By Courtney Olujobi, Principal, Moon Pursuit Capital
One of the strongest arguments against allocating digital assets comes down to a simple problem: nobody can tell you with any real confidence what the asset is worth.
To a large extent, I agree, because I do not think any principal or investment committee can form a genuinely defensible view on the terminal value of a monetary network when there are simply too many variables involved, and pretending otherwise is how investors end up sizing exposure based on conviction and calling it allocation. But valuation is only one thing an investor can underwrite, because you can also look at whether the structure of a market consistently rewards you for doing something repeatable and whether a manager can actually demonstrate the process that captures it. Those are questions with answers, yet this industry has spent much of the past decade debating what these assets might eventually be worth while giving far less attention to how returns are actually generated.
From my years of experience, this matters well beyond digital assets because the liquid side of most portfolios is being asked to carry more weight as private markets distribute capital more slowly. As I have seen recently, venture alone has been net negative to limited partners by roughly $202 billion since 2022, while holding periods have stretched beyond seven years, and as a result, when one side of a portfolio keeps capital tied up for longer, allocators naturally start looking elsewhere for returns that are less dependent on market beta and liquidity that is genuinely available when they need it.
The allocator data is already reflecting that shift, with Barclays surveying 340 investors representing $8.7 trillion and finding equity market neutral at the top of the strategies they wanted most for the balance of 2026, while four of the top five carried low equity beta.
My own reason for favouring systematic exposure is probably more boring than the industry would like, but I think that is part of its appeal because you can actually check it. You can look at the signal library, risk model, execution stack and governance around model changes, and you can ask a manager exactly what conditions the strategy is designed to struggle in and expect a specific answer. I think about it in much the same way that credit committees ask for covenants because assurances only take you so far when real capital is at stake, and if I am allocating money to a strategy, I want to understand where the return is coming from and what has to happen for it to stop working.
Digital assets are where that instinct becomes especially important because these markets remain fragmented across dozens of venues, with an observable basis between spot and futures, funding rates that reprice several times a day and flows still heavily influenced by participants taking directional risk. These are persistent features of the market, which means they can create opportunities for market-neutral strategies designed to capture structural inefficiencies, and for an allocator that gives you something tangible to analyse around execution, repeatability and risk.
There is an important caveat here because ‘quant’ has become an incredibly broad label, and simply allocating to something because it carries that label can create a false sense of sophistication. A statistical arbitrage book can look neutral on paper while carrying a crowded short that turns ordinary volatility into tail risk when everyone suddenly needs the same exit, while strategies that appear uncorrelated during calm markets can quickly begin moving together under stress, which is exactly when that diversification is supposed to matter.
We have seen what that looks like before when the HFRX Equity Market Neutral Index fell 1.58 per cent in March 2026, driven largely by mean-reverting and factor-based losses, and anyone who was around markets in 2007 will remember how quickly crowded positions can unwind when everyone starts heading for the exit at once.
Digital assets introduce failure modes of their own because the infrastructure around the trade can matter just as much as the trade itself. Basis compression can remove the return you expected to capture, funding regimes can shift and invert the economics of a position, and borrow can disappear precisely when you need it most, while there is also a fundamental counterparty issue because a strategy can stay inside every trading risk limit and still lose capital if the custody arrangement fails. The events of 2022 made that reality very difficult for institutional investors to ignore.
For me, structure matters just as much as the signal because the first question is simple: does the person generating the return also have the ability to move the money?
Managed accounts can separate the two, giving a manager authority to trade while the assets remain under the allocator’s control and positions stay visible. Inevitably, that helps reduce custody and counterparty risk, although it does not remove the underlying risks of the strategy or guarantee liquidity.
This is also where diligence needs to get much tougher as an unaudited return series from an unnamed manager tells you very little, and I would much rather know who holds the assets, who can move them, how much leverage is being used and what happened when the strategy was under real pressure.
Systematic strategies can still lose money because markets change, trades become crowded and models stop working, this is not completely unavoidable. However, in the long term, their value is that you can examine how the return is being generated before committing capital. After a cycle where investors often discovered the risks far too late, I think that ability to verify what you are actually investing in matters more than ever.
