The Bear Market Playbook: How Institutional Managers Are Positioning Now

Tim Enneking is Managing Partner and Founding Partner of Psalion, a digital asset yield business with approximately $200 million under management generating yield on BTC, ETH, Solana, and stablecoins through DeFi liquidity pool allocations via segregated managed accounts. Visit Psalion.com.

Let me tell you what I see when I look at most Bitcoin treasury programs today.

A company makes a bold decision. They allocate capital to Bitcoin. They announce it. The stock reacts. Executives take a victory lap. And then, nada. The Bitcoin sits in cold storage. No bear market framework. No answer when the board walks in and asks the question everyone should have seen coming: what exactly is generating a return on this asset?

I have been investing in crypto for thirteen years. I ran what I believe to be the first crypto trading fund in the United States, a fund that in 2021 was the best performing hedge fund in the world according to Preqin, not just the best performing crypto fund. I spent nine years as Chief Investment Officer of a near ten-digit family office, where I tripled its value with zero crypto exposure. I say that not to qualify my opinion but to explain the lens I apply to everything I look at: both sides of the ledger, fiat and crypto, at the same time.

What I see in Bitcoin treasury management right now is a lot of buy-side conviction, and very little infrastructure. Corporates are adding to the balance sheet, all the while the company is paying real operating costs while they wait on theoretical appreciation. 

That is not a strategy. That is a bet with no risk management around it.

The Yield Nobody Is Capturing 

Here is the uncomfortable truth: Bitcoin natively generates zero yield. 

That is fine if you are a long-term holder with no operating expenses and no board asking questions. For a corporate treasury, your obligations are real. And the asset covering your balance sheet is generating nothing while you wait for appreciation.

At Psalion, we generate yield on Bitcoin and stablecoins through allocations to liquidity pools, structured as segregated managed accounts. Over five years and approximately $14 billion in total allocations across more than 500,000 individual pool positions, we have never recorded a non-positive result and never experienced impermanent loss.

The strategy is completely market neutral. In the current environment, we are generating approximately 3.5% annually on Bitcoin holdings.

That number might not sound dramatic. But understand what it means in a drawdown. 

The Bear Market Multiplier

If Bitcoin drops 50% and you have been generating 7% over two years, you have not gone down 50%. You have gone down in the low forties. That difference is not just arithmetic, it has a multiplier effect on the recovery.

Run the numbers. Treasury A goes down 40%. Treasury B, generating yield, goes down 30%. Both subsequently recover 50%. Treasury A was at 60, recovers to 90, still hasn't made it back. Treasury B was at 70, recovers to 105. 

That is a 15-point spread from a 10-point difference on the way down. 

The compounding effect of any yield in a down market is disproportionate. That is why generating even modest yield during a bear period is one of the highest-leverage decisions a treasury can make.

The Four-Year Cycle Is Over

I want to be direct about this because I think it is one of the most important structural shifts happening in this market right now: the four-year Bitcoin cycle is dead.

The cycle was driven by the halving, the mining reward cut in half every four years, creating a supply shock that historically preceded major price moves. That mechanism made sense when miners controlled meaningful supply and when the dominant investor profile was retail. Neither of those things is true anymore.

Ninety-seven percent of all Bitcoin has already been mined. The halving of the remaining reward is not a significant supply event. More importantly, the investor profile has changed permanently. Digital asset treasury companies have entered. ETFs have entered. Wirehouses and major brokerages are offering Bitcoin exposure to institutional clients. These are investors who think in decade-long time horizons, not four-year cycles. They do not panic sell at the same triggers. They do not respond to the same fear signals.

What I call Enneking's Law (a riff on Moore's Law) is that the profile of the average crypto investor changes every eighteen months. When that happens, market behavior changes with it. The old playbook stops working.

Crypto hedge funds that could read the cycle and ride it are folding because the cycle is no longer readable in the way it once was. This is a market that now rewards fundamental analysis, not cycle timing.

The Contrarian Framework

None of this means there is no signal. There is always signal. 

When I see every headline negative, every analyst cutting price targets, fear indexes at all-time lows, retail exiting, and the only bullish call in the market being a single Bernstein note — that is not noise. That is the signal. Baron de Rothschild said you invest when there is blood in the streets. He did not mean revolution. He meant: buy when everyone else is running away.

On November 15th, 2022 — the day FTX declared bankruptcy, the single most catastrophic event in the history of crypto markets — I moved all liquid assets in the fund I manage into BTC, ETH, and Solana. We did not trade once in all of 2023. We rode the full recovery. I called it the artificial FTX capitulation because that is exactly what it was: fear-driven selling that had nothing to do with the underlying value of the assets.

That is what contrarian positioning looks like in practice. You do not pick the exact bottom. You do not need to. You need to recognize capitulation when you see it, have the framework to act on it, and have the yield infrastructure in place so that while you wait, your assets are not sitting completely idle.

Build the Playbook Before You Need It

The current environment makes all of this more urgent, not less. Bitcoin came down from a high of approximately $126,000 to around $67,000. That is a nearly 50% drawdown. 

The treasuries that emerge from this period with their positions intact will not be the ones who got lucky. They will be the ones who built yield infrastructure on top of their holdings, understood the market structure well enough to interpret price action correctly, and had a bear market framework in place before they needed it.

The playbook is not complicated. But you have to build it before the drawdown arrives. Because by the time you need it, it is already too late.

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Visit Psalion.com or contact Tim's team to learn how Psalion generates yield on institutional Bitcoin holdings through segregated managed accounts.