DAiM Issue 58
Welcome to DAiM's Newsletter. Where wealth is redefined in crypto. We have our clients to thank for being an award winning asset manager. Please enjoy our thoughts below.
Sell or Borrow
Fund Fail?
24/7 Trading Platforms
Sell or Borrow - Borrowing against bitcoin is often framed as a way to access liquidity without triggering a taxable sale. In practice, it’s more nuanced, and riskier, than most realize.
At its core, bitcoin-backed lending is simple: you post bitcoin as collateral and receive a loan, typically in USD or stablecoins. The key variable is the loan-to-value ratio (LTV). For example, a 50% LTV means you deposit $100,000 worth of bitcoin to borrow $50,000.
The structure introduces a reflexive relationship. If bitcoin rises, your collateral becomes safer and risk decreases. If bitcoin falls, your LTV rises and risk increases. Unlike traditional assets, bitcoin’s volatility makes this dynamic much more pronounced. A 20–30% move in a short period is normal, which is where problems begin.
Most borrowers focus on the interest rate, but that’s only part of the equation. Rates can vary widely depending on the platform and structure, and your bitcoin is encumbered while pledged as collateral. There can also be less visible risks, including rehypothecation, platform risk, and liquidity constraints. The biggest cost, however, is not explicit, it’s the potential for being forced into decisions under pressure.
This becomes most clear with margin calls. If bitcoin declines and your LTV breaches a certain threshold, you may be required to add more collateral or pay down the loan. If you’re unable to do so quickly, liquidation can occur automatically. This locks in losses and reduces your bitcoin position at exactly the wrong time. This dynamic introduces timing risk into what is otherwise a long-term asset.In most cases, we don’t view borrowing against bitcoin as a core strategy. However, if someone were to consider it, timing matters. Historically, more favorable setups tend to occur when bitcoin is already 40% or more below its all-time highs, sentiment is weak, and excess leverage has been cleared from the system. In these environments, the risk of forced selling is generally lower than during euphoric market conditions, when borrowing activity tends to increase.
Borrowing against bitcoin can be useful in specific situations, but it adds a layer of fragility that many investors do not need. In many cases, simply holding unencumbered bitcoin with a long-term perspective is the more durable approach, avoiding the risk of being forced to act at the worst possible time.
For clients who do explore this strategy, our role at DAiM is to approach it conservatively and with a clear risk framework. That includes closely monitoring loan-to-value ratios, maintaining more conservative thresholds than what platforms typically allow, and planning for adverse scenarios before they occur. The objective is not to maximize borrowing capacity, but to protect bitcoin holdings and reduce the likelihood of forced liquidation during periods of volatility.
Fund Fail - Over the past year, we’ve been hearing a consistent theme from high-net-worth investors: private market allocations, private equity, and venture-style crypto funds, have not delivered the outcomes they expected. What was once positioned as access to “early-stage upside” has, in many cases, turned into a drag on overall portfolio performance. Returns have been muted, capital has been locked up longer than anticipated, and the path to liquidity has become increasingly uncertain.
The structure itself is part of the issue. These funds are typically illiquid by design, with multi-year lockups and limited visibility into underlying positions. When markets shift, investors don’t have the ability to rebalance or exit. Even more frustrating, losses are often difficult to realize for tax purposes because positions aren’t marked to market or actively traded. At the same time, fee structures, management fees plus carried interest, can materially erode returns, particularly in an environment where exits are delayed. In some cases, incentives become misaligned, with managers encouraged to continue raising capital and extending timelines rather than returning capital to investors.
This dynamic stands in sharp contrast to bitcoin. Unlike private investments, bitcoin trades in a fully liquid, global market 24/7. Investors have complete transparency on pricing, immediate access to liquidity, and the ability to actively manage their exposure. There are no capital calls, no lockups, and no dependence on a future acquisition or IPO to generate a return. While volatility is part of the experience, it also creates opportunity, particularly for long-term investors who can accumulate during drawdowns and maintain discipline over full market cycles.
For investors seeking asymmetric return potential in crypto, the case for simplicity is becoming clearer. Rather than chasing opaque, fee-heavy structures with uncertain outcomes, a liquid portfolio, anchored by bitcoin, offers a more efficient and controllable way to participate in the asset class. At DAiM, we work with clients as a Registered Investment Advisor focused on digital assets, helping them build and manage portfolios centered around bitcoin with a long-term perspective. Through comprehensive wealth management, institutional-grade custody partners, and disciplined portfolio construction, we aim to reduce unnecessary complexity and risk, prioritizing liquidity, transparency, and capital preservation while positioning clients to participate in bitcoin’s long-term upside.
24/7 Trading Platforms - The concept of 24/7 trading is often highlighted as a defining feature of digital assets, but the reality is more nuanced depending on where and how that trading occurs. On the regulated side, platforms like tZERO have worked to extend market hours and bring private and tokenized assets into a more continuous trading environment. Operating through an SEC-regulated Alternative Trading System, tZERO facilitates trading in tokenized equities, private company shares, and digital securities. While this represents important progress, activity remains relatively niche and geared toward institutional or accredited participants, with liquidity still well below what most investors associate with true 24/7 markets. The company reports more than 50 million cumulative shares traded and approximately $880 million in digital securities traded and offered historically, but detailed ongoing secondary-market volume disclosures remain limited. That lack of visible liquidity highlights one of the central challenges facing regulated tokenized asset platforms today.
In crypto-native markets, the promise of continuous trading has been more fully realized, particularly in derivatives. Platforms like dYdX were early leaders in decentralized perpetual futures, but despite strong technology and early momentum, they’ve struggled to maintain dominant market share as competition intensified. Liquidity has fragmented across venues, and user migration has been more fluid than many expected, highlighting how difficult it is to sustain leadership even in a fast-growing segment.
More recently, newer platforms, such as Hyperliquid, have begun to consolidate a meaningful share of trading activity by focusing on performance, user experience, and deeper liquidity. At the same time, large centralized exchanges like Binance and Coinbase continue to anchor a significant portion of global volume, particularly for spot markets and fiat access. The result is a landscape where 24/7 trading exists in practice, but liquidity is concentrated in a relatively small number of venues.
The broader takeaway is that while always-on trading is now standard in crypto, scale and liquidity remain the defining factors. Many platforms can offer 24/7 access, but far fewer can sustain the depth of market needed to attract and retain meaningful capital. As the space evolves, and tokenized real world assets become popular, the winners are likely to be those that combine continuous access with concentrated liquidity, rather than simply extending trading hours without solving for participation.
At DAiM, we view these shifts as more than just market structure, they represent the early formation of a new financial system. As part of our ongoing portfolio management process, we continue to evaluate where sustainable liquidity, user adoption, and long-term value creation are converging across digital asset markets. From time to time, this leads to thoughtful adjustments within our Model Portfolio to reflect emerging areas of infrastructure that we believe are positioned to benefit from these trends. Access to these evolving opportunities, implemented with a disciplined, risk-aware approach, is a core part of how we help clients navigate the next phase of digital asset investing.
How DAiM benefits clients
Wealth Management: We are a licensed Registered Investment Advisor (RIA). This requires us to act as a fiduciary looking out for our clients diverse financial needs.
Model Portfolio: Our meticulously managed portfolio has outperformed the simple strategy of buying and holding bitcoin alone by more than 343% since inception on 5/31/2018.
Tailored Solutions for Various Investors:
Crypto focused: HNWI looking for management of large crypto holdings.
Comprehensive Wealth Management: Blending traditional stocks and bonds with crypto in long term financial planning, portfolios, estate creation, and tax planning.
Intergenerational Wealth Planning: Large families aiming to create and manage intergenerational wealth, including gifting in bitcoin across multiple generations.
Simplified Management: Investors struggling with the complexity of juggling multiple wallets, decentralized exchanges, and manual tracking.
Bitcoin Options Trading: Investors looking to manage risk or generate additional yield through advanced strategies like bitcoin covered calls and zero-cost collars.
Bitcoin Lending: Investors seeking opportunities to lend their bitcoin and earn interest while retaining ownership of their assets.
Estate and Tax: Investors needing to protect their assets and understand taxes.
Enhanced Support and Communication: We understand the frustrations of navigating communication with crypto exchanges. At DAiM, we provide easy access to expert guidance, ensuring seamless communication for our clients.
Curious to Learn More About Investing with DAiM? Contact us at hq@daim.io