Welcome to Crypto Long & Short, our institutional newsletter. This week, we examine the importance of investor relations in token performance.
A recent example is the liquidation of a protocol's treasury by tokenholders just months after a highly successful ICO, highlighting the need for effective investor relations. Institutional-grade investor relations is the missing piece in token markets, and protocols are now seeking public market investors for more durable capital. Regular investor calls with forward guidance are essential, as seen in Maple Finance and EtherFi. Research shows that providing accurate guidance is crucial, as it leads to a measurable stock price premium and increased market trust.
Crypto is starting to produce its own version of this dynamic, with Maple and EtherFi delivering on their guidance and experiencing significant token price increases. However, guidance without delivery is just marketing, and investor relations in crypto requires accountability and credibility.
We also explore how institutions are separating custody from execution in crypto, with major trading firms holding assets in regulated bank custody while executing trades on exchanges. This shift signals a broader evolution in digital asset market structure, with the infrastructure being built by institutions to support it. The separation of custody and execution reduces capital inefficiency and allows collateral to generate returns, making it a fundamental change in the economics of institutional crypto trading operations.
As the market matures, institutional participation is becoming possible at scale, with 73% of institutional investors planning to increase their digital asset allocations this year.