Greetings from the post-Paris Blockchain Week era.

It was good to catch up with so many of you, and even better to put faces to names I had only known over email and Telegram for months. The conference was well organized, the agenda was tight, and Paris… Paris is basically a museum you get to walk through between meetings. For a city that hosts institutional gatherings like these, it is hard to beat. I had been meaning to go for years and finally pulled the trigger this time. Worth it.

But I want to talk about what I actually saw on the floor. Because if you were there, you probably felt the same thing I did. And if you were not, you need to hear it, because it tells you where this market is going over the next 18 months.

On one side of the building, the quant trading density was surprisingly thin. Fewer systematic teams than I expected. Fewer of the allocators we normally trade emails with every single week. The institutional SMA corner of the industry - the part that keeps this newsletter running - was quieter than it should have been for an event of this scale.

On the other side of the building, the banks were EVERYWHERE.

BNP Paribas. JPMorgan. Morgan Stanley. Goldman Sachs. HSBC. Crédit Agricole. Every single major bank you can name had a presence - whether through senior executives on panels, private roundtables, or simply walking the floor and collecting cards. Pension funds were there too, more than I had seen at any previous crypto event. Not in force, not with check books open, but there, showing their faces.

It matters more than most people reading this realize.

What we witnessed in Paris was not a bull market conference. It was a reconnaissance mission. The institutions that will ultimately define the next cycle of crypto capital allocation were not there to deploy - they were there to learn. To understand who the players are. To figure out which infrastructure they can actually plug into.

And this is exactly how institutional capital has moved for the last forty years. Slowly. Then suddenly.

They will come. It will just take time. Rome was not built in a day, and the institutional allocation wave into crypto will not be either. But make no mistake: the foundation is being poured right now, under the glass pyramid of the Louvre, while most of the retail-facing crypto industry was busy arguing about their rugged meme coins somewhere else.

We are growing in size. We are growing in credibility.

We are just doing it at a pace that feels frustrating if your P&L is measured in weeks instead of years.

Now, for the part I really wanted to write about.

The whole flight back from Paris, I kept thinking about one question. And I want to share it with you because it reframed how I am thinking about new entrants into this space.

If I were starting from scratch today - knowing everything I now know about SMAs, about pods, about multi-manager structures, about what it actually takes to run a crypto trading business at institutional scale - what would I build?

The answer surprised me. And it is going to be unpopular with a lot of the founders who subscribe to this newsletter.

I would not build a pod. I would not run SMAs. I would start a fund of funds.

Let me explain why - btw this is me being honest about what the math actually looks like for someone entering this market in 2026.

If you have been reading this newsletter for a while, you already know I spend a significant portion of my time talking to trading teams, multi-managers, and allocators. Every single week. I sit at the intersection of supply and demand in this market, and I can tell you with complete conviction: the entry point for SMA-based pod structures is brutally high right now, and it is getting higher.

Here is what it actually takes. The real version.

You need elite skill. Not good skill. Not "we have a strong Sharpe on our reported dailies" skill. You need the kind of skill that can navigate regime shifts, alpha decay, correlation regimes, and liquidity crunches in a market that punishes mistakes in milliseconds. Most of the people who entered this space in the last 18 months thinking they had that skill have since discovered they did not.

You need luck. I know quants hate when I say this but it is true. Even the best teams in this industry have gone through 6-to-12 month stretches where nothing worked. You need to have capital cushion, investor patience, AND market conditions all align long enough for your edge to actually express itself.

You need a real team. Not one founder wearing five hats. You need dedicated people for research, execution, operations, infrastructure, monitoring, and business development. If you try to do this alone, you will miss something critical - and in this market, missing something critical does not mean a bad quarter. It means a terminal event.

You need capital to lose before you earn a dollar. Setting up a proper fund structure - legal entity, fund administrator, audit framework, compliance wrapper, technology stack, custody solutions - will cost you around $100,000 minimum in setup fees. Then add $10,000 per month in fixed operational costs bare minimum before you pay a single salary. Now layer in the people. Research analysts, risk manager, ops, BD. You are looking at a meaningful six-figure burn before you generate a dollar of performance fees.

And here is the fked up truth - you are not guaranteed to make anything back. Because by the time you have finished setting up your pod structure, researched and vetted external managers, negotiated SMA terms, and actually deployed capital, the market regime you originally designed the portfolio around has already shifted. You are now guessing what the market does next - with other people's money, on a structure you spent a year building. Welcome to the industry.

This is not a hypothetical scenario, too, btw. So yeah good luck out there.

Now let me walk you through what I would actually do.

Instead of building a pod from scratch and trying to source, vet, and manage external quant teams via SMA mandates - which is the hardest version of this business - I would set up a fund of funds that allocates directly into already-existing, already-running, already-credible crypto hedge funds.

The math here works better, by orders of magnitude.

Cost minimization. The structural overhead collapses. You are not paying fund admin fees at the strategy level, you are paying them once at the fund-of-funds level. You are not building trading infrastructure, exchange connectivity, risk systems, or signal pipelines - you are buying access to existing ones that have already been paid for, by teams that have been running them for years.

People minimization. You do not need a 10-person trading team. You need a small, sharp investment team that knows how to evaluate managers, structure allocations, and manage drawdown risk at the portfolio level. A good FoF can be run by a team a third the size of a comparable pod structure.

Subscription fee avoidance. No Bloomberg terminals per desk. No duplicate licenses for execution platforms. No paying for 14 different data feeds you need because you are subscribing to alpha generators. You are a LEGIT capital allocator, not a sub-trader.

Knowledge leverage. This is the one nobody talks about. When you allocate into an existing fund, you are buying into years of accumulated knowledge, infrastructure scars, and institutional memory that took that team 3-5 years to build. You are not trying to recreate it from scratch. You are compounding on top of it.

Better structural fit. Most of the serious funds operating in this space today are better structured than the pod you would build from scratch. They have real audits. Real admins. Real compliance. Real risk frameworks. By the time a new entrant builds all of that, the established funds have already iterated through three versions of the same systems.

Outperformance probability. A well-selected FoF portfolio is mathematically more likely to outperform a new SMA pod manager in the first 24 months. Why? Because the selection risk of picking 8-10 established funds with verified track records is lower than the execution risk of building a brand new pod structure while simultaneously trying to source external managers. One is a portfolio construction problem. The other is a startup execution problem layered on top of a portfolio construction problem.

If I were entering this market in 2026 with $20-50M of committed capital and a clean sheet of paper, I would run the FoF. Every f-ing time.

Now here is where it gets interesting for those of you who are already running funds.

I am seeing something right now in the market that I want to flag explicitly, because it is creating one of the cleanest structural opportunities I have seen in the last 18 months.

Funds that are struggling to raise additional capital at the fund level are increasingly opening up SMA structures for large clients.

If you are running a crypto fund in this market, you have almost certainly felt the capital raising environment go from difficult to brutal. Allocators are sitting on their hands. Existing LPs are not topping up. New LP conversations are taking 6+ months to close, if they close at all. This is the reality of the bear market we are in.

But what many of these same allocators will do - when they will not commit to your commingled fund - is deploy through an SMA wrapper. Ticket sizes in the $5M to $10M range, sometimes larger. The allocator gets custody control, transparency, and tax efficiency. The fund manager gets additional AUM they would not otherwise have captured.

I am seeing more and more funds do this, and I want to say clearly: well done to all of you who are adapting. This is exactly the kind of structural flexibility the current market rewards.

If you are a fund in this position - solid track record, real infrastructure, struggling only because the broader fundraising environment is frozen - and you are considering opening up your SMA structure for institutional tickets in the $5-10M range, please reach out. This is not strictly our niche at Quants.Space, but we have a deep network of allocators who are specifically looking for exactly this kind of setup right now. We can make the introductions.

[email protected] - as always.

I want to close this edition with something that might feel uncomfortable, because it is.

We are still in a deep bear market.

Bitcoin is trading around $74K as I write this - up from the $67K handle but still down roughly 40% from its October 2025 peak. The recent rally has been driven primarily by short covering in derivatives, not by genuine spot demand returning. Spot volumes remain near multi-year lows. Wall Street analysts covering crypto are - correctly, in my view - calling this a rally within a bear market, not a reversal.

And the macro backdrop is getting uglier, not better. Geopolitical conflict is intensifying. The war situation could escalate in the coming weeks in ways that none of our models are well calibrated for. Oil pressure, dollar strength, a locked-up Fed, and unresolved tariff dynamics are all combining into a risk environment that will punish overconfident positioning.

My conviction has not changed: we are experiencing a pullback rally inside a deeper bear market, and I expect this grinding regime to persist through the summer. My target zone for Bitcoin on the downside remains in the mid-$50Ks before we see a genuine, structural bottom. That is a an assumption based on cycle structure, derivatives positioning, and the macro setup.

So please: manage your risk accordingly.

This is not the time to lever up because you caught one good week. This is the time to preserve capital, stay nimble, and position yourself for what comes AFTER this drawdown resolves.

Because the institutions will come. The banks we saw walking the floor in Paris will eventually write the checks they are currently just taking notes about. The allocators who are sitting on their hands today will eventually deploy.

But the teams - and the allocators - who are still standing when that happens are the ones who survived this environment with their capital, their credibility, and their structural integrity intact.

Be one of those.

Stay patient. Stay honest. Stay alive.

See you next week as always.

Quants.Space is an institutional discovery engine for systematic and discretionary trading strategies.

With over 130+ independent world-class quantitative and discretionary trading teams to choose from, each with 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 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, or if you are a fund looking to open up SMA capacity for institutional tickets, please get in touch at [email protected].