The Easy Money Era in Crypto Has Ended: Challenges and Opportunities for Reserve Funds

Experts from Coinbase have made an important statement: "The period of easy money has ended" for digital asset reserve funds. David Duong and Colin Basco emphasize that the phase in which funds could enjoy easy cash flow and guaranteed mNAV rewards is now over. The previous advantages of pioneers such as MicroStrategy – benefiting from the scarcity of Bitcoin and other digital assets – have now disappeared. Instead, success in the current crypto market depends on investment strategies, the application of advanced technology, and the ability to execute efficiently, rather than replicating old models. Survival Challenge for Reserve Funds The crypto market is entering a phase of fierce competition. Many experts warn that the market is gradually becoming saturated, making it difficult for many businesses to sustain operations. According to NYDIG, even when Bitcoin rises in price, many fund management companies still report a decrease in asset value, reflecting intense competitive pressure along with increasing legal risks. Coinbase's report also refutes the notion of the "September effect" – the belief that Bitcoin tends to decline in price every September. They assert: "The month of the year is not a reliable statistical indicator for predicting Bitcoin returns," which indicates that seasonality has lost its significance in current crypto trading strategies. Macroeconomic Factors Bring Hope Despite facing many challenges, the crypto market still shows positive signals thanks to a favorable macroeconomic backdrop. Coinbase predicts that the US Federal Reserve (Fed) will cut interest rates in the next two consecutive meetings, opening up space for an acceleration in the upward momentum of Bitcoin and digital assets. The report also emphasizes that U.S. inflation in August rose by 0.4%, bringing the rate up to 2.9% – a level that could prompt the Fed to ease its policies. According to historical data, each rate cut cycle typically sends a positive signal for risk assets, including crypto. Market Outlook Q4 Coinbase's research team concluded that as we enter Q4, the outlook for the crypto market remains optimistic. Supporting factors include abundant liquidity, a favorable macro environment, and positive developments from the regulatory framework. However, reserve funds need to adapt to the new context, focusing on smart strategies, technology, and execution capabilities, rather than relying on past advantages.