By Key Points
- Crypto Biggest Advantage Most Institutions Ignore
- Institutions rely on outdated, illiquid models.
- Crypto offers scalable, short-term gains via liquid strategies.
- Volatility in crypto unlocks high-yield opportunities.
- Bitwise calls for a new institutional investment mindset.
Traditional finance still clings to the idea that illiquidity brings reward. In venture capital, private equity, or credit, capital is locked for years, under the assumption that long-term holds deliver better outcomes.
But Bitwise Asset Management says this mindset doesn’t translate to crypto, and it’s a costly mistake.
BitMEX CEO Arthur @CryptoHayes argues the U.S. Treasury Department, not the Federal Reserve, is the key institution driving global liquidity and bitcoin’s future.
“[Fed Chair Jerome Powell’s] a sideshow. The real show is the Treasury Department.”
Full interview with… pic.twitter.com/PpIAmp3YFj
— CoinDesk (@CoinDesk) June 17, 2025
Jeff Park, Active Portfolio Manager at Bitwise and CIO at ProCap BTC, believes that the crypto market operates on a completely different logic. At the heart of his argument: crypto’s biggest advantage is its liquidity.
In crypto, investors don’t need to wait a decade for a payoff. Profitable strategies like arbitrage, market-making, and trend-following operate in real-time and thrive even during market turbulence.
When Bitcoin dropped 7% in April 2024, market-making strategies were still able to return 70% annualized, with arbitrage strategies hitting 40%.
Park says this is because the crypto market is in backwardation, a state where short-term investments yield better returns than long-term ones.
“You are paid handsomely to take liquid risks,” he explained. “The scorecard updates daily, not every ten years.”
Many institutional investors are conditioned very early to believe in a concept called the “illiquidity premium”. This premium is the supposed incremental return that compensates an investor for owning an asset that is not highly liquid.
This idea of buying illiquidity as a…
— Jeff Park (@dgt10011) April 4, 2024
This challenges the legacy mindset inspired by David Swensen, the legendary Yale Endowment CIO, who pushed institutions toward illiquid alternatives. Park argues that crypto flips that model and offers better outcomes, faster.
Volatility Isn’t a Risk, It’s the Opportunity
Why Crypto’s Biggest Advantage Is Volatility
Institutional investors have traditionally been taught to fear volatility. But in the crypto world, volatility is what creates opportunities. Jeff Park argues that crypto’s biggest advantage lies in the very thing that scares traditional investors.
He points out a simple truth: if the S&P 500 were as volatile as Bitcoin, expectations for private equity returns would look wildly different. But crypto doesn’t just handle volatility, it monetizes it.
Crypto markets offer rapid price action, high liquidity, and 24/7 accessibility. This is ideal for active strategies that institutions typically overlook. In May 2025 alone, over $5 trillion in crypto assets were traded, $2.5 trillion in spot assets and another $2.5 trillion in Bitcoin futures.
Park believes that such scale and frequency of trading provide better scalability than venture capital. Venture deals are slow, require connections, and are capacity-constrained. On the other hand, liquid markets can absorb massive capital inflows and still deliver alpha.
“The liquid crypto market is undoubtedly more scalable,” said Park. “The venture market, by design, cannot absorb large amounts of capital without diluting returns.”
I will double down on this view again and again and again—
Outperform the “Bitcoin rate of return” https://t.co/l8nGjJmEiF
— Jeff Park (@dgt10011) August 17, 2025
Institutions Are Stuck in the Past
Why Old Models Don’t Work for Digital Assets
Even as crypto continues to evolve and mature, institutional investors remain heavily weighted toward crypto venture capital. They are mimicking what worked in traditional markets—backing early-stage startups and waiting years for exits.
But Jeff Park believes this is a mistake. Crypto isn’t like tech in the early 2000s. It’s already liquid, global, and accessible. The innovation is happening in real time, and returns are generated day by day, not decade by decade.
We’ve already seen projects like Skale gain attention due to surging trading volume, signaling that short-term plays can offer institutional-grade opportunities.
MUST WATCH: ETF ISSUER BITWISE SAYS #BITCOIN DEMAND WILL OUTPACE SUPPLY BY 30x THIS YEAR
INSTITUTIONAL FOMO. IT’S HERE🔥 pic.twitter.com/jl6AZEse31
— The Bitcoin Historian (@pete_rizzo_) June 18, 2025
Bitwise itself is leaning into this belief. The company is actively building multi-strategy products aimed at capturing alpha across multiple liquid tactics, arbitrage, market-making, and trend-following. These strategies aren’t just theoretical. They’re already delivering real-world results.
Park believes institutions are too comfortable applying traditional frameworks to a market that plays by different rules. And it’s holding them back.
He suggests that if Swensen were still alive today, he’d likely appreciate these new approaches, especially given his reputation for embracing unorthodox ideas.
Quoting Swensen, Park said:
“Establishing and maintaining an unconventional investment profile requires accepting uncomfortably idiosyncratic portfolios… Sounds like crypto to me.”
The New Institutional Playbook for Crypto
How to Capture Crypto’s Biggest Advantage Today
Park’s core message is simple: institutions need to adopt a new playbook for digital assets. Instead of chasing the illiquidity premium, they should be harnessing crypto’s built-in features, liquidity, volatility, and 24/7 markets.
This means shifting from venture-style allocations to actively managed liquid strategies. It means understanding that short-term volatility isn’t a threat, it’s an asset. And it means realizing that crypto doesn’t need to mirror traditional models to be valid.
The next wave of institutional alpha won’t come from simply buying and holding tokens or investing in startups. It will come from firms that actively engage with the market every day, using dynamic, scalable strategies.
Consider how market dynamics are evolving. Meme coins are shifting exchange reserves, influencing liquidity. At the same time, events like OKX burning $2.6B worth of OKB tokens highlight the direct impact that tokenomics have on short-term volatility and opportunity.
Institutional attention has also intensified around regulatory clarity, especially in major events like the SEC-Ripple settlement, which reshape sentiment and trading behavior overnight.
According to Park, the next legendary investor won’t be someone who brings Wall Street to crypto, it’ll be someone who lets crypto be crypto and builds around its natural strengths.
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