to consider the Fund in connection with any corporate action that may affect the value of the Fund. New Fund Risks. The fund is a newly established management investment company with no operating history. Therefore, potential investors have no track record or history on which to base their investment decisions. Non-diversification risk. Because the Fund is non-diversified, it may invest a greater proportion of its assets in the securities of a single issuer or a smaller number of issuers than a diversified fund.
Foreside Fund Services, LLC (“Dealer”)