June 2023 – Quarterly Update

Key Takeaways from Today’s Letter

  • How We Are Positioning Ourselves Ahead Of The Coming Bull Market
    • Despite A Tumultuous 2022, Crypto Adoption And Institutional Participation Are Rising, And We Are Positioning EXPAAM To Best Capture Institutional Demand
    • Critical New Team Members Have Been Added To Accomplish This By Pursuing Key Initiatives Across Manager Selection, Sales & Distribution, and Asset Allocation Strategy
    • Market Commentary
    • Showcasing Our Unique Brand & Culture Through The Introduction Of Our New Website
  • EXPAAM Will Be Hosting Quarterly AMAs Following Our Quarterly Letters, With Our First In September Of 2023. Stay Tuned!

Download our Q2 2023 update as pdf here.

Preparing for the Next Bull Market

Critically important changes are being implemented within EXPAAM to position us to capture institutional demand ahead of the next bull market, and we wanted to lay them out here to give you all perspective on our strategy and our journey as an investment manager since our inception in November of 2021.

For these changes to resonate, it is helpful to illuminate how crypto development and adoption have continued to grow over the past 18 months, despite a fluid world.

Crypto Development & Adoption Over the Past 18 Months

2022 reflected an historic decline in global investment wealth across nearly every asset class:

  • US Treasury bonds had their worst year since the birth of The United States,
  • The average 60/40 portfolio was down ~23%, the worst year for balanced portfolios since 1931,
  • There were more negative trading days in the S&P 500 than even during the Great Financial Crisis,[i] and
  • The IPO market experienced its worst performance since 1990,[ii]

When you add negative surprises like a war in Ukraine, FTX, Celsius, and Terra Luna to the mix, it is easy to incorrectly assume that crypto adoption would have ground to a halt or even reversed.

When you add negative surprises like a war in Ukraine, FTX, Celsius, and Terra Luna to the mix, it is easy to incorrectly assume that crypto adoption would have ground to a halt or even reversed.

But the data paint a different picture.

Crypto developers have increased in number by 297% since 2018.[iii]

Source: Electric Capital 2022 Developer Report

Crypto asset users grew 44% between December of 2021 and December of 2022, despite all of the negative headwinds affecting the space.[vi]

52% of the Fortune 100 companies have pursued crypto, blockchain or web3 initiatives since the start of 2020. 83% of surveyed Fortune 500 executives who are familiar with cryptocurrency or blockchain say their companies have either current initiatives or are planning them.[v]

Source: Coinbase “The State of Crypto: Corporate Adoption”


These investments are motivated by more and more transparent use cases that create value for shareholders.[vi]

Interestingly, the subset of the companies with the greatest number of initiatives – JP Morgan Chase, Goldman Sachs, Citigroup, Bank of America, Amazon, Microsoft, Alphabet, and Coca Cola – are some of the very same companies whose senior leadership have publicly condemned digital assets the most. The reality is that these companies realize they must invest in the space to avoid being disrupted and forthcoming regulation will allow them to monetize the opportunity.

In a major global survey of professional investors conducted by Fidelity throughout 2022, 81% of respondents revealed they believed digital assets should be part of a portfolio and 74% of respondents planned to buy or invest in digital assets in the future.[vii]

There is enormous white space, particularly across pension funds, endowments, and family offices. This explains why the market capitalization of the space is still small, despite wide-ranging, vocal interest in exposure.

Large institutional investors have been slower to make allocations in large part due to uncertainty around the regulatory environment.

In a similar survey Coinbase conducted in June of 2023, 87% of the surveyed Fortune 500 executives say a lack of clear rules, for crypto, blockchain, and Web 3 tech is a top barrier to investment and adoption. 92% agree that policymakers should develop new rules for these new technologies, instead of enforcing older rules developed for older technologies.[viii]

For those investors who have sought exposure to digital assets, capital has largely been directed to Bitcoin and Ether. Alt coins remain a major source of potential investment as risk appetite returns to the space.[ix]

But regulation is already here!

In Q2 of 2023, European Union finance ministers voted unanimously to adopt the bloc’s Markets in Crypto-Assets regulation (MiCA). The legislation sets clear regulatory guidelines and requirements for using cryptocurrencies and related services and activities across the entire European Union. The scope of the legislation covers a range of cryptocurrencies, digital assets, utility tokens and stablecoins and will be active in 2024.[x]

In May of 2023, The UAE introduced its crypto regulatory framework, giving locals a concrete licensing regime for digital asset issuers and service providers through the Virtual Asset Regulatory Authority (VARA).[xi]

Similarly, on June 1, the Virtual Asset Service Provider (VASP) of Hong Kong began accepting license applications from exchanges to approve retail trading under its own regulatory framework.[xii]

In fact, since the collapse of FTX and what we believe to be “the bottom” across a number

of digital assets for this cycle, institutional and governmental initiatives and adoption have surged and painted an increasingly bright future for cryptocurrency:

  • In November of 2022, JPMorgan Chase completed its first-ever DeFi transaction on a public blockchain, working with the Monetary Authority of Singapore (MAS) and other Singapore-based financial institutions, with a modified version of the Aave protocol’s smart contract code.[xiii]
  • In May of 2023, Goldman Sachs, Microsoft, Deloitte and others launched a bespoke blockchain (The Canton) network designed specifically for financial institutions.[xiv]

The following occurred in the last few weeks alone![xv]

  • HSBC announced it was offering Bitcoin and Ethereum ETFs to its customers, making it the first bank in Hong Kong to do so.[xvi]
  • Mastercard announced the launch of a “blockchain app store” and that it has expanded its Engage program to help bring cryptocurrency card programs to market.[xvii]
  • Julius Baer announced it is expanding to Dubai where it will start to offer crypto services.[xviii]
  • Similarly, Andreessen Horowitz announced it was choosing London for its first non-US base in light of its crypto-friendliness.[xix]
  • Bank of America released a report stating that “tokenization is likely to transform infrastructure and financial markets” over the next 15 years and may develop into a $15 TRILLION market.[xx]
  • South Korea passes an inaugural standalone crypto bill, titled the Virtual Asset User Protection and integrates previously discussed crypto-related bills.[xxi]
  • The Chairman of the House Financial Services Committee within the US House of Representatives released a discussion draft on legislation providing “a statutory framework for digital asset regulation intended to provide clarity, fill regulatory gaps, and foster innovation, while providing adequate consumer protections.” Discussions are expected to commence in the US House of Representatives in July.[xxii]
  • The Bank of England and the Bank for International Settlements Innovation Hub London Centre published a report concluding that a well-designed digital currency could “enable a robust ecosystem to foster innovation, and help meet the future needs of a more digitised society.”[xxiii]
  • The EDX Crypto Exchange went live and is trading Bitcoin and Ether. This is currently backed by Charles Schwab, Fidelity and Citadel.[xxiv]
  • Deutsche Bank applied for a Digital Asset License to operate a custody service for cryptocurrencies.[xxv]
  • The US Fed Chair, Jerome Powell, spoke on Capitol Hill and said: Cryptocurrencies, like Bitcoin, have “staying power”.[xxvi]
  • The International Monetary Fund released a report on crypto’s usage across LATAM and the Caribbean. Some comments from this report: “If well designed, CBDCs [Central Bank Digital Currencies] can strengthen the usability, resilience, and efficiency of payment systems and increase financial inclusion in LAC [Latin America and the Caribbean].” “While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run.”[xxvii]
  • The SEC approved the first leveraged Bitcoin futures ETF.[xxviii]
  • The Bitcoin ETF by Jacobi Asset Management — a London-based multi-asset investment platform — is set to debut on the Euronext Amsterdam exchange in July 2022.[xxix]
  • The U.S. Southern District Court of New York ruled that certain sales and distributions of XRP tokens by Ripple and its executives were not investment contracts – and therefore don’t break securities laws – as the SEC alleged in a 2020 civil lawsuit.[xxx] This extremely significant precedent could help pave the way for major companies like Coinbase in their own cases with the SEC concerning which crypto projects may or may not be securities and spearhead further adoption in the United States.
  • And 7 issuers, following BlackRock, filed applications for a spot BTC ETF with the SEC. The list includes Fidelity, Ark Invest, Wisdom Tree, Valykrie, and InvestCo.[xxxi]

Of all these announcements, perhaps none is as exciting as the spot bitcoin ETF application by Blackrock – who has been rejected once in a history of literally hundreds of ETF applications and is rumored to have been asked to apply – due to the liquidity it would introduce to the same professional investors looking for regulated vehicles, managed by exemplary counterparties, through which to gain exposure. A spot ETF would be a night-and-day improvement over futures-based alternatives (which often trade at a premium to spot and have an associated basis risk, and rollover inefficiencies) as well as the Grayscale Bitcoin Trust (a closed-end fund that is not redeemable for actual BTC, charges 2% fees despite its passivity, and is currently trading at a sizable discount to NAV).

Everywhere we look, investing and operating companies are building out new trading desks and infrastructure for Bitcoin and crypto in response to global adoption that continues no matter what mainstream news or politicians may say to the contrary.

All that remains is for liquidity to return alongside regulation, and we believe we will see asset prices melt upwards.

Raoul’s work at GMI suggests the turning point is coming very soon. The GMI Financial Conditions Index suggests that global liquidity will rise by 20% YoY by the end of 2023.

Source: GMI

The ISM suggests it will keep rising into 2025.

Source: GMI

Changes Within EXPAAM

We strongly believe that our flagship fund of funds, EADAF, will excite both professional investors alongside the registered investment advisors (RIAs) who represent the clients who will drive future ownership across digital assets.

It is clear to us that these prospective stakeholders have come to realize that the core elements that make an asset class investible – namely, sound regulation, markets that are deep and liquidity, robust use cases, global adoption, objective valuation methodologies – are all present and durable across the cryptocurrency landscape.

Crypto may be a small market relative to the most liquid markets of the world, but they are large enough to allow for positions of size relevant for institutions. Moreover, high volatility means that a small allocation in dollar terms would give meaningful exposure on a risk-adjusted basis.[xxxii]

More importantly, institutional investors are realizing that portfolios including non-correlated assets such as cryptocurrencies and digital assets have provided superior and higher risk-adjusted returns. Finding actively managed strategies to capture this excess return across the cryptocurrency and digital asset landscape, however, is challenging. This challenge is heightened by the concentration and idiosyncratic risks associated with single managers.

For institutional investment advisors and RIAs, their clients thus are actively seeking exposure to digital assets outside of the RIA universe and traditional RIA platforms.

EADAF is a compelling solution that enables an institutional-grade Investment Committee (IC) and other allocators for institutional investors to underwrite the type of exposure portfolios need to achieve optimal and higher risk-adjusted returns, all while satisfying portfolio management principles of diversification, minimizing single manager risk and prioritizing asset allocation over individual equity selection. For many institutional investment advisers and RIAs, keeping an allocation to digital assets on their platforms is of significant value for both prudent and rational sizing of investments and visibility . . . increasing the chances and enabling performance that provides optimal and higher risk-adjusted returns.

As exciting as this is, competition in our space is growing and EXPAAM must evolve as an investment manager to maximize its probability of execution success in capturing demand and returns for investors. As such, we have made and are making a number of strategic changes across our team, manager selection process, sales & distribution capabilities, and the levers through which we communicate with EADAF investors and the professional investment community. At the heart of all of these changes remains our adamant focus on building EXPAAM’s brand equity and community, an intangible source of value that will enable us to grow and thrive, both with EADAF and other projects.

We wish to double-click on a few of these changes here:


EXPAAM is thrilled to announce that it has added three senior team members to further professionalize our investment manager and provide world-class expertise as we head into the next bull market.

Paulo Baia as Head of Manager Research

  • Paulo comes with decades of deep experience in manager selection for fund of funds. He was Head of Research and part of the key team that built Société Générale’s $12bn fund of funds platform, Principal/Head of Research and Investments at $3bn Nexar Capital, and Head of Research and Investments for UBP’s world-renowned fund of funds platform. More recently, Paulo managed the digital asset investment and hedge fund portfolio for a single-family office.
  • Paulo is one of the world’s most experienced experts in manager selection, has tremendous knowledge of crypto hedge funds, and is truly passionate about the digital asset ecosystem.
  • Paulo has been working closely with our “rockstar” analysts, Scott Wijayatilake and Matthias Föhr, to develop and run a bottoms up allocation model and risk scoring framework for cryptocurrency and digital asset managers.

Pierre M. Henry as Chief Commercial Officer

  • Pierre is joining to lead strategy & sales & distribution within EXPAAM.
  • Pierre is an experienced public and private company executive, having been CEO of Trine II Acquisition Corp. and CFO/EVP of Trine Acquisition Corp., publicly traded investment funds focused on disruptive technology and upper middle market infrastructure. Pierre raised $1bn from some of the world’s most important investors across the Trine vehicles. A noted success for his Trine shareholders was Pierre’s sourcing, structuring, and closing of Desktop Metal, the first pure-play additive manufacturing company in the world to trade on The New York Stock Exchange.
  • Prior to Trine, Pierre was VP of Corporate Development and Investor Relations at Hemisphere Media Group, a NASDAQ traded media company with a $500m portfolio of film & TV IP/cable assets in the US and LATAM.
  • Pierre got his start as an investor / entrepreneur in Asia, working in private equity, film development, and consulting roles across companies such as Rakuten, Walt Disney, and Kylin Capital (麒麟资本).
  • Pierre holds degrees from The University of Chicago (A.B), The University of Cambridge (MPhil), and Stanford’s Graduate School of Business (MBA).
  • Pierre is looking forward to meeting all of you and investigating possible add on strategies for EXPAAM in growth / private equity investing, all strategies within his core expertise and experience set.

Julien Bittel as Head of Asset Allocation

  • Julien brings a decade of asset allocation experience to EXPAAM, and is also Head of Macro Research at Global Macro Investor.
  • Julien previously worked at Pictet Asset Management where he co-managed several of Pictet’s Multi Asset Funds, overseeing a total AUM of CHF 5Bn, and won a number of Morningstar Awards, including Multi Asset Fund of the Year in 2019/2020.
  • Prior to assuming a fund management role, Julien worked as a Multi Asset Investment Strategist in London with a focus on global macro investing before relocating to Geneva to help grow and develop Pictet’s Swiss Multi Asset franchise. Julien was the youngest person to be admitted to the Pictet Strategy Unit – a senior level investment group where partners, CIOs, and team heads gathered to analyse the current market situation and decide the house position on asset allocation and markets.
  • Julien is a Chartered Financial Analyst (CFA) charter holder and holds a BSc in Business Administration with a minor in Economics from the University of Colorado.  In addition to speaking at multiple CFA events, Julien has written several pieces for the press, appeared in TV interviews and was a guest speaker at the London School of Economics (LSE) on the topic of global macro investing.
  • Initially, Julien will help determine asset allocation regimes within EADAF, EXPAAM’s flagship fund of funds strategy, and anticipate turning points therein to maximize returns. Proprietary allocation models developed with Raoul at GMI in traditional asset markets will be extended at EXPAAM to crypto currencies and digital assets.
  • Our thinking is that with Julien’s well-honed and precise top-down strategic macro view, complemented by additional and focused work analysis we are now doing on crypto currencies and digital assets, we will complement the bottom up manager specific work Paulo is doing on managers and their underlying trading styles and portfolios, and maximize ROI for EADAF investors while minimizing risk factors and possible losses.

Market Commentary

Value destructive events in 2022 like Terra, 3AC, and FTX, alongside regulatory uncertainty in the USA over the potential security designation of digital assets outside of BTC, pushed investors to fly to safety. Moreover, The Fed’s delayed actions to reduce inflation and its ongoing reverse repo facility were deleterious for the value of risk assets and reversed capital flows into cryptocurrencies and digital assets.

Many crypto managers came into the year with reduced exposure following the downfall of FTX in late 2022, as they needed to raise cash to meet redemptions both at year-end and during the first quarter of 2023. This conservative posture did not help performance, especially during January when BTC had one of its best months ever, up 39.6% and ETH gained 32.3%.

FTX left a deep mark on crypto managers, and we understand the stress they were under and the more conservative posture they undertook at the time. None of our managers was significantly levered (which can sometimes lead to blow ups) nor did any one of them have a mismatch of asset and liability duration.

BTC and ETH tend to outperform the rest of the tokens at the outset of a crypto bull market, as we have seen during the first half of this year. In terms of the wider market in 1H 2023, Bitcoin dominance – its share of the total digital asset market cap – continued to rise throughout Q2, ending the quarter above 50%. This is a direct result of the flight to safety dynamics we mentioned.

BTC, as such, has enjoyed a stellar YTD performance over most alt coins:[xxxiii]

Source: VanEck

Alt coins have faced strong regulatory headwinds in the United States, as the SEC remained adamant on enforcing regulation without providing a clear framework of rules, while Congress has been slow in passing new regulation. We expect this standstill to change. We are happy to see that our managers remain well positioned in Alt coins with solid fundamentals, which we believe will lead to an outperformance over the next 12 to 18 months. The second quarter’s performance reflected the increased positioning our managers have in Alt coins and the resulting underperformance due to said regulatory environment.

EADAF’s goal is to outperform BTC over an entire crypto cycle (3 – 4 years) and we believe we are on track to achieving our goal since the fund’s inception in late 2021. The way we will be able to achieve this is by positioning our investments with experienced managers who have solid knowledge of the crypto space and following closely the developments in the protocols. Alpha can only be generated through sound analysis of all information available about the protocols on the blockchains and positioning accordingly.

As noted above, we have brought in exceptional talent to fortify our firm to ensure we have the sustainable competitive advantages needed to protect, attract and grow capital. We now have a full team, with Raoul as CIO being supported by Julien as Head of Asset Allocation and Paulo as Head of Manager Research.  The portfolio will continue to express Raoul’s views on crypto currencies and digital assets.  Positioning and “high level” asset allocation will be shaped by our top-down macro views drawing on proprietary asset allocation and quantitative models work brought to us by Julien from his work with Raoul at GMI. This will be supplemented by crypto currency and digital asset specific analysis we are doing at EXPAAM, as our markets develop and mature.  Specific expression of these macro views will be developed by our team and the bottom-up work Paulo does with underlying managers.

Additionally, we have enhanced our manager selection process to lessen the chance of exposure to a failed counterparty like FTX. In future EXPAAM Quarterlies, we will be offering a deep-dive into our manager selection process.

Raoul and Julien also completed their groundbreaking work on The Everything Code. This proprietary research, which overlays several frameworks including secular and cyclical trends within the business cycle, exponential technologies, and quantitative and technical analysis, studies liquidity flows as key drivers of asset prices, and indicated to us a bottom had been reached in November of 2022 for this cycle. It thus made powerful sense to reposition the portfolio towards an overweight position in Beta driven managers over market-neutral ones.

Our core thesis has not changed.

As exciting as Bitcoin and Ethereum are – and we have captured returns therein, we believe more exciting returns are to be had in the alt coin market. Many of these projects – those which have world-class teams, sensible tokenomics, practical adoption and use case implementation, rich development roadmaps, active communities, and first-class investors behind them – are now several standard deviations oversold and represent major sources of potential return.

It is very important we continue to seek best-in-class managers that have the technical and investing ability to underwrite not just the most promising blue chip alt coin projects, but emerging ones that represent the next Solana. As noted above, Paulo is leading the charge in positioning our portfolio to maximize returns with this strategy, and we will expound upon this in greater depth in future EXPAAM Quarterlies.

We are proud of what we are building and are committed to our thesis, which we believe will deliver on the highest standards to which we hold ourselves as stewards of capital.

We are excited for the future and believe 2023 is a year of pivotal importance to EADAF, not only as a period where the market looks to the other side of inflation and other factors, but chiefly as a year where our investment manager and its strategies will come of age.

Investor Communication and AMA

Last but not least, we are streamlining our communications to increase efficiency, transparency, and ease of access for the larger, professional investor community:

  1. We have breathed new life into and are updating our website to better reflect our brand, community ethos, and culture.
  2. We will be expanding future quarterly letters to reflect feedback from EADAF investors to provide commentary on areas such as our manager selection process, the execution of our strategy, proprietary research, and what we are calling “Raoul’s Corner”, a brief video from Raoul encapsulating his thoughts on the market and a nice heuristic for those who are short on time.
  3. Finally, we will be offering a video AMA in September and once each quarter thereafter to provide another touch point to connect on EXPAAM and answer your questions. Stay tuned for a sign-up sheet from us in the coming weeks!

Until then, we wish you all a terrific summer season.


Raoul Pal

CIO & Co-Founder



[i] Newfrontier Advisors, 2022


[ii] Axios, 2023


[iii] Electric Capital, Electric Capital 2022 Developer Report, 2022


[iv] Statista, 2022


[v] Coinbase, The State of Crypto Adoption, June 2023


[vi] Ibid

[vii] Fidelity Digital Assets, Exploring Institutional Interest in Blockchain Applications and Digital Use Cases, 2023

https://www.fidelitydigitalassets.com/sites/default/files/documents/1075436.1.0%20Fidelity%20Digital%20Assets_Institutional%20Investor%20Study%20Whitepaper_fnl.pdf – 1,052 total respondents included 410 U.S. investors, 359 European investors, and 283 Asian investors. The investor sample composition contained 324 financial advisors, 303 high-net-worth investors, 128 family offices, 99 traditional hedge funds, 97 pensions and defined benefit plans, 63 crypto hedge and venture capital funds, and 38 endowments and foundations.

[viii] Coinbase, The State of Crypto Adoption, June 2023

https://www.tbstat.com/wp/uploads/2023/06/The_State_of_Crypto_-_Corporate_Adoption_-_Coinbase.pdf?mkt_tok=MTYzLVpQTC0zMjQAAAGM_gtjWDPt-O5DDKFxisS0_xBunjC06MkYjL36HGdF3ZDAU3aueRaX-FCo-8sATV9_TzLCebMXSulvAWZ-WzCA_Y2NR85QEWSnKDQdsoly – A survey of >100 Fortune 500 executives at the level of director and higher, who are aware of crypto and blockchain, conducted for Coinbase by a third-party research firm from ay 26 to June 1, 2023

[ix] Fidelity Digital Assets, Exploring Institutional Interest in Blockchain Applications and Digital Use Cases, 2023


[x] Cointelegraph, 2023


[xi] Coindesk, 2023


[xii] Cointelegraph, 2023


[xiii] Cointelegraph, 2023


[xiv] Decrypt, 2023


[xv] With special thanks to Keith Grossman for first publishing the list.


[xvi] Decrypt, 2023


[xvii] Coindesk, 2023


[xviii] Coindesk, 2023


[xix] Pitchbook, 2023


[xx] Coindesk, 2023


[xxi] Bloomberg, 2023


[xxii] Financial Services Committee, 2023


[xxiii] Bank for International Settlements, 2023


[xxiv] CNBC.com, 2023


[xxv] Bloomberg, 2023


[xxvi] Decrypt, 2023


[xxvii] International Monetary Fund, 2023


[xxviii] Decrypt, 2023


[xxix] Beincrypto, 2023


[xxx] Coindesk, 2023


[xxxi] Reuters, 2023


[xxxii] For an in-depth take on the above, see Bridgewater’s work from 2022


[xxxiii] TradingView, 2023



This communication does not constitute an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle. Any such offer, sale or solicitation may be made only pursuant to a confidential private placement memorandum, limited partnership agreement, and subscription documents. An investment in digital assets, or any fund relating to digital assets, involves significant risks and investors should have the financial ability to accept the risk of loss of their entire investment. Hypothetical returns are presented for illustrative purposes only, and past investment performance is not indicative of future results.

Moritz Heiden09 06 23

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