Monthly Manager Commentary: March 2025

Multi-Strategy Fund Performance

In March, the Fund struggled alongside the broader crypto market for the second consecutive month, posting an 11% decline amid heightened volatility. Bitcoin, which peaked at $95K early in the month, tumbled nearly 14% to $82K by month’s end, dragging sentiment across the digital asset space. The broader market downturn was exacerbated by the implementation of new tariffs, which fueled economic uncertainty, inflation concerns, and fears of slower global growth. These headwinds triggered a widespread sell-off across risk assets, including equities and cryptocurrencies, as investors shifted toward safer assets in response to tightening financial conditions and geopolitical tensions. Despite strong long-term fundamentals in the crypto sector, near-term pressure from macroeconomic instability weighed heavily on market performance.

	Multi-Strategy Fund	Bitcoin
March Gross Performance	-11.4%	-2.1%

Engineering Insights and Updates

This month, our research efforts focused on strengthening the Fund’s quantitative frameworks to better navigate the unique inefficiencies of crypto markets. Given the fragmented liquidity, structural volatility, and evolving investor behavior in digital assets, our strategies are designed to adapt dynamically to shifting market conditions. We continue to refine our non-directional approaches—including statistical arbitrage, pairs trading, and volatility arbitrage—with the goal of capturing alpha while mitigating systemic risks such as liquidity constraints and changing asset correlations.

The most significant advancement this month was the enhancement of our Copula-based Investment Strategy, a sophisticated framework for modeling asset dependencies, particularly under extreme market conditions. Traditional correlation models often fail to capture the nuanced relationships between assets during periods of market stress. By leveraging non-linear Archimedean copulas—such as Clayton and Gumbel—our updated approach provides a more precise representation of tail dependencies, allowing us to identify and respond to simultaneous extreme price movements that conventional models tend to overlook. Additionally, cross-validation techniques and real-time data integration ensure that the model remains robust across different market conditions. These refinements enhance our ability to detect inflection points early, optimize portfolio exposure, and sustain performance across varying cycles.

By continuously evolving our quantitative infrastructure, we aim to strengthen the Fund’s ability to capitalize on crypto market inefficiencies while maintaining a disciplined approach to risk control—ensuring long-term resilience and stability in a rapidly changing environment.

Market Commentary

March was a month of stark contrasts for the crypto market. Despite significant regulatory progress, price action remained under pressure due to macroeconomic uncertainty, primarily driven by new tariffs.

One of the most notable developments was President Trump’s March 6 executive order establishing a Strategic Bitcoin Reserve and a broader digital asset stockpile. This move signaled a formal recognition of bitcoin as a strategic asset, with the U.S. government committing to retain its existing 198,000 BTC holdings and explore additional acquisitions—provided these purchases are “budget-neutral” and do not impose costs on taxpayers. This policy shift highlights bitcoin’s increasing importance on the global financial stage. Shortly thereafter, Abu Dhabi’s sovereign wealth fund announced a $437 million investment in Bitcoin ETFs, further reinforcing the increasing global arms race among nation states to acquire bitcoin.

Beyond bitcoin, the regulatory environment in the U.S. saw meaningful progress. Congress overwhelmingly voted to overturn the IRS broker-dealer rule, removing restrictive tax reporting requirements that would have significantly hindered DeFi innovation. Meanwhile, the Office of the Comptroller of the Currency reaffirmed that banks can engage in crypto-related activities, clearing the way for traditional financial institutions to enter the space. Major players—including Citi, State Street, and Charles Schwab—quickly responded by announcing new crypto custody solutions and expanded digital asset offerings. The Senate Banking Committee also advanced the GENIUS stablecoin bill with strong bipartisan support, paving the way for clearer regulations around dollar-backed digital assets. At the same time, the SEC launched the first of five Crypto Task Force roundtables, marking an important step toward establishing regulatory clarity and a formal market structure for digital assets.

Despite these positive developments, crypto markets experienced significant declines throughout March. Bitcoin opened the month trading as high as $95,000 but fell to $82,000 by month’s end as uncertainty weighed on sentiment. Solana declined by 12%, Ethereum by 18%, and most other crypto assets suffered even steeper losses. The primary driver of this downturn was macroeconomic uncertainty, particularly new tariffs imposed by the Trump administration. On March 4, the U.S. enacted 25% tariffs on imports from Canada and Mexico and 20% tariffs on imports from China, triggering an immediate sell-off across both traditional and crypto markets. Investor sentiment worsened further as President Trump hinted at additional tariffs on foreign-made cars and auto parts, adding to broader concerns about global trade disruptions.

Although the market reaction to tariffs has created near-term volatility, we believe the fundamental drivers for a continued bull market remain firmly in place. The regulatory environment is improving every month, with increasing clarity and institutional engagement. Global liquidity is beginning to expand, particularly with the Federal Reserve’s decision to gradually slow its balance sheet runoff, effectively ending Quantitative Tightening. There is  growing institutional interest in stablecoins and tokenization. On-chain data continues to signal strength, as selling pressure eases and long-term holders accumulate, indicating a shift toward more stable, price-insensitive investors. 

The Q1 pullback is well within historical norms and does not change our broader thesis. Despite recent volatility, bitcoin and the broader crypto market continue to outperform all other asset classes since the election. The structural tailwinds that drove the early-year rally remain firmly in place, reinforcing our expectation of new all-time highs for many crypto assets later this year. As always, we are committed to long-term value creation and disciplined capital allocation. Please don’t hesitate to reach out if you have any questions or would like to discuss our outlook further.

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. 

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