In today’s newsletter, GSR’s Andy Baehr examines how advisors during the stalled market are quietly building sustainable crypto allocations, moving beyond BTC and gaining more comfort in this asset class.
Then, in “Ask an Expert,” Valdora’s Patrick Velleman comments on how financial advisors can navigate the growing trend of durable crypto allocations.
– Sarah Morton
Summer is coming. Build your core.
Crypto markets feel low energy and ambivalent. But beneath the surface, investors are searching for the right long-term home in crypto. It’s time to position yourself for the next change of season.
The question eventually finds every crypto person. A friend, a relative, a client asks: “I want to add some crypto. What should I actually own?”
Before you answer, let’s be honest about the current environment.
Rally without booster rocket
The good news: crypto prices are on the rise. The less good news: they are only driving. Bitcoin has moved from the mid-$60,000s to the high $70,000s, ether (ETH) from around $1,800 towards $2,300, and Solana (SOL) in the mid-$80s. Motion without momentum. Progress without a pulse – and more than a few sad trombone rallies that faded before they could build on themselves.
The feeling of… ambivalence... was so tangible, we developed a belief/ambivalence gauge. In the 1st quarter of 2026, we hit maximum ambivalence. Other signals point the same way. Funding rates on perpetual futures, a pure reading of leveraged appetite, have been persistently low or negative. DeFi lending rates on Aave rose towards 3% prior to a recent exercise, towards 20%+ in the weeks following the 2024 election, and 5-7% under more typical conditions. The fast money is elsewhere: oil, stocks, prediction markets. Volatility is both a magnet and a product of hot markets, and right now crypto lacks both.
The Conviction Gauge measures an average ratio of weekly returns to daily returns. Source: GSR
This is in stark contrast to last year’s Q2 and Q3 rally, which had speed, power and width. ETH suffered. SOL pushed hard in August and September. The GENIUS Act added fuel. It was a market with real conviction.
The slower shift means more
And yet beneath the surface something more durable is happening: long-term investors and their advisors are quietly getting more comfortable allocation to crypto. That shift doesn’t flood X like a funding rate increase does. No one posts charts about advisors quietly building allocations, but it’s the iceberg that matters. Over time, the effects will be felt and they will be durable.
And for these allocators, BTC alone is no longer the answer. Its role has been clarified as the macro asset, something that can even behave defensively when markets contract. But advisers are being asked to go further. Clients want exposure to the blockchain growth story: tokenization, stablecoins, the layer-1 infrastructure that are now top-of-fold business news.
So what should the core actually be?
Our answer is straightforward: BTC, ETH and SOL. The Power Trio. Cycle survivor. Two different themes across three assets: BTC as the largest macro asset, with ETH and SOL as the lag-ones on which blockchain’s growth story is decided. Neck and neck really competing and we think both will win.
However, a solid core stock should do more than just sit there. Proof-of-stake assets like ETH and SOL can generate dividends through staking, a stream of returns that passive holders often leave on the table. And you want a product that leans towards the market: one that reads different environments and adjusts weights to seek excess returns, rather than keeping fixed weights through each regime.
That is a lot to ask. So we launched an ETF to make it easy.
The GSR Crypto Core3 ETF (BESO) packs core BTC, ETH and SOL with stake rewards on ETH and SOL and active, research-driven weekly rebalancing. Over time, investors will seek satellite teams – sectors, themes and factors. But Core3 is designed to do the first job well: core beta for crypto market, with stake and active management built in.
gsretps.io/etf/beso
– Andy Baehr, Managing Director, Asset Management at GSR *
Ask an expert
Q. How does digital asset investing and trading differ from traditional assets?
The biggest practical difference is that everything happens on the blockchain. Holdings, transactions, strategies, even the behavior of a protocol over time, it’s all visible. Anyone with a wallet address and a block explorer can see what you own and what you’ve made. It’s a level of transparency that traditional markets simply don’t offer. This changes the information environment in which clients/users work.
The other difference is that price discovery runs 24/7, which means volatility never takes a break either. Then there is self-care. In traditional financing, custody is someone else’s problem and often insured. In digital assets, it becomes your problem whether you want it or not. It’s empowering because you really own the asset and no middleman can gate your access to it. It is also more dangerous because the responsibility for keys, backup and operational security rests with the owner. A lost sentence is a permanent loss, which is one of the reasons why people like CZ (Changpeng Zhao, former CEO of Binance) guarantee to keep assets on centralized exchanges.
For advisors, this means that the conversation with clients is broader than allocation because it also covers custody setup, key management and operational risk in a way it never did before.
Question How are vaults and onchain financing changing the investment vs. trading debate?
It’s no longer a question of investing versus trading, what I see the market debating is which returns are real and which aren’t. After a few cycles of degen farming, triple-digit APYs, and protocols collapsing, most serious participants have moved on from the question of “how much can I make” to “how sustainable is this.”
This is why vaults have become increasingly popular. A well-designed box allows capital to stay in the market with less manual rotation. So if you deposit into a strategy and the strategy runs, there’s less movement, less clicks, less emotional decision making. For someone who doesn’t want to trade, it’s a definite improvement over what was previously available on the chain, which was mostly either passive farming or active yield farming.
The other important piece is liquidity. A lot of traditional dividend products lock up your capital. Private credit funds, for example, have redemption windows that run anywhere from a week to a quarter. A box that issues a floating token against your deposit gives you something else. Your capital earns, but you can still move if you need to. It is a real change in how long-term allocations can be structured.
The path this sets up is a yield that may be a bit duller than what crypto has historically offered, but more sustainable. But boring, at least you don’t get RIGHT.
Q. When automated boxes handle the technical ‘trading’ (rebalancing, compounding, liquidation), does an advisor’s value-add shift from ‘picking winners’ to ‘curating risk profiles’?
Yes, and a good one at that.
When the mechanics of a strategy are handled by a smart contract, the execution work is no longer where the advisor adds value. Rebalancing happens automatically and compounding happens automatically. Liquidation triggers run on their own logic, none of which require a human in the loop.
What it needs is a human in the loop as the assessment layer on top. Someone has to look at what’s actually available in the market, research it and decide what’s worth putting customer capital into. It’s more of a due diligence issue. Who built this vault? What does the strategy below do? What are the custody arrangements? How has it worked under stress? Is the team trustworthy? Is the audit credible? What happens if an addiction is broken?
You then take the customer’s risk appetite and adjust it to the risks that the available boxes actually carry. A conservative client might want a tokenized treasury box and a stablecoin dividend box. A more adventurous customer might accept a DeFi dividend box or an FX strategy box. Curing risk is human in the loop work.
– Patrick Velleman, Chief Marketing Officer, Valdora CMO
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* Risk information
Investors should consider investment objectives, risks, fees and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call 888-999-5958 or visit our website at gsretps.io/etf/beso. Read the prospectus or summary prospectus carefully before investing.Investments involve risk. Head loss is possible.
Cryptocurrency Risk (Bitcoin (“BTC”), Ether (“ETH”) and Solana (“SOL”) (collectively the “Reference Assets”)). The Reference Assets are relatively new innovations and are subject to unique and significant risks. Cryptocurrencies are a subset of digital assets that represent blockchain-based tokens that function primarily as mediums of exchange, stores of value, or units of account, whereas digital assets more broadly include any electronically represented asset with economic value, such as tokens, stablecoins, and other distributed ledger-based instruments. The prices of the reference assets have historically been very volatile. The value of the fund’s exposure to the reference assets – and thus the value of an investment in the fund – may fall significantly and without notice, 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. As a result, the Fund’s performance may be significantly affected by overall movements in the digital asset market, and the Fund may decline in value when the broader cryptocurrency market declines. The cryptocurrency market is highly volatile and subject to rapid changes. Effort and validation risk. When the Fund stakes reference assets that use proof-of-stake consensus (currently Ethereum and Solana), the assets are subject to risks associated with stakes in general, such as illiquidity, dependence on third-party service providers, slashing, lost rewards, validator problems and errors. Staking is the process of putting digital assets to work on a blockchain network to receive rewards and improve protocol security. By helping the blockchain run more smoothly and securely, rewards are earned in the native blockchain token. Potential stake rewards are earned by the Trust and are not issued directly to investors. Liquidity risk. Release periods for exposed reference assets can vary from several days to several weeks depending on network conditions. Concentration risk. The fund’s assets will be concentrated in the sector(s) or industries or industries that are assigned to the reference assets, which will expose the fund to the risk that economic, political or other conditions which have a negative effect on these sectors and/or industries may adversely affect the fund to a greater extent than if the fund’s assets were invested in a wider range of sectors or industries. Risk for foreign securities. To the extent the fund invests in foreign securities, they may be subject to additional risks not typically associated with investments in domestic securities.Indirect investment risk. None of the Reference ETFs or Reference Assets is affiliated with the Fund, 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 corporate actions that may affect the value of the Fund. New Fund Risk. The fund is a newly organized management investment company with no operating history. As a result, potential investors do not have a track record or history to base their investment decisions on. Non-diversification risk. Because the fund is non-diversified, it may invest a greater percentage of its assets in securities of a single issuer or a smaller number of issuers than if it were a diversified fund.
Foreside Fund Services, LLC (the “Distributor”)
