Welcome to the institutional newsletter, Crypto Long & Short. This week:
- Sygnum Bank’s Pascal Eberle writes that investors are recognizing that custody is less about holding assets and more about proving you’re holding them properly.
- CoinDesk Indices’ Andy Baehr provides a “Vibe Check” and writes about how, on the heels of Election Day in NYC, among other political activity, the crypto market is waiting for a new leader to spark its next rally.
- In the “Chart of the Week” we examine the ETH price against average DeFi pool yields and BTC/ETH funding rates.
-Alexandra Levis
Expert insight
Redefining the custody standard for banking
– Off Pascal Eberlechief of staff, Sygnum Bank
The walls between traditional and future finance are dissolving faster than most people realize. Regulated institutions are no longer rejecting blockchain-native functions. In fact, they adopt them. As a result, the next custody standard will be based on cryptographic accountability.
Investors recognize that custody is less about holding assets and more about proving you’re holding them properly. Multi-signature technology (multisig) provides this proof, continuously and cryptographically.
Where traditional custody falls short
Elderly custody operates on the premise of centralized control. When you deposit assets with a traditional custodian bank, you surrender authority to an external entity. This model requires absolute trust in institutional processes that remain invisible to customers and are based on legal/regulatory regimes that can come with their own complexities. This can create significant counterparty risk depending on the regulatory regime under which the lender operates. Certain regulatory schemes provide better customer protection than others. For example, banks in Switzerland are legally required to segregate client assets, effectively making them remote from bankruptcy, and rehypothecation of collateral is not permitted unless the client expressly agrees. However, this ultimately still requires trust in banks, the Banking Act and banking regulators to enforce these rules. But hope, trust and faith are not safety features.
Multi-signature technology flips the entire custody paradigm. Instead of one party holding all the keys (literally), control is distributed. No single entity can move funds unilaterally. Clients have their own keys as part of the security architecture. Each transaction requires multiple approvals, providing an unprecedented level of accountability. Instead of relying on the (banking) law, “code is the law” becomes the new paradigm. The enforcement of the law is not dependent on any regulator, but guaranteed by the blockchain. In the case of Bitcoin, this is the world’s most powerful computer network.
It is a philosophical revolution as much as a technological one. Keeping multiple signatures embodies the cypherpunk principle: “Don’t trust, verify.” Customers can monitor their assets on-chain in real time. They see exactly where their possessions are and how they are secured. They participate in their own asset protection rather than outsourcing it entirely to an institution.
Before blockchain technology, this shared custody model was simply impossible. Banks had no mechanism to distribute control while maintaining security and efficiency. Now they do. Multi-factor authentication transformed how we access applications by requiring multiple verification methods. Multisig wallets will similarly transform how we secure assets by requiring multiple signing authorities.
Cryptographic accountability changes everything
Henry Ford once said that customers would have asked for faster horses, not cars. Similarly, most investors do not yet know how to ask for escrow with multiple signatures. But once they experience the transparency of monitoring on-chain assets, the security of distributed key management, and the control of participating in their own asset protection, traditional custody models will feel as antiquated as paper share certificates.
Banks clinging to legacy opacity will lose their place in the competitive market. Just as the industry once standardized on SWIFT for messaging and clearinghouses for settlement, the next standard will be cryptographic accountability. Multisig is becoming the basic expectation that customers will demand because it is objectively superior. It reduces single points of failure, prevents internal fraud, enables real-time verification and gives customers actual control over their assets. Once customers experience this level of transparency and security, they won’t accept anything less.
Customers want visibility, control and accountability. Multisig custody delivers all three.
Expert insight
Promises given, timing hard
– By Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
On Sunday, New York City (and, I suspect, much of the rest of North America) plunged into Standard Time darkness; the sun set at 16:49. New Yorkers elected a new mayor yesterday, plunging the city into a polarized new phase. The mood in crypto has felt similar lately: resigned, hunkered down, wondering where the endless summer days have gone. With the government shut down for a month, crypto legislative progress paused, and Fed policy offering little upward convexity, catalysts for an uptrend are hard to find. Commentators are constructing hopeful narratives and pushing back on end-of-cycle FUD, but the weight of poor price performance and bruising after the October 10 event keeps the mood sour. It doesn’t help that stocks are firing on all cylinders — the Nasdaq Composite hasn’t had a string of up months this long since 2017.
Sober Uptober – CoinDesk 20 names underperformed in a traditionally positive month
It may be helpful to look back to a year ago, days before the 2024 presidential election, for perspective. The CoinDesk 20 index sat below 2,000. Bitcoin was in the high $60,000s. By the end of November, CD20 had nearly doubled, ETH touched 4,000 and bitcoin was on its way to $100K, its champagne moment. The market knew digital asset support was coming (and it has), but market timing and asset selection has been painfully difficult. The Q1 Tariff Tantrum tested faith and the snapback was too quick for most to predict. ETH was nobody’s favorite portfolio item at the beginning of the 2nd century. quarter until it led the entire market to all-time highs.
Performance since Election Day 2024 – big numbers hide difficult timing
Within weeks, the post-election and Inauguration Day euphoria will be baked into 1-year returns, and we’ll feel the need to demonstrate some more durable asset class performance. To know, look at the performance since the inauguration day till today; only ETH’s power rally stands out as impressive.
Price action since Inauguration Day – only ETH has led higher among top names
The crypto market is looking for leadership to spur another broad rally. Bitcoin led the way in 2024, carving its way into investment portfolios through ETFs and Treasury adoption. Ether led in 2025, benefiting from stablecoin growth and tokenization narratives finally gaining institutional traction. XRP – and Ripple – have delivered remarkable performances despite their history being largely absent from the talking points that move allocators. Solana has become increasingly public—sponsorships, conferences, and consumer adoption—yet SOL’s performance has lagged its ambitions. What narrative and asset will provide the next spark? The market seems to be waiting for an answer.
Chart of the week
This week we look at the ETH price in relation to average DeFi pool yields and BTC/ETH funding rates. Since August 2025, the ETH price has increased while both the 7d rolling DeFi pool APY (yield on all pools tracked by DeFillama) and ETH funding rates have been consistently lower. This divergence strongly suggests that the rally is a “Digital Asset Treasury” (DAT) narrative/flow-led trade, not a demand-driven move based on utility or high yield. The persistently low base DeFi yield is a key signal of weak underlying demand for ETH’s core DeFi tool, a factor that is likely to become a headwind and challenge the continuation of the DAT narrative as institutional flows continue to slow.
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