Welcome to the institutional newsletter, Crypto Long & Short. This week:
- Sygnum Bank’s Pascal Eberle writes that investors are recognizing that custody is less about holding assets and more about proving you’re holding them properly.
- Andy Baehr of CoinDesk Indices offers a “Vibe Check,” writing how, in the wake of Election Day in New York, among other political activity, the crypto market is waiting for a new leader to spark its next rally.
- In the “Chart of the Week,” we look at ETH price in relation to average DeFi pool yields and BTC/ETH funding rates.
-Alexandra Lévis
Expert Views
Redefining the custody standard for banking
– By Pascal Eberléchief of staff, Sygnum Bank
The walls between traditional finance and future finance are dissolving faster than we think. Regulated institutions are no longer discounting native blockchain functionality. In fact, they adopt them. As a result, the next standard of custody will be based on cryptographic accountability.
Investors recognize that custody is less about holding assets and more about proving that you hold them properly. Multi-signature technology (multisig) provides this proof, continuously and cryptographically.
Where traditional care fails
Legacy custody works on the principle of centralized control. When you deposit assets with a traditional custodian, you are giving up your power to an external entity. This model requires absolute trust in institutional processes that remain invisible to clients and are based on legal/regulatory regimes, which may have their own complexities. This can create significant counterparty risk depending on the regulatory regime in which the lender operates. Some regulatory regimes provide better customer protection than others. For example, Swiss banks are legally required to segregate their clients’ assets, effectively keeping them away from bankruptcy, and rehypothecation of collateral is not permitted unless the client explicitly agrees to it. However, this ultimately still requires trust in banks, banking law and banking regulators to enforce these rules. But hope, trust and belief are not elements of security.
Multi-signature technology flips the entire custody paradigm on its head. Instead of one party holding all the keys (literally), control is distributed. No entity can move funds unilaterally. Clients hold their own keys as part of the security architecture. Each transaction requires multiple approvals, providing an unprecedented level of accountability. Instead of relying on (banking) law, “the code is the law” becomes the new paradigm. Law enforcement does not depend on any regulator, but is guaranteed by the blockchain. In the case of Bitcoin, it is the most powerful computer network in the world.
It is a revolution as much philosophical as technological. Multi-signature custody embodies the cypherpunk principle: “Don’t trust, verify.” Clients can monitor their on-chain assets in real time. They see exactly where their assets are and how they are secure. They participate in the protection of their own assets rather than outsourcing it entirely to an institution.
Before blockchain technology, this shared custody model was simply impossible. Banks had no mechanism to distribute control while maintaining security and efficiency. Now it is. Multi-factor authentication has transformed the way we access applications by requiring multiple verification methods. Multisig wallets will similarly transform how we secure assets by requiring multiple signing authorities.
Crypto Accountability Changes Everything
Henry Ford once said that customers would have asked for faster horses, not automobiles. Likewise, most investors do not yet know that it is necessary to request multi-signature custody. But once they experience the transparency of on-chain asset monitoring, the security of distributed key management, and the control of participation in protecting their own assets, traditional custody models will seem as obsolete as paper stock certificates.
Banks that cling to traditional opacity will lose their place in the competitive market. Just as the industry once standardized around SWIFT for messaging and clearinghouses for settlement, the next standard will be crypto accountability. Multisig becomes the baseline expectation that customers will demand because it is objectively superior. It reduces single points of failure, prevents internal fraud, enables real-time verification and gives customers real control over their assets. Once customers gain this level of transparency and security, they will accept nothing less.
Customers want visibility, control and accountability. The Multisig guard offers all three.
Expert Views
Promises kept, difficult timing
– By Andy Baehr, CFA, Head of Product and Research, CoinDesk Indices
On Sunday, New York City (and, I suspect, much of the rest of North America) plunged into the darkness of standard time; the sun set at 4:49 p.m. Yesterday, New Yorkers elected a new mayor, plunging the city into a new polarized phase. The mood in crypto has been similar lately: resigned, hunkered down, wondering where the endless summer days have gone. With the government shut down for a month, crypto legislative progress stalled, and Fed policy offering little upside convexity, catalysts for an uptrend are hard to come by. Commentators construct hopeful narratives and push back against late-cycle FUD, but the weight of poor price performance and the bruises left by the October 10 event keep the mood going. It doesn’t help that stocks are firing on all cylinders: The Nasdaq Composite hasn’t had such a long streak of rising months since 2017.
Sober Uptober – CoinDesk 20 Names Performed Poorly in a Traditionally Positive Month
It may be helpful to look back to a year ago, a few days before the 2024 presidential election, for perspective. The CoinDesk 20 Index was hovering below 2,000. Bitcoin was hovering around $60,000. By the end of November, CD20 had nearly doubled, ETH touched 4,000, and bitcoin was on its way to $100,000, its champagne moment. The market knew that support for digital assets was coming (and it is), but market timing and asset selection has been extremely difficult. The first quarter’s tariff anger tested faith, and the rollback was too quick for most to anticipate. ETH was no one’s favorite portfolio item at the start of the second quarter, until it led the entire market to all-time highs.
Performance since Election Day 2024: High numbers mask difficult timing
In a few weeks, these periods of post-election jubilation leading up to Inauguration Day will translate into year-over-year returns, and we will feel the need to demonstrate more sustainable asset class performance. Namely, look at the performance from Inauguration Day to today; only ETH’s power rally is impressive.
Price development since inauguration day – only ETH has led the way higher among the biggest names
The crypto market is looking for leadership to spark another broad rally. Bitcoin has dominated in 2024, making its way into investment portfolios through the adoption of ETFs and treasury. Ether dominated in 2025, benefiting from stable coin growth and tokenization narratives eventually gaining institutional traction. XRP – and Ripple – have shown remarkable performances even if their story remains largely absent from the talking points that move the marketers. Solana is increasingly reaching out to the public (sponsorships, conferences and consumer adoption), but SOL’s performance is lagging behind its ambitions. What story and asset will provide the next spark? The market seems to be waiting for an answer.
Chart of the week
This week we look at ETH price in relation to average DeFi pool yields and BTC/ETH funding rates. Since August 2025, the price of ETH has been increasing while the 7-day rolling DeFi pool APY (yield of all pools tracked by DeFillama) and ETH funding rates have been consistently trending downward. This divergence strongly suggests that the rally is a narrative of “Digital Asset Treasury” (DAT)/flow-driven trading, and not a demand-driven move based on utility or high yield. DeFi’s sustained low core yield is a key signal of weak underlying demand for ETH’s core DeFi utility, a factor that will likely become a headwind and challenge the continuation of the DAT narrative as institutional flows continue to slow.
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