Backtest compares 2.5% and 10% allocations across bull, bear, and sideways regimes
Gregory Mall, Chief Investment Officer at Lionsoul Global, backtested bitcoin allocations at 2.5% and 10% weights in a traditional 60/40 portfolio across three market regimes spanning January 2021 to March 2026. The analysis, published as part two of Mall’s case for crypto allocation, frames the institutional question not as what to own, but how much an investor can survive holding.
Adding bitcoin at either weight lifted returns and Sharpe ratios during strong crypto years while traditional bonds cushioned performance in weaker periods. A trend-managed sleeve that toggled between bitcoin and cash on trend signals moderated extreme years in both directions and improved drawdown behavior compared to spot bitcoin exposure.
In bull regimes, both spot and trend-managed approaches outperformed a plain 60/40 portfolio. In bear regimes, spot exposure transmitted larger drawdowns while the rules-based sleeve kept losses shallower. In sideways markets, direct bitcoin exposure struggled to justify added volatility, while the trend-managed sleeve had a better chance of avoiding risk without corresponding reward.
Institutional demand accelerates
The backtest arrives as institutional adoption of crypto accelerates. Institutional crypto trading hit a record 72% of spot volume on Wintermute OTC desk in the first half of 2026, up from 61% in the second half of 2025. The shift reflects growing comfort among institutional allocators with onchain infrastructure and regulatory clarity in major jurisdictions.
Regulatory support has gained momentum. BlackRock, Fidelity, Franklin Templeton, Goldman Sachs, and SoFi endorsed the Clarity Act, though Senate leadership confirmed it would receive no floor time before the summer recess. BlackRock has introduced 12 tokenized share classes across six funds and 15 markets using JPMorgan’s Kinexys blockchain platform, signaling institutional appetite for onchain settlement.
BNY Mellon is adding an onchain ownership ledger to its transfer-agency business, which services $8.6 trillion across 7.6 million accounts. The bank selected Galaxy to add staking capabilities to its custody platform, expanding the range of services available to institutional clients holding digital assets.
Market structure shifts
The post-ETF market has become more flow-sensitive, according to the analysis. Supply growth is anchored by the 2024 halving, while regulatory clarity in major jurisdictions is separating investible projects from speculative noise. These structural shifts are reshaping how allocators approach position sizing and rebalancing rules.
Hashdex will liquidate its $14.7 million DEFI fund after August 17, 2026, reflecting broader consolidation in the crypto fund space as managers adjust strategies to match institutional demand patterns.
