Review and Preparation of Top Liquidity Funds: A Pure Secondary Market Approach, Easier for Retail Investors to Follow

This article is from: Fisher8 Capital

Compiled by | Odaily (@OdailyChina); Translator | Azuma (@azuma_eth)

Editor's Note: 2025 is now in the past. At the beginning of the new year, many VCs are rushing to publish their reviews of 2025 and predictions for 2026. However, due to their own business model orientation, VCs often focus more on a primary market perspective, which offers limited guidance for retail investors focused on the secondary market. This review and preparation piece from leading liquidity fund Fisher8 Capital is different. It not only fully documents the fund's successful and unsuccessful secondary market operations throughout 2025 but also provides some more secondary-market-oriented thoughts on the market direction for 2026.

The following is the original content from Fisher8 Capital, compiled by Odaily.

Summary

2025 was an exceptionally challenging year for most Liquid Funds, characterized by extremely aggressive capital rotation and crypto assets underperforming traditional assets overall. Although Fisher8 Capital achieved some results with mainstream assets and on-chain assets, due to our strong conviction in several long-term themes (such as AI, DePIN, etc.), and against the backdrop of poor performance in some emerging sectors, we chose to continue holding related positions through significant drawdowns.

Ultimately, Fisher8 Capital closed the year with an annual return of 16.7%. We are confident that the discipline and insights accumulated during this highly volatile year will help us continue to outperform the market in the future. However, from a risk-adjusted perspective, we might have been better off putting our money in a daycare center (Note: This is a sarcastic reference to the Minnesota daycare scandal).

If you are interested in collaborating with us or are working on something interesting and innovative, feel free to reach out to us on X. We hope you enjoy our annual review and wish everyone a prosperous new year.

Trading Records

Our best trades of 2025 are as follows.

Our worst trades were these.

2025 Market Review

The Clear Link Between Trump and the Crypto Market

Before the 2024 presidential election, the market widely anticipated that a Trump victory would be a major inflection point for cryptocurrency regulatory environment and valuation scale. Related expectations included:

• Ending the "regulation by enforcement" approach;
• Explicit support for stablecoins;
• Exploring the establishment of a "strategic Bitcoin reserve";
• And the launch of Trump-related projects in September 2024, such as World Liberty Financial (WLFI);

These factors collectively made crypto assets one of the highest Beta expressions within the broader "Trump Trade," pricing in immense policy optimism before the election results were known.

However, this optimism began to fade post-election, with the overall "Trump Trade" reversing. This phenomenon was evident not only in crypto assets but also in stocks highly correlated with Trump, such as DJT, whose stock price peaked before the election and then declined significantly. Although the post-election environment confirmed a more crypto-friendly policy stance, the market faced inertia in legal and regulatory progress, along with a series of fragmented, incremental policy outcomes, which struggled to offset the impact of overall de-risking on "Trump-themed assets."

Furthermore, Trump himself developed direct economic exposure to the cryptocurrency industry through his association with WLFI and the emergence of TRUMP. This heightened market concerns — crypto assets had become somewhat financialized around Trump's personal popularity, introducing a "perceived risk" — a decline in his political capital could directly translate into weakening prices for related assets.

Odaily Note: Forbes reported that the presidency increased Trump's net worth by $3 billion in one year.

While these concerns are not unfounded, they can be mitigated through the implementation of long-term policies or by reducing reliance on charisma-driven demand. Most notably, the Executive Order on Expanding Access to Alternative Asset Investments, signed in August 2025, broadened the permission for 401(k) plan fiduciaries to include digital assets in their portfolios. Although the order did not mandate allocations, it effectively lowered the legal and reputational barriers for institutional participation, reshaping cryptocurrency from a speculative fringe asset to at least a permissible asset within long-term capital pools.

The true significance of this shift lies not in whether immediate large capital inflows will occur in the short term, but in the change in market demand structure. With the potential inclusion of pension-related long-term capital, the crypto market began transitioning from a purely supply-driven halving cycle to a policy-modulated demand cycle, characterized by longer-term, stickier capital. Even marginal adoption at scale has the potential to raise the equilibrium price level and compress downside volatility compared to the 50–80% deep drawdowns seen in past cycles.

Narrowing of the "Risk-On" Trading Range

The connotation of "risk-on" trading is becoming more complex. Unlike previous cycles where speculative capital flooded into Meme and long-tail assets during risk-on phases, the performance divergence among Beta assets in 2025 was exceptionally pronounced. This was particularly evident in the relatively muted performance of Memes when BTC hit a new all-time high in early October.

Instead, investors began concentrating capital into a narrower subset of crypto assets, such as "equity-like assets" with crypto exposure (DATs, CEXs, and funds), prediction markets, or tokens with clear value capture mechanisms. This divergence reflects a maturing market structure: capital is becoming more selective and rotating faster, with flows becoming more short-term and narrative-driven. Investors chase local momentum, quickly harvest gains, and roll liquidity into the next narrative. In 2025, narrative cycles compressed, and trade durations became shorter than in previous cycles.

In this environment, the idea of holding altcoins long-term for massive returns has largely become a mirage. Apart from major tokens like BTC, ETH, and SOL, which benefit from institutional capital sedimentation, other tokens tend to appreciate only when compelling narratives are active. Once that narrative fades, liquidity dries up, and prices revert. The narrowing risk-on trading range hasn't extended altcoin lifespans; instead, it has accelerated the pace at which capital tests, milks, and discards new narratives. This reinforces a judgment — truly long-term crypto investment remains concentrated in a very few assets.

The Expansion of Digital Asset Treasuries (DATs)

The rise of Digital Asset Treasuries (DATs) introduced a novel capital formation mechanism, designed to replicate the success path of MicroStrategy. DATs allow publicly traded companies to raise funds and directly allocate them to crypto assets, creating a built-in proxy for crypto exposure and bypassing the regulatory vacuum before the approval of altcoin ETFs.

As these structures proliferated rapidly, the market quickly showed signs of froth — numerous new vehicles rushed to package themselves as the "DAT" for a particular altcoin, even if there was no real, sustained demand for that asset.

The capital structures adopted by many altcoin DATs, we classify as predatory. Specifically, these structures often employ financial engineering through token-in-kind contributions in exchange for stock, aiming to introduce a new set of participants while creating exit liquidity; supplemented by private rounds with extremely low costs and highly favorable lock-up conditions.

These mechanisms allow insiders to offload large quantities with minimal buy-side pressure, leading to rapid value extraction from retail investors in both the stock and token markets. This scale mismatch is particularly evident in some aggressive DAT schemes — some companies attempted to raise funds far exceeding their own public market capitalization.

2026 Investment Themes

Conclusion One: Asymmetric Returns Will Emerge at the Application Layer

The era of "monetary premium" enjoyed by new-generation alt Layer1s is coming to an end. Historically, this premium was primarily supported by the "Fat Protocol Thesis" and the "Moneyness" narrative — the belief that infrastructure would disproportionately capture value, and its tokens would eventually evolve into global stores of value.

However, the market has already consolidated this monetary function around mainstream assets like BTC, ETH, SOL, and stablecoins, stripping away the "moneyness" imagination for new Layer1s.

Odaily Note: Statistics on the All-Time High Fully Diluted Valuation (ATH FDV) of Layer1 tokens launched each year.

With the disappearance of the "moneyness" moat, the social consensus that once granted new public chains valuations of tens of billions of dollars is disintegrating. Since 2020, the ATH FDV of alt Layer1s has shown a clear structural downtrend, strongly indicating that the monetary premium is continuously fading.

Furthermore, the existing valuation "floor" is largely artificially created: in recent years, many Layer1s launched via fixed-price ICOs or directly on CEXs, with teams artificially setting initial prices. If these assets were forced to undergo genuine price discovery at launch, we believe their valuations would likely not approach the historical average of past cycles.

This valuation collapse trend is further amplified by the inertial advantages of existing public chains. Mature ecosystems already possess numerous "sticky applications" that lock in users, creating high barriers to entry for new alt Layer1s.

Data shows that since 2022, approximately 70–80% of DEX trading volume and TVL have consistently concentrated on three chains. Among them, Ethereum always holds one spot, while the other two positions rotate across different cycles. For new entrants, breaking this oligopoly structure is almost an uphill battle; historical experience shows most projects ultimately fail to secure a long-term seat.

Odaily Note: Comparison of application revenue / chain-layer revenue for ETH, SOL, and BNB.

We believe the revaluation of application tokens has already begun, driven by the significant divergence in value capture capability between Layer1 tokens and underlying applications. As shown in the chart above, over the past two years, application-layer revenue has decoupled noticeably from infrastructure revenue: application revenue within the ETH and SOL ecosystems grew by 200–300 times.

Despite this, the market capitalization of applications remains only a fraction of the L1's market cap. As the market matures, we expect this mismatch to correct through capital rotation from overvalued infrastructure assets to applications with real revenue.

Conclusion Two: Midterm Elections Will Shape a High-Volatility Environment

The current policy focus of the Trump administration is clearly on securing victory in the 2026 midterm elections, with overall policy design leaning towards supporting short-term economic momentum. The One Big Beautiful Bill Act (OBBBA) stimulates demand through deficit financing, marginally increasing the probability of a reflationary environment. For digital assets, this fiscal expansion is bullish for hard assets like Bitcoin, reaffirming its role as the ultimate "scarcity hedge."

Simultaneously, this fiscal expansion is highly likely to encounter supply-side constraints in certain areas, such as grid capacity and manufacturing output. These bottlenecks will create inflationary pressures on input costs and wages in related industries, even as the overall level is suppressed by structural deflationary forces like tariff normalization and AI productivity gains.

The resulting macro environment is characterized by — high nominal growth but simultaneously elevated volatility, with the market periodically repricing inflation risk. This tension will structurally push volatility higher. The market may oscillate between "reflation optimism" and fears of "resurgent inflation," especially as economic data gradually reveals capacity constraints rather than insufficient demand.

Overlaying this macro backdrop is the historical pattern where midterm election cycles elevate political risk premiums — investors typically demand higher risk compensation before elections to account for policy uncertainty. Supporting this landscape are clear political motives — to tolerate, or even expand, fiscal deficits during the midterm election cycle. Additionally, a more dovish Federal Reserve leadership would provide a more accommodative liquidity environment for risk assets.

While this combination implies higher volatility in the short term, from a long-term perspective, the impact of OBBBA combined with the ongoing advancement of crypto-specific legislation still leads us to believe that 2026 will be a constructive year for digital assets, albeit with a bumpier path