Before we start: I genuinely appreciate every single reader, and everyone who sends feedback on these Monday write-ups. This letter exists purely to serve as many people as possible with transparent, thoughtful ideas about the SMA niche. If it's valuable to you - share it with one friend who'd be intrigued by it. That's the entire growth model, and it's kept us honest for a year.

Now. Today I'm going to repeat myself, because the market is finally agreeing with me.

I've said it for weeks and I'll say it plainer: the market looks like it's bottoming - and whether it grinds a bit lower first genuinely doesn't matter. This is an accumulation setup. The risk-reward clearly favors buying, and in hindsight, I believe this will look like an obvious entry region. Add that autumn has historically been kind to digital assets, and the picture shows itself.

The Clarity Act just missed its window: the Senate punted the vote to September after failing to get it done before the August recess, and the market's odds on it passing this year have collapsed from 82% in February to around 28%.

But understand what that is: a catalyst, not a cause. The market isn't waiting on a bill. The market is exhausted - and exhaustion is the actual precondition for the next leg.
It always arrives the same way: when everyone is tired, burned, and ready to throw in the towel, like majority of you reading this.

Which brings me to what I'm actually seeing… and its this:

Let me describe the sentiment across my calls in one sentence: everyone is wasted, and nobody trusts anyone or anything anymore.

A lot of people got burned. Allocators who spent one and a half years hunting for the best teams - the alpha-capturers, the verified performers - have watched even those teams go flat. Because the truth is: the whole market is flat. Almost nobody is making money consistently. The pattern repeats everywhere - three, four good months, then the same nothing. Trust in teams is eroding, trust in track records is eroding, and staying optimistic is getting harder for everyone by the week.

So if you're sitting there feeling like a stupid monkey who can't produce returns - hear this clearly: absolutely everyone is wrecked. There are no exceptions, and there is no one to blame. You're not uniquely broken. The environment is.

And the context that should actually calm you: we haven't even seen the worst. The 2022 bottom was materially worse than this… and shortly after it, a new bull started and everything got (SO much) better.

I believe the same rhyme plays out here. It's never the same - it's always different in the details - but the ideology of markets rhymes. I feel it in my bones that a few months from now, things start changing and capital starts flowing again. That's a belief, clearly labeled; you know my record on timing. But it's an informed one.

People keep asking me: "What do you see? How is everyone actually doing?" And despite sitting in the middle of everything - a seat I genuinely love - I'm not even the best answer to that question. Because you can see the whole picture yourself, with two names.

Look at the funds with the best infrastructure in the industry.

Wincent - by reputation, something like the Renaissance Technologies of digital assets; huge AUM, closed fund, not taking new investors, full credibility, exceptional at what they do - is netting around 10% this year, in a year where their normal is closer to 40%.

Nickel Digital - institutional-grade, multi-strategy, credible enough that Jump Trading bought a minority stake in them - is, from what I'm hearing, sitting in drawdown.

Use them as your benchmark. That's the entire exercise:

If the most equipped funds on the planet - unlimited infrastructure, the best talent, the deepest structures - are not making money, why exactly did you expect that you would?

That question or the answer isn't by any means meant to depress you. It's meant to recalibrate.

Your flat six months isn't evidence you're a fraud; it's evidence you're in the same ocean as everyone else. And here's the quiet flip side that should genuinely encourage the good teams: some (and many) SMA teams are currently making more money than these giants. Small, nimble, specific - in a starved market, the David-sized edge sometimes eats when the Goliaths can't. That's worth knowing about yourself.

I will leave this section with a quote from a book.

"One of the mistakes I made in those early years was that when nothing was going on, I forced marginal trades, wasting mental and financial capital, instead of waiting for the unicorn that would eventually show up.

Learning from that mistake was one of the pivotal lessons in my trading career.
I now know that 90% of the time, the market is not going to provide any opportunities, and 10% of the time, I will make 90% of my profits.”

Now, the thing I can't stop thinking about - the scale lesson of the year.

Last week, gold pumped about 4.5% in a single day, adding roughly $1.3 trillion to its market cap in one session. That one-day gain is almost exactly the entire market capitalization of Bitcoin - while BTC itself sat near $64K, barely moving.

A 4% candle in gold worth an entire Bitcoin, in an afternoon, pretty much.

Do you understand what that means on the global scheme of things? It means the sum total of everything we obsess over - every chart, every team, every allocator, this whole industry - is one ordinary risk-on day in a real asset class.

And it means the reverse: getting Bitcoin back to its all-time high is, at global scale, a rounding error of capital rotation. If a group of very large institutions ever puts that into an action plan, the entire distance we've spent eighteen months grieving gets crossed in weeks. The size of the pond is not the problem. The direction of the tide is. And tides turn. Fast.

Meanwhile, back in our pond, the thing that is happening in real time: the market is cleaning itself.

Around 80% of teams aren't producing anything substantial enough to allocate to right now - not because they're stupid, but because their alphas have dried up in their nature.

And the consequence is arriving in my inbox weekly: teams are quitting. In fact, we just added a new section to the quants.space platform that tells the story in one number: over 30 teams that were active within just the past year have given up. Not raising, strategies not working, towel thrown. Maybe some come back. Maybe not. Idk.

Here's why that's good news if you're still standing. The selection is evaporating. Every team that exits thins the field you compete in - and the larger tickets and AUM concentrate into fewer, stronger hands. New teams will come to replace the fallen, but they'll need year(s)+ to build track records. Which means the survivors of this winter inherit a structurally emptier market at exactly the moment capital returns.

It's the same sentence I've written all year, and it's still the only sentence that matters: it's all about staying in the game.

But moments like this are also when the industry should innovate - because the current pain is partly self-inflicted by how we do things. Let me throw out one idea that occurred to me literally while writing this. Take it as a first sketch.

Think about how testing works today. An allocator puts down the standard 100K test ticket, knowing full well that nobody earns anything on 100K anyway.
The test exists purely to understand the strategy: how it trades, how it behaves, whether it fits the portfolio. And yet that allocator is carrying real risk for that information: a minus 6–8% drawdown on the test is five or six grand gone, on a position that was never meant to make money. So test periods get cut brutally short - one and a half months, "we didn't like what we saw, test's over" - and everyone walks away having learned almost nothing, slowly, expensively. Repeatedly.

So flip the structure. Pay the team a retainer instead of feeding them risk capital.

Allocate the absolute minimum the strategy needs to run - 20K, say, instead of 100K - and pay the team 1–2K a month as a retainer. Effectively, you're renting the software. The team's costs are covered with a little margin on top - their bills get paid, which is the honest reason test tickets exist at their current size anyway - and the allocator's capital-at-risk collapses to almost nothing.

Now run the math on what that unlocks. Ten strategies under test simultaneously for roughly 10K a month in retainers. A typical test runs two or three months - call it 30K total to properly evaluate ten teams, with minimal drawdown exposure, no fear of the capital, and no pressure to cut a test short to stop the bleeding. Compare that to a million deployed across ten nervous 100K tickets. The retainer model lets allocators test faster, wider, and calmer - and gives teams guaranteed revenue during exactly the phase where they currently earn nothing.

This mainly fits directional strategies - HFT and the like don't really need extended testing; their nature shows quickly.

It's one random idea from one Sunday night; there are surely a hundred better ones on how to innovate.

But that's my point: the last two years made everyone cautious, selective, and slow (especially now during the summer) and the fix isn't waiting for the market to improve.

It's redesigning the mechanics so that caution stops costing this much. Win-win structures exist. Someone just has to normalize them.

Maybe I'm missing something. But fund structures are a different beast - different investors, different asset class dynamics, different everything. The allocators who invest in funds are a completely different universe from SMA allocators, and honestly, I don't personally know too many of them. The demand I see every single day is the opposite: allocators want SMAs. They want performance in their own accounts. They don't want a black box - even a fund-admin-verified black box. Transparency in your own account is the entire value proposition of this niche.

And here's the irony: most of the capital we work with are funds themselves - funds allocating outward, hunting returns for their own investors. Everyone wants to have a fund; the money, meanwhile, wants SMAs. Draw your own conclusion about which side of that trade to build for.

So: don't give up. It's not much longer to wait - most likely, things improve soon. That's a hope, not a guarantee; nobody can give you guarantees in this business, least of all me. But I remain positive. I think everything's going to be all right - especially for those who managed to stay in the game.

Stay in the game long enough to succeed. That's the whole formula. There's nothing else.

If you know an exceptional trading team - or an allocator - connect us.

We reward you properly for any introduction that turns into business: [email protected].

Stay patient. Stay honest. Stay alive.

See you next week.

Quants.Space is an institutional discovery engine for systematic and discretionary trading strategies — 130+ independent, world-class quantitative and discretionary trading teams, each with vetted track records and unique alpha sources, plus a dedicated Emerging Managers sector for early-stage teams. Our mission is simple: connect institutional capital and allocators directly with best-in-class teams, all within a secure Separately Managed Account (SMA) framework. If you're an allocator active in the SMA space, or a team opening SMA capacity for institutional tickets, get in touch at [email protected].