This week's edition of Crypto Long & Short by Gregory Mall from Lionsoul Global emphasizes that the main decision in crypto allocation revolves around size rather than asset selection.
By Gregory MallUpdated Jul 22, 2026, 3:11 p.m. Published Jul 22, 2026, 3:09 p.m. 4 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on SummaryShowYou're reading Crypto Long & Short, our weekly newsletter providing insights, news, and analysis for professional investors. Sign up here to receive it every Wednesday.
Welcome to our institutional newsletter, Crypto Long & Short. This week:
- The most challenging allocation question isn't about what to hold, but rather what one can endure holding, according to Gregory Mall.
- Key headlines that institutions should monitor by Francisco Rodrigues.
- “BTC ETF Flows Turn Positive After 8-Week Slide” in the Chart of the Week.
Thank you for being with us!
Understanding Convexity vs. Survival: Essential Insights for Crypto Risk Allocation
- By Gregory Mall, chief investment officer, Lionsoul Global
Discussions around crypto allocation often revolve around asset selection. However, a more crucial question is what an investor can realistically handle in their portfolio.
Historically, cryptocurrencies operated outside traditional finance, but this landscape is shifting. The introduction of spot bitcoin and ether exchange-traded products has created a regulated pathway for institutional investment, enabling swift capital inflows and outflows depending on market sentiment. Additionally, stablecoin transactions are now integrated into short-term Treasury markets, linking cryptocurrencies more closely with conventional asset classes.
This integration has implications that many investors underestimate. In stable market conditions, diversification is more effective than during periods of stress. During risk-averse phases, correlations between different tokens tend to increase, diminishing the protective benefits that investors expect. Interestingly, holding a larger variety of coins doesn’t necessarily equate to reduced risk. Effective risk management is about controlling exposure rather than merely expanding the number of assets.
The Importance of Rules Over Emotions
The most significant error in the crypto space is often behavioral: abandoning a well-thought-out strategy at the most inopportune moment, such as selling during a downturn that one’s portfolio wasn’t structured to endure. This highlights the need for systematic discipline. Historical data on time-series momentum indicates that rules-based, trend-following strategies can mitigate losses without the necessity for predicting market movements. In the highly reactive crypto market, maintaining this discipline can be just as vital as the actual investment.
Three Portfolio Archetypes
Most investment portfolios can generally be categorized into three types:
- Single-asset bitcoin. Offers maximum convexity but also carries the highest drawdown risk.
- A large-cap basket. Provides some diversification, but often comes with increased volatility and a more turbulent investment journey.
- A dynamically managed sleeve. Comprises cash and bitcoin, rebalanced based on market signals, trading off some potential gains for a smoother experience.
None of these options is categorically superior; each represents a unique approach to the same underlying question: how much risk can you tolerate while remaining invested?
This distinction is important, as significant losses that undermine confidence can be far more damaging than a series of lackluster returns. Although returns can vary across these strategies, the impact of drawdowns is what truly matters in practice. A well-sized investment can withstand volatility while still capturing long-term growth, whereas an oversized position may falter even if it holds the right asset due to its inability to endure its own downturn.
Therefore, for any allocator, the primary consideration should be about size rather than just selection: determining how much bitcoin a portfolio can withstand without collapsing under pressure, and whether a straightforward bitcoin investment or a more structured approach is the right fit.
Weekly Highlights
The ongoing trend in the cryptocurrency sector is the integration of blockchain technology into regulated financial market frameworks. The DTCC has successfully executed live tokenized-securities trades with leading Wall Street firms, while both the U.S. and U.K. are advancing towards unified regulations for tokenized finance.
- DTCC initiates live trading of tokenized securities on Wall Street: The Depository Trust & Clearing Corporation (DTCC) has processed live transactions involving tokenized stocks, ETFs, and U.S. Treasuries with firms like JPMorgan, Goldman Sachs, BlackRock, and Vanguard.
- U.S. and U.K. present joint strategy for tokenized finance: The two nations have issued a 10-point framework addressing tokenized securities, cross-border stablecoins, and digital money infrastructure, with plans for coordinated settlement rules and tokenization pilot projects.
- Japan officially redefines crypto as a financial asset: New legislation in Japan reclassifies cryptocurrencies from a payments-centric model into a financial-instruments framework.
- Bank of Korea set for live CBDC transactions with nine banks: South Korea’s central bank will launch the second phase of its digital-won pilot in September, allowing major banks to issue and manage tokenized deposits using central bank infrastructure.
- U.S. crypto market structure legislation faces renewed Senate opposition: Several Senate Democrats have intensified their resistance to the Clarity Act, urging for stronger measures to address government officials' interests in cryptocurrency.
Chart of the Week
Ending the Outflow Streak: BTC ETF Flows Shift to Positive After 8 Weeks of Decline
BTC ETFs experienced eight consecutive weeks of net outflows from May 11 to June 29, totaling approximately -$8.25 billion during that period, before reversing to two weeks of net inflows (on July 6 and July 13). During this timeframe, BTC's average weekly price increased from around $61,300 (the last week of outflows) to approximately $64,200 (the most recent week), reflecting a rise of about +4.6%.
Engage with Us.
- Listen: Did you know that CoinDesk data encompasses over 300 exchanges, 10,000+ coins, and 300,000 trading pairs? Explore our comprehensive API.
- Read: In Crypto for Advisors, Kriti Bansal from Alphapoint discusses the rise of AI-driven fraud and offers a framework for financial controls to help advisors protect client assets against advanced impersonation tactics.
- Watch: “Bitcoin ETFs, the CLARITY Act & Wall Street’s Crypto Push.” David LaValle joins Remy Blaire, MBA on FINTECH.TV.
- Engage: CoinDesk’s upcoming Policy & Regulation event will take place on September 22 in Washington, D.C. Check out the preliminary agenda.
Looking for more? Get the latest crypto news from coindesk.com and market updates from coindesk.com/institutions.
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Crypto Flows, Share and the Selective Rotation
Crypto Flows, Share and the Selective Rotation
Market dynamics have shifted since June, but Binance retained its market share (~55% of user funds, ~24% of spot) while experiencing net inflows in early July, contrasting with outflows in the broader market.
By CoinDesk Research1 hour agoMarket dynamics have shifted since June, but Binance retained its market share (~55% of user funds, ~24% of spot) while experiencing net inflows in early July, contrasting with outflows in the broader market.
Why it matters:
Market dynamics have shifted since June, but Binance retained its market share (~55% of user funds, ~24% of spot) while experiencing net inflows in early July, contrasting with outflows in the broader market.
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