Core Strategy

Crypto Equities Portfolio

Note: Going forward, we will provide clients with updates on the crypto equities portfolio in the same format as our token portfolio updates. This will enable us to share views on position sizing and implement risk management measures where appropriate.

Macro Thoughts: Yields and DXY Have Bottomed, and Trade Concerns are Back in Play, But That Doesn’t Spell Trouble for Crypto (Yet)

I talked about this in our video on 7/3, but to reiterate my stance on the current macro regime, it seems clear that we are moving toward a market in which investors will begin to reprice growth into their models.
We saw several material upside beats on jobs last week, and ISM Services showed a rebound into expansionary territory (50.8). While there are still lingering questions about how tariffs will impact earnings, the economy appears to be on solid footing for now, and yields are starting to reflect that.
Additionally, the fact that we just passed a deficit-perpetuating tax bill and that the government will need to refill the Treasury General Account (which involves issuing debt) certainly raises the prospect for upside in yields in the near term.

However, as I also noted in that video:

1. While BTC tends to be negatively correlated with the DXY, it typically lags DXY moves by roughly 70 days. This means that the recent move lower in the DXY should continue to have positive effects on BTC, even though the index has started moving higher.
2. While BTC has historically been negatively correlated with real yields over the long term, that dynamic shifted after the cyclical peak in real yields in 2023. Since 2024, BTC has been positively correlated with real yields, which suggests that the recent bond selloff is unlikely to pose an immediate headwind for BTC.

We have also seen the Trump administration begin to reimplement relatively severe tariff rates on trade partners. While the net tariff rate is still tracking below levels seen on liberation day, the absolute levels being proposed are quite significant and could introduce some volatility in equities. Over the past few days, gold has started to outperform equities, possibly signaling a shift in investor positioning back toward a “tariff trade.”

That said, Trump has a well-established precedent of opening negotiations with large threats and later backpedaling to meet somewhere in the middle. The fact that the implementation deadline is still a few weeks away lends credence to the idea that markets will give the administration some benefit of the doubt and will assume that eventual deals will be more market-friendly than the initial proposals suggest.

Even so, there is a strong chance that, over the next 2-3 weeks, yields could rise to levels that spark renewed volatility across asset markets. This would likely coincide with the start of August’s historically negative seasonality. Combined with lingering trade uncertainty, this creates a setup where it may soon make sense to raise some cash. These are all key risks we are monitoring closely, but I believe it is still too early to act on them.

Pump.Fun Launch: PUMP and BONK both are Good Buys Here

Pump.fun, one of this cycle’s standout projects from a revenue standpoint, has announced plans to move forward with its token launch via ICO on July 12^th. The team plans to sell 15% of the token supply at $0.004 per token, raising $600 million at a $4 billion valuation.

I think the token is likely to trade well out of the gate. Despite memecoin mania fading this year, Pump.fun continues to generate ~$1 million in daily fees. Its 30-day annualized revenue stands at approximately $484 million. At its $4 billion valuation, that implies an 8.3x revenue multiple.

There are also reports that 25% of protocol revenues will accrue to tokenholders. Tokens that generate real revenues and possess clear value accrual mechanisms have outperformed this cycle and, in my view, should continue to do so relative to those with more ambiguous tokenholder benefits (pure memecoins are a major exception to the rule). While the team has been light on details, it appears they plan to use proceeds from the raise to build out a social platform on-chain. This could present a compelling, underpriced upside case. However, without more clarity it is difficult to include this in any underwriting of the PUMP token.

Overall, given the project’s track record (it has generated over $800 million in cumulative fees since launch), and the seemingly voracious appetite from investors to buy at $4B ($720 million was sold to private investors ahead of the ICO), I believe PUMP is worth taking a flyer on at $0.004.

For those without access to PUMP futures that are already live on Hyperliquid or to the ICO itself, there are other names that stand to benefit from the launch. I think that BONK is chief among them.

BONK is a memecoin that has been a staple in our Core Strategy. It is my preferred way to get memecoin exposure on Solana, given its grassroots appeal and a team that remains actively engaged in building on the network. I view the BONK team as one of Solana’s strongest advocates.

One of their recent product launches was a memecoin launchpad, LetsBonk.Fun, intended to directly compete with Pump.Fun. The platform shares fees with BONK holders, with 50% of all fees going toward buying and burning BONK.

Over the past week, activity on the BONK launchpad has surged. Market share climbed above 50%, and the platform has posted 5 consecutive days of over $1 million in revenue.

Given these developments, it’s worth considering whether BONK should begin to be valued based on its launchpad fundamentals, rather than just its memetic appeal. As you can see in the table below, BONK’s limited track record still places it well below PUMP in terms of fees, but (1) trends matter more than absolute levels, and (2) I doubt that investors have ascribed much fundamental value to BONK at all.

Below I provide a simple framework for how to think about its potential valuation. If BONK is able to sustain its ~60% market share, it could justify a valuation similar to (or at least 60% of) Pump.Fun’s $4 billion. This would result in ~2.4X from current prices.

And if PUMP rallies post-launch while BONK maintains its 60% market share, there could be upside beyond that level. There are also scenarios in which BONK’s market share recedes substantially, but PUMP’s valuation extends to a level that still warrants upside in BONK. For instance, PUMP rallying to $10B while BONK slides to 20% market share would still translate to 2x upside. Below, I provide a sensitivity to two variables: PUMP valuation and BONK market share.

The Key Risk: The primary risk is that the recent jump in activity proves fleeting. BONK’s team held a hackathon in June, which wrapped up on July 6^th. It is possible that recent user engagement is solely tied to that event and may not be sustained. I will be watching this closely, but so far, activity has held steady since the hackathon ended.

MSTR: S&P 500 Inclusion Could Help Reverse Recent Underperformance

Digital asset treasury companies (DATs) are clearly all the rage right now. New companies are popping up left and right to acquire crypto. Strategy (MSTR) was the original DAT and effectively wrote the playbook. However, possibly due to new DATs siphoning flows away from MSTR, the stock has underperformed BTC since early May.

That said, the outlook for MSTR outperformance is beginning to improve, and I believe two key factors are driving this shift:

1. BTC has broken out.For investors still on the sidelines or looking for added leverage, MSTR remains one of the easiest ways to gain amplified exposure to BTC. Leveraged ETFs exist for MSTR, and a liquid, traditional option market also offer access. This could lead to rising implied volatility and potential premium expansion in the stock.
2. MSTR may be added to the S&P 500 in September (more on this below).

To qualify for S&P 500 inclusion, companies must meet certain criteria related to market cap, float, and be U.S. domiciled. However, the most critical requirement for MSTR has historically been profitability. A company must report positive GAAP net income in the most recent quarter and on a trailing twelve-month basis.

This was previously difficult for MSTR because of the accounting treatment applied to crypto. BTC was considered an indefinite-lived intangible asset, meaning the company had to record impairments when prices dropped below cost but could not write the asset back up if prices recovered. As a result, MSTR was unable to recognize gains even during BTC rallies. Below we see that GAAP net income has diverged significantly from net income that would be obtained with fair value accounting.

That changed in 2025, when MSTR adopted the newly approved fair value accounting standard. This allows them to mark BTC holdings up or down based on price changes, eliminating impairment charges and enabling BTC appreciation to flow through to earnings. While this will introduce more volatility into earnings, it also gives the company a clearer way to reflect BTC price action in EPS.

Based on estimates from our own Ken Xuan, MSTR is likely to show positive GAAP earnings over the trailing four quarters, which would make the company eligible for index inclusion.

There is, however, a discretionary component to index inclusion. The index committee can still make subjective decisions and could cite earnings volatility or the limited history of profitability as reasons for exclusion. That said, I think there are two key things to keep in mind:

1. MSTR is already part of the Nasdaq 100, and S&P may not want to miss out on capturing similar BTC-adjacent upside as their index counterpart.
2. Regardless of the final decision, the market is likely to begin pricing in the increased probability of inclusion ahead of time.

S&P 500 inclusion would bring significant long-term passive flows into MSTR. But the opportunity is likely to be front-loaded. In other words, the bulk of the outperformance may occur in the lead-up to a potential September announcement, as investors look to front-run index-related flows.

In our view, that creates a favorable near-term setup for MSTR.