TL;DR
- Geopolitical risks are rising, and the market's baseline scenario remains high volatility.
- Global liquidity has not yet shifted to a loose stance, with safe assets performing better.
- Short-duration U.S. Treasuries and private credit assets currently offer the best risk-return structure.
- BTC/ETH are long-term allocation assets, but positions should be kept restrained.
- Altcoins / high Beta crypto assets: 0% allocation is recommended at this stage.
Executive Overview
The global market in 2025 presents a structurally higher level of uncertainty. Geopolitical tensions, unstable global liquidity, and the breakdown of traditional crypto cycles are collectively pushing the market into a phase of prolonged volatility and more dispersed outcome distributions.
In this environment, the importance of capital preservation, liquidity management, and stable returns has significantly increased, far surpassing directional bets or high Beta speculation.
The transparent, verifiable on-chain yield products offered by R2 align closely with current investors' demands for stability and security.
This report will outline the macro factors we are focusing on and provide an updated asset allocation framework for the current environment.
1. Macroeconomic Environment Assessment
1.1 Geopolitical Risks: The Return of Multi-Regional Tensions
Two geopolitical lines are significantly impacting the global market:
Venezuela
The U.S. has designated Venezuela's "Cartel de los Soles" as a Foreign Terrorist Organization (FTO), establishing a legal basis for potential military intervention. However, this remains in the preparatory stage and does not indicate that conflict is imminent.
Market impacts:
- Increased risk premium in the energy market
- Short-term volatility in risk assets
- Enhanced demand for short-duration safe assets (T-Bills, MMFs)
This is a volatility event rather than a signal of a systemic crisis.
Japan—Taiwan—China
Japan has recently made a significant change in its official rhetoric, viewing the Taiwan conflict as a national security threat, which has notably raised the long-term geopolitical risk premium in the Asian region.
This move does not mean war is imminent but indicates that regional balance has become more fragile.
Market impacts:
- Increased risk premium for Asian assets
- Continued demand for U.S. duration assets and dollar liquidity
- Suppression of risk appetite during periods of geopolitical tension
1.2 Liquidity and Interest Rates: Uncertainty Remains Prominent
Global liquidity has not yet entered a clear easing cycle.
Core characteristics include:
- Core inflation remains sticky
- U.S. fiscal deficit is at a multi-decade high
- Financing costs in the credit market have significantly increased
- Dollar liquidity is strong but unstable
In this context, short-duration U.S. Treasuries continue to offer the most attractive risk-adjusted returns globally (4–5%).
1.3 Crypto Market Structure: Entering a New Paradigm
The crypto market has departed from the previous "4-year halving cycle" operational logic.
BTC/ETH:
- ETF funds have become a major source of demand
- Volatility has structurally decreased
- Highly correlated with U.S. tech stocks and interest rates
- Increasingly behaving as macro high Beta assets rather than independent cyclical assets
Altcoins:
- Liquidity is severely fragmented
- High FDV supply surplus
- Weak secondary demand
- Extremely low institutional participation
The result is the emergence of localized micro-cycles rather than a comprehensive altcoin rally.
2. R2's Macroeconomic Judgments
Based on the current macro environment, R2 draws the following conclusions:
- Volatility remains the main tone of the market, with uncertainties in both geopolitics and liquidity.
- Global liquidity has not yet supported widespread risk appetite, and high Beta crypto assets have a weak risk-return profile.
- Short-duration fixed income assets provide the best balance between safety and yield.
- Transparent yield supported by real assets will outperform speculative narratives.
- Demand for on-chain, verifiable, collateralized yield products continues to grow.
3. R2 Asset Allocation Framework
This allocation framework aims to balance the following objectives:
- Capital preservation
- Liquidity
- Stable returns
- Controlled long-term growth exposure
- Reduced drawdown under geopolitical and macro shocks
3.1 Core Defensive Allocation (70–80%)
Short-term U.S. Treasuries / Money Market Funds (40–50%)
The safest and most liquid assets globally. They can effectively buffer against volatility from geopolitical or macro events.
Institutional-grade Private Credit (30–40%)
For example, high-quality short-duration, senior, collateralized private credit (e.g., Apollo). Provides 6–10% annualized, low volatility, low correlation returns. Used to stabilize the cash flow of the overall investment portfolio.
3.2 Growth Allocation (10–20%)
BTC / ETH (10–20%)
Still the core long-term assets of the digital economy, but positions should be controlled during macro fragile phases.
As a structural long-term allocation rather than a short-term bet.
3.3 High-Risk Allocation (0%)
Altcoins / Venture Capital / High Beta Crypto Assets (0%)
In the current context of fragmented liquidity and poor market structure, allocation is not recommended.
Maintain a 0% weight until there is substantial improvement in global liquidity.
4. Reasons the Allocation Framework is Effective in the Coming Months
This allocation is built on three principles:
1. Liquidity First
Short-duration U.S. Treasuries perform excellently during shocks and provide flexibility.
2. Stable, Verifiable Returns
Private credit and on-chain T-Bill strategies can provide low volatility, reliable returns, independent of market narratives.
3. Controlled Long-Term Growth Exposure
Moderate allocation to BTC/ETH can maintain long-term potential returns while reducing the probability of drawdowns.
5. R2's Role in the Current Environment
R2 provides investors with:
- Tokenized T-Bills
- Private Credit Supported Yields
- Fully Transparent On-Chain Interest Distribution
- Real yield alternatives with lower volatility compared to speculative crypto assets
In a market cycle dominated by uncertainty, investors increasingly value:
Safety, liquidity, transparency, and verifiable real yields.
This is the core value of R2.
Conclusion
The current environment is more suitable for constructing a portfolio that:
- Has high liquidity
- Has high safety
- Has moderate growth exposure
- Reduces high Beta speculative risks
Recommended allocation structure:
- 50% → Short-term U.S. Treasuries
- 35% → Private credit stable yields
- 15% → BTC/ETH
- 0% → High Beta crypto assets
This portfolio can maintain resilience while providing upside opportunities for future macro improvements.
R2 will continue to track changes in the macro environment and update allocation recommendations as necessary.
Disclaimer
This report is for informational reference only and does not constitute investment advice, investment solicitation, or any form of financial product recommendation. All investment activities carry risks and should be based on the investor's own goals, risk tolerance, and independent judgment.
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