Crypto Current #95

This week, Intercontinental Exchange Inc (ICE), owner of the New York Stock Exchange, invested $2 billion into Polymarket at an $8 billion valuation this week. The deal structure matters: ICE becomes Polymarket's global data distributor and partner on tokenization initiatives. This is TradFi backing a crypto-native product that already works, then helping scale it to mainstream users. As DACM's CIO Richard Galvin put it on stage at Singapore Token2049 last week, crypto needs to move from "hundreds of thousands inside the crypto sandbox" to "hundreds of millions of users" beyond it.

What's happening in crypto?

Bitcoin hit new all-time highs above $126,272 this week. Stablecoin supply crossed $300 billion. Crypto ETPs recorded their largest weekly inflows ever at $5.95 billion, with Bitcoin alone seeing $3.55 billion and Solana breaking records at $706.5 million. The numbers suggest growing institutional participation, but recent travels through Korea Blockchain Week and Singapore Token2049 revealed how institutions are actually approaching the market.

Chart of the week

Polymarket's prediction market monthly volumes. The US election drove October-November 2024's volume spike, but sustained adoption post-event has supported Polymarket's $8 billion valuation.

Source: Dune Analytics

Notes from the road - Korea Blockchain Week and Token2049 Singapore

Korea Blockchain Week opened with news that felt bigger than the headlines suggested. Naver, Korea's equivalent of Google, completed a stock swap to acquire Dunamu, the parent company of Upbit. Initial reports framed it as Upbit being sold. When we spoke with Upbit's CEO, he corrected that view: "We are not selling, we're buying."

The structure matters. Dunamu becomes a wholly owned subsidiary of Naver Financial, but Dunamu shareholders receive Naver Financial shares in exchange. Upbit controls roughly 69% of Korea's crypto exchange market and serves 16 million active traders out of Korea's 51 million population. Naver brings 25 million daily active users across search, shopping, payments, and messaging. The combined entity plans to build a "super app" integrating crypto trading into Naver's existing ecosystem, including a Korean won-pegged stablecoin.

This played out as a microcosm of what we saw throughout BCW and Singapore. Sophisticated retail markets watching traditional corporates move into crypto. The corporates are interested, actively planning, but waiting for clarity on infrastructure, custody, and regulatory frameworks before committing capital. The optimism is there, but measured.

Singapore Token2049 felt different from previous years - more suits, fewer cargo shorts. One partner described crypto as having evolved from infancy into its teenage years—fully formed but not yet mature. Products and approaches that worked in crypto's early days don't necessarily translate to institutional scale.

DACM’s Executive Chairman & CIO, Richard Galvin, joined a panel with Kelvin Koh from Spartan Group, Alan Du from PayPal Ventures, and Steve Lee from Neoclassic Capital, with the discussion focused on market structure changes. When asked what's next for crypto, Richard's answer focused on execution: leaving the crypto sandbox, scaling products from hundreds of thousands of users to hundreds of millions. The moderator made another point worth noting: "narratives are slippery." Markets increasingly demand substance over stories.

DACM's Richard Galvin onstage at Token2049 in Singapore last week for the "Global Markets and Crypto: Where’s the Upside Now?" panel.

Views on market timing diverged throughout the week. Crypto VCs expressed caution about froth in certain areas. Newer institutional entrants remained more bullish. Richard took a measured view: rather than seeking massive zero-to-one moments, focus on converting the current cohort of projects into real businesses. That conversion takes time but offers more durable returns than chasing narratives.

A lot of conversation across the conferences revolved around Digital Asset Treasury companies (DATs), as their issuance became the latest trend following Strategy's ($MSTR) success. Whilst we’ve talked about DATs in previous Crypto Currents, talking with other market participants on the road, it seemed there was an irony—the dynamic involves role reversal: crypto natives questioning whether DATs benefit the broader ecosystem, applying similar skepticism that traditional finance once directed at crypto. The reflexive nature of DATs—where the structure can restart stalled narratives or alter tokenomics—makes them interesting from a market structure perspective as DATs become a new source of demand for tokens.

Access drives adoption, but do DATs solve real ‘access’ problems? What is certain is that not all of them have the same structure, so it's more case by case, though an interesting view from one market participant is that they have witnessed a lot of leveraged traders buying DATs. It is not clear what they were leveraged against, but again points to that these trades are becoming somewhat crowded and there may be additional pressure in the system should something break.

On institutionalization, the recent Polymarket deal provides the template. ICE becomes a global data distributor and partner on tokenization, not just an investor. Polymarket, the leading crypto-based prediction market, proved its concept with over $3 billion in trading volume during the election cycle and has since demonstrated sustainable revenue. ICE provides the infrastructure and distribution to scale Polymarket globally.

Leaving the crypto sandbox requires different capabilities than those most crypto-native teams developed. Compliance infrastructure, custody solutions that meet institutional standards, user experience that works without understanding gas fees or wallet signatures, revenue models that make sense alongside traditional asset classes. This creates a quality filter. Protocols built solely for the sandbox face challenges transitioning to institutional scale. Those that succeed will resemble technology companies: sustainable revenue growth, clear value propositions, professional operations, and partnerships with traditional infrastructure.

Institutional participation is happening carefully. Traditional finance operates on different timescales than crypto natives expect. The participants coming in now are building positions, establishing infrastructure, and preparing for long-term allocation. Progress feels gradual even as fundamentals improve, but that deliberate approach means these participants weather volatility better than tourists chasing quick gains.

The opportunity for protocols navigating this transition successfully: serving millions of mainstream users who don't care about underlying technology as long as products work. That's institutionalization playing out through carefully structured deals and partnerships, one at a time—including this morning's news of Coinbase and Mastercard's competing late-stage talks to acquire stablecoin infrastructure provider BVNK for over $2 billion. We anticipate more deals like these to emerge as investors identify the applications successfully escaping the sandbox.

Subscribe now

Established in 2017, DACM is an institutional investor focused on the digital asset sector. Our team invest across the digital asset sector, from early-stage venture partnerships to listed and derivative markets. DACM has developed a fundamental investment philosophy designed for family office and institutional investors, tested across multiple market cycles.

LEARN MORE

IMPORTANT NOTICE

This document has been prepared by Digital Asset Capital Management Inc (DACM, and together with its affiliates, related entities and subsidiaries, referred to as ‘we’, ‘our’ or ‘us’). It is for distribution to qualifying professional investors only to the extent permitted by law. It is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or would subject a DACM entity to any registration or licensing requirement within such jurisdiction.

This document is provided solely to recipients who are expressly authorized by DACM to receive it. If you are not so authorized you must immediately delete or destroy it.

DACM is registered as an ‘approved manager’ by the British Virgin Islands Financial Services Commission (FSC). It and any DACM managed fund is not licensed or subject to supervision of FSC or any other regulatory authority outside the British Virgin Islands, such that the requirements considered necessary for the protection of investors that apply to regulated funds in the British Virgin Islands do not apply to DACM or any DACM managed fund. This document has not been reviewed or approved by FSC or any other regulatory authority in any jurisdiction.

General information only. No advice or recommendation. This document does not constitute general advice or personal advice by DACM or any of its affiliated entities or funds in relation to a potential investment in any financial product. It is a general communication and is intended to be educational in nature. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments, funds, coins or tokens (whether or not subject to securities regulation) or to participate in any particular trading strategy. In Australia, to the extent that this document may contain financial product advice, it is given by DACM Australia Pty Ltd ABN 50 624214 777 (DACM Australia), as corporate authorised representative No. 001293214 of Quay Wholesale Fund Services Pty Ltd AFSL 528526, only to ‘wholesale clients’ as defined under the Corporations Act 2001 (Cth). This document is not authorized for distribution to ‘retail clients’ as defined under the Corporations Act. To the maximum extent permitted by law, neither DACM Australia or Quay, nor their respective directors, employees or agents, accept any liability for any loss arising in relation to this document. Provision of this document is not, and should not be considered as, a recommendation in relation to an investment in any entity or that an investment in any entity is a suitable investment for any specific person. It does not take into account any person’s particular investment objectives, financial situation or needs.

Investment suitability. Recipients should make their own enquiries and evaluations they consider appropriate to determine the suitability of any investment (including regarding their investment objectives, financial situation, and particular needs) and should seek all necessary financial, legal, tax and investment advice. An investment in a DACM managed fund is subject to the fund’s offering memorandum, term sheet or other disclosure document, together with its memorandum and articles of association. Such an investment may be deemed speculative and high risk and should not be regarded as a complete investment program. Digital assets are subject to a range of specific risks associated with their particular features, in addition to the risks of investing in funds or financial assets generally, such as certain regulatory, technology, custody, price, valuation, liquidity, cybersecurity, exchange and market risks. An investment in a DACM fund may present a greater risk to an investor than investment in a regulated fund in the British Virgin Islands or elsewhere. The funds’ investments are subject to substantial market fluctuations and there can be no assurance that appreciation will occur or that material losses will not be realized. The value of investments may fall as well as rise. Past performance is not an indicator of future performance. DACM funds that are open for subscriptions are only available to qualifying professional or accredited investors in selected jurisdictions where an offer of shares is authorized under applicable law and the terms of the offering memorandum. They are designed only for experienced and sophisticated investors who are able to bear the risk of the substantial impairment or loss of an investment in the fund.

Material interests. We and our shareholders, directors, officers and/or employees may have material holdings in the investment funds, projects, coins or tokens referred to and may otherwise be interested in transactions that you effect in those funds. Our actual investment positions may not reflect some or all of the views presented due to a range of possible factors, such as client or fund investment restrictions, liquidity factors, portfolio rebalancing and transaction costs, among others.

No liability. DACM, its affiliated entities and funds, and their respective directors, related parties, representatives and employees, do not accept any liability for the results of any actions taken or not taken on the basis of information in this document, or for any misstatements, errors or omissions negligent or

otherwise, to the maximum extent permitted by law. No legal or other commitments or obligations shall arise by reason of the provision of this document or its contents except to the extent required by law.

Incomplete information. This document contains selected information and does not purport to be all-inclusive or contain all relevant information in relation to its subject matter. The information has not been independently verified and is provided on the basis that it will not be relied upon and that the recipient is capable of making its own independent assessment as to the validity and accuracy of the financial assumptions, data, results, calculations and forecasts contained, presented or referred to in the document, and the economic, financial, regulatory, legal, taxation, accounting and other implications of such. No independent third-party audit or review has been obtained or verified as having been undertaken by any third party of the sources, financial assumptions, data, results, calculations and forecasts contained, presented or referred to in this document. DACM does not undertake to update or keep current any information in the document.

Links. This document may provide links to websites and when you click on one of these links, you may be redirected to another provider's website. The inclusion of any link does not imply our endorsement or our adoption of the statements on the linked site or of the operator of the site. Linked sites and their providers are not controlled by us, and we are not responsible for their actions or the contents or the proper operation of any linked site. The links may not remain current or be maintained. We make no guarantees or representations as to, and shall have no liability for, any electronic content delivered by any third party, including, without limitation, the accuracy, subject matter, quality, sequence or timeliness of any electronic content.

Forward statements. This document may contain forward-looking statements, forecasts, historical performance, estimates, projections and opinions (Forward Statements). No representation is made or will be made that any Forward Statements will be achieved or are correct. Actual future results and operations could vary materially from the Forward Statements. Any projections or statements of past performance are provided for general reference purposes and Forward Statements may be based on assumptions relating to the general economy, markets or other factors beyond the control or knowledge of DACM. No representation is given that the assumptions disclosed in this document upon which Forward Statements may be based are reasonable, or that any prices or valuations provided represent DACM’s internal records or that a transaction can or could have been be effected at those prices or values. Any opinions expressed in this document may change without notice and may differ or be contrary to opinions expressed by other DACM representatives or documents. Any statements or data attributed to a third party represent DACM’s interpretation and have not been reviewed by the third party. Facts and circumstances may change and the contents of this report may become outdated or incorrect as a result.

Proprietary information. This document and its contents (including all DACM intellectual property) are propriety to DACM, and must not be reproduced, delivered or disclosed, in whole or in part, to any party other than the authorized recipient to whom this document is addressed, except with the prior written approval of DACM. Images or other data sourced from third parties may contain objects, data or elements that are protected by third-party copyright, trademarks and other intellectual property rights.