Not all crypto strategies are earning their keep right now. Here's what's working, what's struggling, and why the allocation question has never been more important.
The market we're actually in
It's worth setting the scene before talking about which strategies are working. As of April 2026, Bitcoin sits around $75,000 — down roughly 40% from the $126,000 all-time high printed in October 2025. ETH and the rest of the complex have tracked broadly lower, with dispersion widening sharply in the long tail after the October 10 liquidation cascade wiped out a large chunk of altcoin open interest.
The price action has been geopolitically driven, not structurally driven. The Trump administration's tariff announcements, the ongoing Iran conflict, Strait of Hormuz disruption, and a Fed stuck on pause have kept institutional capital cautious. ETF flows have held up — BlackRock's IBIT and Fidelity's FBTC continue to absorb supply, and corporate treasury adoption has expanded — but the speculative leverage that defined 2024–2025 has been comprehensively flushed out. BTC correlations with the S&P 500 and gold have both risen materially, which tells you most of what you need to know about who's currently setting the marginal price.
The consensus among institutional research desks — Bernstein, Standard Chartered, Bitwise — is that the cycle isn't over, just paused. Long-term holders control 78% of supply. Exchange reserves sit at six-year lows. Michael Saylor's Strategy added 89,618 BTC in Q1 2026 alone. The structural bid is there. What's missing is the catalyst — a meaningful Middle East de-escalation, a Fed pivot, clearer tariff resolution — any of which could snap the market back quickly.
So allocators are in that awkward middle zone: not yet convinced enough to deploy fresh risk capital aggressively, but increasingly uncomfortable sitting in cash as the structural case gets stronger. The allocation question, in this environment, is which strategies actually work now — not which sounded good when the market was grinding higher.
Strategy performance, honestly assessed
Let's go through the main categories institutional allocators look at, with an honest read on current conditions.
Market-neutral (basis/funding-capture) — struggling. This is the category that's taken the biggest hit. Delta-neutral strategies that collect funding on perpetuals while hedging spot have been the darling institutional trade for the past two years, and they've worked beautifully when perp markets ran hot — funding rates above 20% annualised were routine through mid-2025. That party is over. The October 10 cascade flushed leveraged longs so comprehensively that perpetual funding rates have spent most of the subsequent four to five months either neutral or meaningfully negative. A basis trade that relies on collecting positive funding doesn't work when funding is negative — the trade costs money rather than earning it. Funds running pure funding-capture strategies have seen flat-to-negative returns since November. Some have rotated into cross-exchange basis arbitrage where dislocations still exist, but the easy yield has compressed hard.
Market making — holding up. The volatility regime that's been brutal for passive basis trades has been constructive for active market making. Higher realised vol widens the spreads market makers can legitimately quote. The dispersion across altcoins post-cascade has created opportunities for makers willing to take inventory risk on the long tail. Thin order books in second- and third-tier tokens are exactly the conditions that reward disciplined quoting infrastructure. The desks running proper cross-venue market making with real risk systems have had a decent few quarters — not spectacular, but clearly positive, which is more than most other strategies can say right now.
Long/short — working selectively. Directional long/short strategies with proper risk management have had real dispersion to work with. The relative performance gap between BTC, ETH, majors, and long-tail alts has been the widest in years. Funds that can actually differentiate between strong and weak names — rather than just running correlated beta — have been able to generate returns that aren't dependent on the overall market going up. It's not a raging bull-market strategy environment, but it's a workable one for managers who know what they're doing.
Yield farming and DeFi exposure — compressed. Onchain yields have compressed across the board. The combination of lower leverage demand, stablecoin supply growth, and the shift of capital toward regulated venues has pulled DeFi lending rates to unattractive levels for institutional size. Tokenised money market funds and RWA strategies are taking market share from pure crypto yield products, which tells you where the institutional money actually wants to sit in a risk-off environment.
Directional crypto — the patience trade. Pure directional long exposure has been painful for six months, but the setup for a recovery is arguably better than it's been at any point since the cycle low. Anyone buying BTC at $70–75K who is willing to hold through continued geopolitical noise is positioning for what most institutional research desks now call the base case: $80–100K year-end, with bull-case paths to $120–150K if the macro picture improves. The trade isn't free — it requires stomaching further drawdown if the Middle East situation worsens — but the risk-reward is more attractive than it's been in a long time.
What this means for allocation
The performance dispersion across strategies right now is the whole point. In a market where everything worked, allocation decisions were less consequential. In a market where basis trades are bleeding while market makers are printing, allocation decisions are the entire performance story.
Three specific implications:
Diversification has to be real, not nominal. An allocator holding three funds that all run variants of funding-capture has not diversified their book — they've concentrated it. Genuine diversification across market-making, long/short, directional, and yield strategies is what lets an overall portfolio perform through a regime like this. That requires knowing, in detail, what each underlying manager is actually doing.
Manager access matters more than headline returns. The top-quartile market makers, long/short funds, and basis desks have a habit of being closed to new capital — or of only accepting allocations through relationships. Getting into the managers actually earning their fees in a hard market is the real challenge. This is where a capital introduction network and pre-existing prime services relationships matter. An allocator who only sees what's fundraising publicly is seeing the wrong end of the quality distribution.
Timing allocation decisions around regime shifts. Strategies that work in one regime often continue working by momentum until the regime actually breaks, then reverse hard. A disciplined allocation framework has to distinguish between a strategy that's temporarily in a bad regime and one that's fundamentally broken. Funding-capture isn't broken — it's waiting for positive funding to return. That's a different allocation decision from exiting a strategy whose edge has structurally decayed.
How Bequant approaches allocation of capital
Bequant runs an institutional allocation of capital platform from its prime services stack, operating from Malta (Bequant Pro, MFSA-regulated CASP, MiCA authorisation in process) and Seychelles (Bequant Prime). A few features that matter in the current environment:
Access to managers running real strategies on institutional rails. The funds and trading desks working through Bequant's DMA infrastructure, portfolio-margined lending, and cross-venue risk are, by selection, running at a level that retail platforms don't support. When we allocate capital across strategies, we're allocating into operators whose infrastructure and risk frameworks we already see daily — not into black boxes.
Capital introduction into emerging managers. The flip side of institutional access is helping emerging managers with strategies that are working in this regime — disciplined market makers, long/short funds with real alpha — connect with allocators who need that exposure. Our capital introduction function is built around the same relationship network that supports the trading business, which means the managers we introduce are ones we can vouch for operationally, not just on a pitch deck.
Real-time visibility through RiskQuant. Allocation decisions informed by point-in-time snapshots are allocation decisions made blind. Our risk engine gives us continuous visibility into how strategies are actually performing across the book — not monthly letters, but live data on what's working right now and what isn't. That changes the conversation with allocators from "here's last quarter's performance" to "here's what's earning in the current regime."
Integrated execution across CEXs and DEXs. Whatever strategy capital is allocated to, it ultimately has to trade somewhere. The same DMA infrastructure that runs lending and market-making books runs allocated capital, which means execution quality, settlement, and risk are all on one stack rather than fragmented across counterparties.
Prime services depth. Allocation of capital doesn't sit alone. It connects into OTC execution for large rebalancing flows, portfolio-margined lending for managers who need financing, and market making for liquidity provision. The same relationship covers the full lifecycle of how capital gets deployed and managed.
The market will turn. The bulls waiting for a Middle East resolution, a Fed pivot, or a clean break above $85K are probably right — the only question is timing. The allocators who position intelligently in the meantime, across strategies that actually work in the current regime, are the ones who'll be sitting in the right funds when it does.
Bequant is a principal trading firm and an institutional prime services provider for digital assets, operating from Malta (Bequant Pro, MFSA-regulated CASP, MiCA authorisation in process) and Seychelles (Bequant Prime). Services include allocation of capital, capital introduction, OTC trading, market making, portfolio margined lending, DMA execution, and cross-venue risk management through RiskQuant. To discuss an allocation mandate or manager introduction, get in touch with the Bequant institutional team.