Crypto for Advisors: Crypto – No Longer The Wild West?

THEN, KIM Klemballa from Coindesk Indices Answers Questions About Digital Asset Benchmarchs and Trends in Ask An Expert.

– Sarah Morton

You’re Reading Crypto for Advisors, Coindesk’s Weekly Newsletter That Unpacks Digital Assets for Financial Advisors. Subscribe Here to Get It Every Thursday.

The Evolution of Crypto Products – from Speculatory Bets to Strategic AssetsCrypto is no Longer the “wild west” of investing. Once Dismissed As Mere Speculatory Bets, Digital Assets Have Matured Into A Credible and IncreASINGly Strategic Component of Institutional Portfolios.

Figure 1: Global Assets Under Management (Aum) in Physical Crypto etps

Source: Bloomberg, Wisdomtree. 01 April 2025. Historical Performance Is Not An Indication of Future Performance and Any Investment May Go Down in Value.

As of the End of Q1 2025, Global Assets Under Management (Aum) in Physical Bitcoin Exchange-Traded Products (ETPS) Was More Than $ 100 Billion. That figure signals deep, Sustaned Convention from Institutional Investors, Meaning This Is No Longer Just Just of Early Adopters. Today, Sovereign Wealth Funds, Pension Schemes and Asset Managers Are Allocating to Crypto at Scale.

After more 15 years of development, Multiple boom-and-bust cycles and a Global User Base Exceeding Half A Billion People, Crypto Has Proven It Passing Trend. Bitcoin has emerged as a Crypto Macro Asset-Scarce, Decentralized and Increasing Positiored As a Core Holding Within Diversified Multi-Asset Portfolios.

But Here’s The Catch-Crypto Allocations Are Still Under-Diversified.

Despite Growing Adoption, MOST Crypto Portfolios Remain Narrowly Concentrated in Bitcoin. That is a Legacy Mindset and One that is funcentalally flawed. Investors wouldn’t allocate their entre Entire Equity Exposure to Apple, Nor Rely on a Single Bond to Represent Fixed Income. Yet that is precisely how many still Treat Crypto.

Diversification IS Foundational in Traditional Finance. IT Spreads Risk, Enhances Resilience and Unlocks Access to Broader Opportunity Sets. The Same Principle Holds in Digital Assets.

The Cryptocurrency Universe Has Expanded Far Beyond Bitcoin, Evolving Into A Dynamic EcoSystem of Distinct Technologies, Use Cases and Investment Theeses.

Smart Contract Platforms Like Ethereum, Solana and Cardano Are Building Decentralized Infrastructure for Everythingthaning from Decentralized Finance Trade-Offs in Scalacy, Security and Network Design. Meanwhile, Polkadot is Advance Interoperability, Enabling Seamless Communication Across Chains-A Key Building Block for a Multi-Chain Future.

Beyond These Layer 1 Blockchains, We Are Seeing Rapid Innovation In:

• Real-World Asset (RWA) Tokenization WHERE Traditional Finance Meets Blockchain Rails
• Defi Protocols Powering Decentralized Lending, Trading and Liquidity Solutions
• Web3 Infrastructure, from Decentralized Identity to Storage, Forming The Backbone of a More Open Internet

Each of the Sectors Carries Its Own Risk-Sturn Profile, Adopt Curve and Regulatory Tradery. Treating them as interchangeable, or worse, igNoring them altogether, is similear to redecking Global Equity Investing to a Single Tech Stock. It is not just outdated – It is strategical inefficiency.

Diversification in Crypto is not about Abouting Risk, But Racher, CAPTURING The Full Spectrum of Innovation. In a multi -chain, multi-teisis World, Failing to Diversify Means Leaving Opportunity on the Table.

The Case for Crypto Indices

The reality is that MOST INVESTORS DO NOT HAVE the TIME, Tools or Technical Expertise to Keep Up with 24/7 Crypto Markets. Crypto Indices Offer A Powerful Solution for Those Seneking Broad, Systematic Exposure Without Having to Dive Into Tokenomics, Validtor Uptime or Network Upgrades.

Just As equity Investors Rely on Benchmarks Such as The S&P 500 or Msci Indiches, Diversified Crypto Indices ALLOW INVESTORS TO Access the Market Passiely – Str. No Gusswork, No Token-Picking, No Need for Constant Rebalalances. Just Clean, Rules-Based Exposure to the Evolving Crypto Landscape.

– Dovile Silenskyte, Director of Digital Assets Research, WisdomTree

Ask An ExpertQ. WHY IS DIVERSIFICATION IMPORTANT IN CRYPTO?

A. Among over 20,000 Listed Cryptocurrencies, Bitcoin Now Accouns for Approximately 65% ​​of Total Market Capitalization. Diversification is Key for Institutional Investors to Manage Volatility and Capture Broader Opportunities. Indices Can Be An Efficient Way of Tracing Asset Class Performance, While Products Like Exchange-Traded Funds (ETFS) and Separalate Managed Accounts Cryptocurrencies at Once, Potentilly Helping to Spread Risk.

Q. What Trends Are You Seeing in Digital Assets?

A. Institutional Investors are Entering the Market, Pushing Digital Assets From A Niche Investment Into A Key Asset Class. Ey-Parthenon and Coinbase Conducted A Survey of More than 350 Institutional Investors AROUND IN JANUARY 2025. Variety of Options Such as Exchange-Traded Products (ETPS), Investments in Digital Asset Companies, Stablecoins, Futures and Thematic Mutual Funds. Perryey, 55% HOLD SPOT Crypto Through Etps, With 69% of Those Who Plan to Own Spot Crypto Planning To So Using Registered Vehicles.

Q. Does A Broad-Benchmark Exist in Crypto?

A. There are Broad Benchmarks in Digital Assets. AT CODICES INDICES, WE LAUINCHED The CODEX 20 INDEX IN JANUARY 2024, to CAPTURE The Performance of Top Digital Assets and Act As a Gateway to MEASURE, Trade and InvESTASEVESTA. Designed with Liquidity and Diversification in Mind, The Coindesk 20 Has Generated an Unprecedated $ 14.5 Billion in Total Trading Volume and Is Available In Twenty Investment Vehicles Globally. Coindesk Indices ALSO HAS The COINDESK 80 Index, Coindesk 100 Index (Coindesk 20 + Coindesk 80) and Coindesk Memecoin Index, Amongst Others.

– Kim Klemballa, Head of Marketing, Coindesk Indices

KEEP READING

• WHY A DIVERSIFIED APROACH TO CRYPTO INVESTING MAKES SENS.
• International grocery Giant Spar Begins Accepting Bitcoin Payments in Switzerland.
• The New Crypto-Friendly US Sec Chair, Paul S. Atkins, Was Sworn in Wednesday.