The Skies are Clearing for Digital Assets

Cryptocurrency and Bitcoin are no longer just buzzwords – they’re becoming a defining force in modern finance. Speculation has often taken the forefront in the space, however digital assets are now experiencing mainstream acceptance.

While speculation initially dominated the space, the narrative has shifted. Adoption is accelerating, with some of the biggest names on Wall Street leading the charge.

BlackRock CEO Larry Fink (source: Yahoo Finance)

Larry Fink, CEO of BlackRock, once called Bitcoin “an index of money laundering,” but by 2024, he praised it as “digital gold” and a “legitimate financial instrument.” That year, BlackRock’s Bitcoin ETF became the most successful in history, with over $50 billion in AUM at the end of 2024. Similarly, J.P. Morgan’s CEO Jamie Dimon, who has been dismissive of  Bitcoin, now oversees the bank’s own cryptocurrency launch and Bitcoin-related services due to overwhelming client demand.

The institutional embrace of digital assets is no longer a question of “if” but “how fast.” Last year, AMP Super made headlines when it allocated $27 million to Bitcoin in a first for Australian super funds. 

With over 560 million cryptocurrency owners worldwide as of 2024, this demand in digital assets is no phase. The cryptocurrency market more than doubled in value in 2024 from $1.65 trillion on January 1st, to $3.28 trillion by year’s end – a remarkable 98% increase. Even with Bitcoin at an all-time low 4-year CAGR of 14.5% in late February 2025, it has still provided better returns than gold and stocks.

As the financial landscape evolves, investors are beginning to recognise this and explore ways to add this evolving asset to their portfolio.

So where can it go from here?

With a Trump re-election paving the way for more favorable conditions in the digital asset space, we have already seen key de-regulatory promises materialise. This included the nomination of a pro-crypto leader to the position of SEC Chairman, a bold declaration claiming the U.S. as the “Crypto Capital of the World”, and even some speculation that Bitcoin could be added to the U.S. Government balance sheet.

This begs the question – where can prices go if cryptocurrency truly goes mainstream?

As with all assets, future price is driven by supply vs demand. The supply side is straightforward, as supply for Bitcoin has a hard cap – it cannot be printed like fiat currency – which is why it’s often compared to gold. 

Demand, however, is expected to keep growing. Technical innovation is enabling an increasing use of crypto technology which feeds into more demand. Global governments are deregulating its use and El Salvador has even allowed it as legal tender and added it as a reserve currency. And finally, investors – both institutional and retail – are looking to get exposure. All of these factors can drive demand which could then feed into higher prices.

Trump at the Bitcoin 2024 event (source: Reuters)

Off the back of this, market forecasts are turning increasingly bullish, with Blackrock’s Larry Fink even predicting a huge Bitcoin surge up to 7x, reaching as high as $700,000. If this sounds extreme, there are others in the market, like Michael Saylor, co-founder of MicroStrategy, the world’s largest corporate holder of Bitcoin, who forecast that Bitcoin could hit $49 million in a bull scenario.

“The bull market is looking likely for the rest of the year, and as more and more investors are educated on the space, I would not be surprised to see Bitcoin at $250,000 by the end of this year.” – Dean Serroni, CEO, Merkle Tree Capital.

Investors looking for exposure

The demand for digital assets is exploding, and investors are taking notice. As a fast-emerging asset class with low correlation to traditional markets, cryptocurrencies offer a unique diversification play, similar to adding a small portion of gold.

Adoption of crypto has been surging at a faster rate than the internet, with 23% of Australians now owning crypto in some form. 

The question for many is – how?

Accessing the digital asset market hasn’t always been easy. Early investors faced the technical complexities of managing crypto wallets, along with the very real risk of losing their holdings entirely. 

Then came cryptocurrency ETFs, a game-changer that finally made digital assets more accessible for both wholesale and retail investors. 

Australia’s deregulation of crypto ETFs in 2022 opened the floodgates, yet investors are still met with limited choices. There is only a handful of ETFs available, and they are either tied to a single major cryptocurrency (BTC, ETH) or shares in companies operating in the crypto industry. 

These limitations have created a need for broader, smarter investment solutions.This has sparked a hunger for something bigger. Investors want broader, more diversified exposure without the hassle – a “set and forget” investment solution that captures the full potential of the digital asset revolution.

The Best Performing Fund in Australia

For sophisticated investors seeking broader exposure to the asset class in a set-and-forget (i.e. actively managed) setup, Merkle Tree Capital is a strong performer.  

Named Australia’s Best Performing Fund by the Australian Financial Review in FY24, Merkle Tree delivered an incredible 122% return – outpacing the second-best fund by 19% and surpassing Bitcoin by 16%.

The fund offers more diversified exposure than the current ETFs available by investing in a broad portfolio of crypto assets with a strong bias to the 50 largest currencies by market cap. Due to Bitcoin’s high weight in the crypto world, a big part (typically 40%) of the portfolio is in Bitcoin, but the remainder allows for participation in newer projects which can have huge upside.

An interesting feature, also not offered by ETFs, is the active management of asset allocation over cycles, which captures an important phenomenon in crypto markets called Bitcoin Dominance.

Similar to an equity manager who looks at cyclical fluctuations of P/E ratios, the Merkle Tree team allocates between Bitcoin and smaller-cap crypto assets depending on their relative value in the market. If Bitcoin’s weight is near a high, the allocation is reduced to favour smaller assets which have historically performed far better after such highs. 

Dean Serroni, Merkle’s CEO states: “These cycles really matter. In some periods, even when all assets go up, some currencies can perform multiple times better than Bitcoin. We want to capture this, which is why active management and deep research is an integral part of our philosophy”.

This strategy has seen their fund achieve a remarkable 248.8% since their inception

The fund’s fees are higher than that of an ETF, but the team states that this is more than compensated by the yield they get from staking their assets, which is basically using their assets to support crypto networks and earn more crypto in return – again, something ETFs typically do not do.

Merkle Tree Capital Co-Founders Dean Serroni & Ryan McMillin (source: The Australian)

Behind this success are Co-Founders Dean Serroni and Ryan McMillin – two industry veterans bringing decades of expertise. Dean, an entrepreneur with a background in trading and research, has spent 20 years in technology and has been investing in crypto since 2017. 

Ryan brings over 20 years in asset management, portfolio construction, and research, having designed and successfully launched over 100 funds in 10 jurisdictions which have raised billions and won multiple awards.

For those exploring opportunities in the digital asset space, Merkle Tree Capital isn’t just an option – it’s a fund worth paying attention to.

Reach Markets Pty Ltd have been engaged for promotion of Merkle Tree Pty Ltd Financial Products and may receive fees for it’s services..

Past performance is not a reliable indicator of future performance.