What to know:
Welcome, dear reader, to the delightful world of Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks the curious case of digital assets for financial advisors. Do subscribe here to receive this weekly dose of financial wizardry every Thursday, lest you miss out on the latest shenanigans!
In today’s edition, our esteemed Gregory Mall, the chief investment officer from Lionsoul Global, regales us with tales of bitcoin’s current rally and its historical impact on those cheeky altcoins.
Meanwhile, the ever-astute Kevin Tam takes a gander at crypto trends, 13-F filings, and institutional adoption in his segment, Ask an Expert. Buckle up! 🚀
– Sarah Morton
Bitcoin’s Breakout — Is the Altcoin Rally Next?
On May 22, bitcoin (BTC) decided to throw a party, reaching a new all-time high and briefly surpassing the levels seen earlier this year. While prices have since taken a breather, BTC remains within striking distance of its all-time high — a feat achieved despite the lingering uncertainties of the macroeconomic circus, low trading volumes, and the general skepticism of the market. Quite the show, I must say!
Meanwhile, most altcoins are still sulking in the corner, far from their respective all-time highs. As of early June, Ethereum (ETH) is still about 20% below its November 2021 peak, and Solana (SOL) is more than 30% below its former glories. This divergence has led some market observers to dub it the “most hated rally”—a quiet, low-participation surge in bitcoin that caught many off guard. Surprise! 🎭
What Drove the BTC Rally?
Three key factors contributed to the recent BTC breakout:
Central Bank Optimism: Futures markets are buzzing with the notion that rate cuts from the Federal Reserve are likely in the second half of 2025, with the eurozone even further ahead—now on its seventh consecutive rate cut. This easing backdrop has revived risk appetite across assets, particularly among institutional allocators. With tariff fears fading into the distance, the overall inflationary outlook has significantly improved in recent weeks. Huzzah!
Institutional Inflows: Spot bitcoin ETFs, approved earlier this year, continue to gobble up flows. While daily volumes have tapered from launch-week highs, net inflows have remained consistently positive, particularly from fee-sensitive RIA and private wealth channels. Year to date, cumulative inflows exceed $16 billion, with May recording the largest inflow this year. Meanwhile, MicroStrategy and other companies have been piling corporate treasury assets into bitcoin like it’s going out of style.
Easing Political Risks: Fading tariff tensions and improving global trade sentiment have helped stabilize broader markets, allowing risk assets like bitcoin to resume their upward trend. A round of applause for the political landscape, if you please!
Despite these tailwinds, the rally occurred on relatively thin volumes. Quite the paradox, wouldn’t you agree?
BTC Dominance Rising — But History Rhymes
Bitcoin dominance — the percentage of total crypto market cap made up by BTC — has now climbed above 54%, up from about 38% in late 2022. Historically, BTC dominance peaks before altcoins begin to outperform. During the 2017 and 2021 cycles, altcoin rallies lagged the BTC all-time highs by two to six months. Patience, dear friends, patience!
If history holds, the rotation from bitcoin into altcoins may already be underway. Ether’s recent outperformance — posting an 81% rally since its April lows — is a sign that sentiment is starting to spill over from bitcoin to the altcoin market. A delightful turn of events!
Altcoin Season Ahead?
While the term “altseason” is often thrown around carelessly, there are some real indicators worth watching:
Institutional Broadening: Allocators who entered BTC via ETFs are now evaluating broader exposure. Equal-weight or smart beta indexes that offer diversified exposure to Layer 1s, DeFi, and infrastructure tokens are gaining traction. Quite the buffet of options!
L1 Innovation and Narrative Cycles: Layer 1 ecosystems like Solana, Avalanche, and Near continue to develop real throughput improvements, which are increasingly relevant as user demand for on-chain activity returns. Innovation is the name of the game!
DeFi Resurgence: As of early June 2025, the total value locked in DeFi protocols has surpassed $117 billion, marking a significant recovery from the April slump. According to DeFiLlama, the total value locked across all DeFi pools has increased by 31% since its April lows. A veritable renaissance!
Risk Rotation: In traditional markets, as the bull market matures, investors rotate from large caps to small/mid caps. Crypto is no different. Bitcoin may be the starting point, but not the end. A classic case of “the more, the merrier!”
A Word of Caution
Although there are significant diversification benefits associated with crypto investing, it is also fair to say that crypto is still behaving largely as a risk-on asset class. As highlighted by the latest OECD report, the global economic landscape is becoming increasingly fragile. Heightened trade restrictions, tighter credit conditions, declining business and consumer confidence, and persistent policy uncertainty are all weighing on growth prospects and increasing the risks of a sell-off of speculative assets that includes crypto. Tread carefully, dear advisors!
Key Takeaways for Advisors
Expect Rotation: If prior cycles are a guide, altcoins may lag BTC but tend to rally with a delay. Advisors should consider this when rebalancing portfolios. Timing is everything!
Diversification Matters: Equal-weight crypto baskets or thematic exposures (e.g., Layer 1s, DeFi) may help capture upside without betting on a single asset. A wise strategy indeed!
Stay Objective: While price action often drives client interest, fundamentals — from network activity to developer momentum — should remain the north star for allocation decisions. Keep your eyes on the prize!
Bitcoin’s new all-time high is certainly a milestone. However, it may also be a signal: the next phase of the cycle could belong to the broader crypto asset class. Advisors who understand the timing and mechanics of market rotations are best positioned to guide clients through the next leg. Onward and upward!
– Gregory Mall, Chief Investment Officer, Lionsoul Global
Ask an Expert
Q: One year into the trend, how are Canadian banks and pension funds approaching bitcoin?
A: This recent quarter’s 13F filing reveals that Montreal-based Trans-Canada Capital has made notable investments in digital assets. They manage the pension assets for Air Canada, one of the largest corporate pension plans in Canada. The pension fund added a whopping $55 million in spot bitcoin ETF. Quite the hefty sum!
Institutional adoption of bitcoin has accelerated over the past year, driven by clearer regulatory guidance, the launch of spot ETFs, and increasing recognition of bitcoin as a strategic asset. Schedule 1 banks in Canada are holding more than $137 million in bitcoin exchange-traded funds, underscoring growing institutional demand and long-term positioning. A veritable gold rush!
Q: How might institutional accumulation affect bitcoin’s market dynamic?
A: Last year, ETFs bought approximately 500,000 bitcoin, while the network produced 164,250 new bitcoins through its proof of work consensus. This means ETF demand alone was three times higher than the newly minted supply. Additionally, public and private corporations purchased 250,000 bitcoin. As governments consider including bitcoin in their strategic reserve, other entities are exploring adding bitcoin to their corporate treasury. Quite the chess game!
Q: How will the Financial Conduct Authority (FCA) greenlighting retail access to crypto exchange-traded notes (ETNs) in the UK accelerate the retail & institutional adoption?
A: This marks an important moment for crypto products in the retail market as an asset class that reflects a broader shift in the UK’s regulatory stance toward digital assets. It is a complete reversal from a 2020 decision when the FCA banned crypto exchange-traded notes. ETNs will need to be traded on FCA-approved investment exchanges. The UK is shifting its approach to crypto as the government seeks to grow the economy and support a digital assets industry. They are sending a strong signal to institutional investors that the UK is positioning itself as a competitive player in the global crypto market. A bold move, indeed!
– Kevin Tam
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2025-06-12 19:16