Ready for it? Let the games begin • Letter 121

Hedgehog Admin -

Hey, it's Colton from Hedgehog, the home base for your crypto portfolio.

Slice 'em and dice 'em

Validation from an unexpected corner — Grayscale (of will-they-won't-they ETF fame) and FTSE Russell are teaming up to offer a product that sounds spiritually similar to Hedgehog Stacks:

They will join forces to offer crypto-curious investors a product called Crypto Sector Index Series, the firms announced Tuesday morning. It will include several indices tracking the prices of various buckets of digital assets according to their use cases.

The groups will include: cryptocurrencies that serve as a medium of exchange of store of value (like bitcoin, litecoin), smart contract projects (like ether, solana, polygon), tokens representing financial services (uniswap, compound, curve), coins representing art, gaming and media assets (NFT projects) and projects oriented on real-life applications (chainlink, filecoin and others), according to the announcement.

You may recall that Hedgehog has also partnered with FTSE Russell, as well as CoinDesk Indices, to expand the portfolio options available to our fine customers, such as yourself. Plus, of course, Hedgehog's own Stacks:

  • Total Crypto: More than 85% of the entire crypto market cap
  • Satoshi: Bitcoin, where it all started
  • DeFi: Peer-to-peer financial services on the blockchain
  • ETH Network: Assets built with Ethereum
  • Layer One: Core networks powering the crypto ecosystem
  • Yield Farming: Tokens that pool staked funds to generate rewards

Point being, there's no need to wait for Grayscale, we've already gotcha covered 😏

With BTC at its highest price since May 2022, everyone in crypto hopes the bull market is ready to swing back into action. If so — there's no way to be sure — then it's time for indexes (indices, if you prefer) to have their moment. I discussed this impending trend in CoinDesk last week:

U.S. crypto exchanges can no longer offer debt-based yield services like the erstwhile Gemini Earn program or retail-friendly staking services like Kraken's verboten one or Coinbase's beleaguered equivalent.

Side note, how often do you get to say "erstwhile," "verboten," and "beleaguered" all in one sentence?

There is, however, a compliant path forward. One that involves proactively playing nice with the Securities and Exchange Commission and relying on robust custody partnerships, including tools like separately managed accounts. Commingling customer funds in large digital asset baskets is a non-starter, as it securitizes the underlying assets. But intelligent and automated direct indexing products, employed by an internet adviser registration, have made inroads with regulators.

These direct indexing platforms are the next step to wide adoption of long-tail digital assets beyond bitcoin (BTC) and Ethereum's ETH. I agree with the leadership of Methodic Capital Management: "Indexes allow for efficient asset allocation, risk management, product development and performance measurement. Without indexes, crypto cannot evolve into an institutional financial market."

Indexes make it easy to benefit from diversification by creating a sensible target for automated rebalancing. Hedgehog actually goes a step farther than that — we allow you to customize Stacks in order to mix in a sprinkle of active management, still without the need to constantly monitor the ups and downs of the market.

Remember: time in the market > timing the market.

Keep hedging,
— Colton

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