R2 Macroeconomic Outlook and Asset Allocation Framework

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 profile.

• 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 more persistent volatility and a more dispersed outcome distribution.

In this environment, the importance of capital preservation, liquidity management, and stable returns has significantly increased, far outweighing directional bets or high Beta speculation.

The transparent and 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 imply that conflict is imminent.

Market Impact:

• 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 shift in its official rhetoric, viewing the Taiwan conflict as a national security threat, which has notably raised the long-term geopolitical risk premium in Asia.

This move does not mean war is imminent but indicates that regional balances have become more fragile.

Market Impact:

• Increased risk premium for Asian assets

• Continued demand for U.S. duration assets and dollar liquidity

• Suppression of risk appetite during geopolitical tensions

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 at multi-decade highs

• Significant rise in financing costs in the credit market

• Strong but unstable dollar liquidity

Against this backdrop, 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 broad altcoin rally.

2. R2's Macroeconomic Judgments

Based on the current macro environment, R2 draws the following conclusions:

1. Volatility remains the dominant theme in the market, with uncertainties in both geopolitics and liquidity.

2. Global liquidity has not supported widespread risk appetite, and high Beta crypto assets have a weak risk-return profile.

3. Short-duration fixed income assets provide the best balance between safety and yield.

4. Real asset-backed transparent yields will outperform speculative narratives.

5. 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

• Reducing drawdowns 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 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 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-weak 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 Yields

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 drawdown probabilities.

5. R2's Role in the Current Environment

R2 provides investors with:

• Tokenized T-Bills

• Private credit-backed 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 investment portfolio currently best suited for construction includes:

• High liquidity

• High safety

• Moderate growth exposure

• Reduced 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, an investment invitation, 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.