Hey, its your host Maxim here, with the last newsletter of the year (its 18th in sequence).

To everyone who found their way to this newsletter - whether through meaningful conversation, a deal we closed, or because I’ve come to respect you as being - a warm welcome!

You’re here because together we share something rare in this industry: a refusal to accept convenient narratives when the data says something different.

2025 was supposed to be the year everything changed. Instead, it became the year everything fractured.

We entered this cycle riding euphoria. Trump would champion crypto. The SEC would capitulate. Institutions would flood in. Retail would finally get rich.

The narrative was neat, self-reinforcing, and almost entirely wrong.

What we got instead was a masterclass in liquidity manipulation, a decimation of retail capital, and a humbling reminder that even the most sophisticated models cannot predict human behavior when institutional incentives are perverse.

After talking with over 100+ trading teams and probably as many allocators throughout this year, the consensus is this: this year’s primary driver was liquidity extraction, orchestrated by Trump’s policy announcements and (failed) token launches.

January started with Trump’s $TRUMP token launch. The optics were magnificent. A sitting president creating his own cryptocurrency weeks before inauguration - it should have signaled confidence in the space. Instead, it created the first of many liquidity traps that would characterize 2025.

The launch sucked every available bid and liquidity out of Bitcoin, Ethereum, and the broader altcoin complex. Institutional capital rotated out of crypto entirely and into what was being promoted as a “safer” alternative: the president’s own token.
When insiders began dumping, the cascade was inevitable.

The structural problem became clear immediately: every time Trump made a policy announcement, whether positive or negative… he was essentially dictating crypto price action moving forward. And more importantly, he was using his announcements to time the extraction of liquidity from retail (and institutional of course) capital that had positioned itself based on his previous statements.

If January and February were liquidity extraction, April through November were pure market manipulation through policy announcements.

April 2 - Liberation Day: Trump announced his reciprocal tariff plan - 10% baseline on all imports, up to 50% on China, 25% on Canada/Mexico. Bitcoin fell 5.4% immediately. By the following week, it had collapsed from $126,000 to $82,000, which is a 35% haircut. Retail traders who had accumulated expecting a “Trump bull market” were liquidated.

April 9 - The Fake Pivot: Reports surfaced (later confirmed as intentional) that Trump was considering a 90-day tariff pause. Bitcoin bounced from $74,000 to $82,000+ in hours. The S&P 500 rallied 9.5%. Its best day since 2008. Retail capital rushed back in, convinced the volatility was over and the bull run would resume.

October 10 - The Final Extraction: Trump announced a 100% tariff on Chinese imports. In 24 hours, $19 billion in leveraged positions liquidated. Bitcoin fell 14%. Ethereum fell 12-20%. Altcoins fell 40-80%. The total liquidation cascade wiped out $65 billion in open interest - the largest single-day wipeout in crypto history, affecting 1.6 million traders.

This, dear readers, is not a market you want to participate, but rather a mechanism for systematically transferring capital to those with information advantage.

The pattern was unmistakable to anyone who had been paying attention: Trump would announce tariffs (market falls, retail liquidates, institutions accumulate at lows), then pause them (market rallies, retail FOMO back in, institutions dump), then announce again (repeat).

While Trump was executing his liquidity extraction strategy at the macro level, a secondary bubble was forming: the digital asset treasury mania.

By June, Ethereum, Avalanche, and others had announced treasury holdings. MicroStrategy’s “Strategy” became the focal point. A vehicle that promised Bitcoin exposure without custodial risk. Retail investors flooded in. The stock soared. Leveraged ETFs like MSTX and MSTU (2x daily Bitcoin exposure) opened and attracted billions.

What retail investors didn’t understand was the valuation mechanics.

When Bitcoin is at all-time highs and a treasury company’s shares trade at a premium to net asset value, that premium is an implicit short volatility position.

The moment Bitcoin corrected (and it did from $126,000 in October to $84,000 by November), the premium collapsed.

Strategy shares fell 60%+. The leveraged ETFs fell 80%+.

Retail investors lost approximately $17 billion trying to get Bitcoin exposure through these vehicles. This was yet another channel through which the year’s losses accumulated.

Here’s what should terrify anyone who entered crypto because of the “Trump bull run” thesis: every other asset class outperformed crypto in 2025.

What makes 2025 historically noteworthy isn’t just the size of the losses.

Its the setup.

Every fundamental was “right”:

-• A pro-crypto president was inaugurated
-• Institutional adoption metrics were at all-time highs (59% of institutions planning 5%+ allocations)
-• Regulatory clarity was improving (GENIUS Act, stablecoin frameworks)
-• Corporate treasury adoption was accelerating ($115 billion in public company Bitcoin holdings by September)

And yet crypto turned out to become the worst-performing major asset class.

Gold beat crypto by 70+ percentage points. Stocks beat crypto by 30+ percentage points.

Even the sector’s own institutional adoption wasn’t enough to offset the liquidity extraction happening at the policy level.

This is historically important because it proves something the industry has struggled to accept: crypto market efficiency is not determined by fundamentals. It is determined by liquidity flows and information asymmetry.

2026 will look nothing like 2025, which looked nothing like 2024.

The winners will be:

• Quant Teams with diversified alpha sources across different market regimes (statarb, market-neutral, volatility harvesting)
• Systematic Managers demonstrating consistency through regime shifts (the graveyard of one-cycle heroes is full)
• Multi-Manager Platforms democratizing access to institutional-grade strategies via SMA frameworks
• Capital allocators who learned that that excessive leverage is a wealth destroyer.

Institutional capital will be reallocated away from directional exposure and toward resilience.

By December 2025, the institutional demand for quant strategies is clear:

At Quants.Space, we are helping allocators to build world-class portfolios.

With over 100+ institutonal-grade SMA managers to choose from, we believe we could provide fund managers unique edge to outperform industry peers and we have proven this dozens of times.

2025 was the toughest year for crypto in a very long time.

Not because of fundamentals, but because of liquidity mechanics and information asymmetry.

The next cycle will be defined by managers and allocators who internalized this lesson.

Those who still believe in directional narratives, political promises, or single-edge strategies have another graveyard to visit.

The opportunities in 2026 will be significant.

The capital allocated to properly constructed quant strategies is accelerating.
The demand for managers who can demonstrate multi-regime consistency is greater than supply.

But the bar is higher now. 2025 proved that conviction on narratives is the fastest path to destruction.

This strategy exhibits very strong absolute performance driven by aggressive participation in high-volatility market regimes. The equity curve shows clear step-functions of expansion, punctuated by sharp but finite drawdowns — characteristic of a system that presses exposure when conditions align and accepts volatility as a cost of return generation.

live period: feb 29, 2024 – dec 01, 2025
cumulative return: +404.7%
cagr: +151.4%
volatility: 36.1%

risk-adjusted metrics remain strong given the volatility profile:

From an allocator’s lens, these figures confirm that returns are not purely leverage-driven randomness - the system demonstrates statistical edge, albeit with meaningful variance

max drawdown: –22.1%
drawdown duration: 50 days
max drawdown duration: 116 days
drawdown of mdd: –15.7%

The heatmap reinforces the regime-dependent nature of the system:

2024: +143.4%

2025: +107.3%

This asymmetry confirms that a small number of months drive a large share of returns - a classic high-beta, high-edge structure.

Quants.Space is institutional discovery engine for systematic trading strategies.

With over 100+ independent world-class quantitative trading teams to choose from, each has vetted track records and unique alpha sources, teams coming from all over the world.

Our mission is simple: connect institutional capital and allocators directly with best-in-class quant teams, all within a secure Separately Managed Account (SMA) framework.

If you are an allocator active in the SMA space and want access to a curated pipeline of strategies, please get in touch at [email protected].