Understory Investment Thesis

Thesis

Why Now?

Mass Blockchain Adoption is Here and Investors Need Structured Exposure.

Digital assets have matured beyond their speculative origins. With bipartisan momentum in Washington, new ETF approvals, and accelerating institutional adoption, the asset class is entering a period of unprecedented legitimacy and inflows. Hedge funds, pensions, and sovereign entities are already allocating, yet most private portfolios remain structurally underexposed.

Those who do allocate often rely on passive vehicles like spot ETFs, trusts, or proxy equities such as MicroStrategy. These products track prices but offer no downside protection. In the 2022 crash, Bitcoin and Ethereum lost over 60%, and many investors absorbed the full drawdown. Using the same systematic strategies that power Understory today, we generated a +56.4% return during that same crash, proving that disciplined trading can protect and grow capital while others are wiped out.

Now, as the next bull cycle accelerates, the opportunity is twofold: capture the upside of institutional inflows and the next retail bubble while maintaining the ability to defend against inevitable future downturns. Understory turns volatility into a source of returns, compounding capital across cycles rather than riding them up and down. For investors, the timing is clear: this is the moment to position ahead of the melt-up with a system that has already demonstrated resilience under extreme conditions.

Why Understory?

Volatility is not a liability; it is our edge.

Most investors remain underexposed to digital assets, and those who do allocate generally default to passive products. That approach delivers raw exposure, amplified volatility, and no compounding. Understory offers an alternative: a proven, adaptive trading system designed to compound across cycles and mitigate the very risks that keep institutions and private portfolios on the sidelines.

Volatility is not a liability; it is our edge. By systematically harvesting gains in both rallies and downturns, the Fund converts short-term dislocation into long-term appreciation. This is not anecdotal success but a structural advantage, supported by independent fund administration and designed to withstand institutional due diligence. Allocating through Understory means accessing a proven, repeatable system that transforms volatility into durable growth in an asset class that has historically punished passivity.

Fund Objective

Deliver absolute returns that outperform raw market exposure across cycles.

The Fund’s objective is to give investors structured access to digital assets that compounds capital while controlling downside risk. Rather than tracking market prices
passively, Understory applies proven, rules-based trading strategies to convert volatility into consistent long-term growth. The purpose is simple: deliver absolute returns
that outperform raw market exposure across cycles.

Strategy in Action

Large-Cap Swing Trading: Laddered positions in BTC, ETH, SOL, and other liquid large caps to capture medium-term appreciation while protecting downside.
Systematic Scalp Trading: Rules-driven trades across 8–30 assets weekly, harvesting volatility in both rising and falling markets, creating realized gains as “dry powder” cycling back into other trades.
Breakout Trading: Targeted opportunities in sectors with accelerating narratives and retail interest, including AI, blockchain gaming, and real-world assets

All trades are spot-long and executed with strict rules-based filters, ensuring systematic discipline with active oversight.

Strategy Performance*

These results highlight the repeatability of Understory’s system: compounding gains across cycles, defending capital in downturns, and generating returns well beyond raw market exposure.

484.6%

Total Cumulative 31-Month TWR*

84.2%

Annualized TWR (CAGR)*

56.4%

Profit During 2022 Market Crash*

7.45

Sharpe Ratio (31 months)*

57.1%

Total Alpha over ETH (31 months)*

16.2%

Annualized Alpha over ETH (CAGR)*

*Live strategy results prior to fund launch, managing $1-4M of individual Ethereum-based accounts (07/01/22 – 01/31/25). Figures represent gross time-weighted returns (TWR), inclusive of principal appreciation. Results do not reflect management fees or fund-level expenses. Past performance does not guarantee future results.

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