Multi-Strategy Fund Performance
In December, the fund posted a return of -11.8%, reflecting a pronounced sell-off across the broader digital asset market. While bitcoin declined modestly on the month—supported by a late-month rebound—our exposure to select altcoins, which sold off sharply alongside bitcoin early in the month but failed to participate meaningfully in the recovery, accounted for the majority of the underperformance. The fourth quarter was marked by unusually elevated volatility, rapid shifts in risk appetite, and thin liquidity, creating a challenging environment for higher-beta assets. As we move into 2026, market structure and positioning appear healthier, with improving liquidity conditions, more constructive price action, and several upcoming catalysts that we believe set the stage for a more favorable first quarter.
| Multi-Strategy Fund | Bitcoin | |
| December Gross Performance | -11.8% | -3.8% |
Market Commentary
December underscored how closely crypto markets remain tethered to global liquidity conditions, even as their long-term fundamentals continue to strengthen. The month unfolded in three distinct phases: an early, macro-driven sell-off; a sharp rebound fueled by institutional validation and shifting monetary policy expectations; and a quiet period of consolidation as year-end liquidity thinned. Volatility dominated the opening days, but as macro narratives evolved and spot demand improved, markets gradually stabilized.
The month began with a pronounced sell-off across major cryptocurrencies. On the first trading day of December, bitcoin and the broader crypto market fell by roughly 5% as investors reacted to rising expectations of a Bank of Japan rate hike. Such a move threatened the long-standing yen carry trade, prompting market participants to raise liquidity quickly and reduce risk exposure. Selling pressure emerged during Asian trading hours and spilled over into global markets, weighing on bitcoin and other risk assets. This dynamic closely resembled the market response to Japanese tightening in August 2024, reinforcing the view that early-month weakness reflected a macro-driven liquidity adjustment rather than any deterioration in crypto-specific fundamentals.
Sentiment improved within days as institutional developments and shifting rate expectations restored risk appetite. Vanguard, long known for its skepticism toward digital assets, reversed course and allowed access to spot crypto ETFs on its platform for the first time, a meaningful milestone for both institutional and retail adoption. Around the same time, Bank of America, which until recently had prohibited its wealth advisors from recommending crypto, executed a notable policy reversal and began suggesting a 1% to 4% allocation to digital assets for clients. Together, these announcements were widely interpreted as strong validation from traditional financial institutions. They helped catalyze a broader rebound in risk assets, with bitcoin reclaiming levels above $92,000 and Ethereum rallying alongside it, underscoring how expanded access and institutional endorsement can provide tangible market support.
Mid-month attention turned to the Federal Reserve’s final FOMC meeting of the year. As expected, the Fed delivered a 25-basis-point rate cut. The more consequential development, however, was the announcement that the Fed would resume balance sheet expansion through approximately $40 billion per month in Treasury bill purchases. This signaled a clear shift away from quantitative tightening and materially altered the liquidity backdrop. Historically, balance sheet expansion has been supportive of risk assets, as lower discount rates and increased liquidity encourage investors to move further out the risk curve. Crypto assets have tended to benefit from this environment alongside equities. Even so, the immediate market reaction was mixed. Risk assets, including bitcoin, surrendered some gains following hawkish forward guidance and acknowledgment that future rate cuts may proceed at a slower pace than previously expected.
In the wake of these policy developments, market structure improved meaningfully. Stablecoin inflows into spot markets increased and the recovery appeared to be driven primarily by spot demand rather than leverage. Funding rates remained subdued and derivatives activity muted, suggesting that buying interest was coming from longer-term capital and institutional flows rather than short-term speculative positioning. Accumulation by corporate buyers also helped stabilize prices after earlier leveraged liquidations, contributing to a healthier and more resilient market profile.
The final weeks of December were defined by consolidation and range-bound trading. As traditional financial markets wound down for the holiday season and liquidity thinned, both bitcoin and Ethereum traded within relatively narrow ranges. Lower volumes and muted momentum were consistent with typical year-end seasonality and reflected a broader reluctance among institutional investors to reposition aggressively in the absence of new macro catalysts.
Overall, December reinforced the central role that macro liquidity conditions continue to play in shaping near-term crypto price action, while also highlighting the growing importance of institutional participation and spot-driven demand in stabilizing markets. Although volatility remains an inherent feature of the asset class, the underlying market structure is steadily maturing. This combination of macro sensitivity and improving institutional footing leaves crypto well positioned to respond when liquidity conditions become more supportive, while continuing to strengthen its case as a component of diversified portfolios.
Sincerely,
The Blockforce Team
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely my own and do not express the views or opinions of Blockforce Capital or Onramp Invest.
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