The Evolution of Crypto Products — From Speculative Bets to Strategic Assets

In today’s crypto for advisors, Dovile Silenskyte from WisdomTree talks about the growth of crypto products and how they’ve evolved into a strategic investment allocation.

Then, Kim Klemballa from CoinDesk Indices answers questions about digital asset benchmarks and trends in Ask an Expert.

– Sarah Morton

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The Evolution of Crypto Products — From Speculative Bets to Strategic Assets

Crypto is no longer the “Wild West” of investing. Once dismissed as mere speculative 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, sustained conviction from institutional investors, meaning this is no longer just the realm of early adopters. Today, sovereign wealth funds, pension schemes and asset managers are allocating to crypto at scale.

After more than 15 years of development, multiple boom-and-bust cycles and a global user base exceeding half a billion people, crypto has proven it is no passing trend. Bitcoin has emerged as a crypto macro asset — scarce, decentralized and increasingly positioned 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 fundamentally flawed. Investors wouldn’t allocate their 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 theses.

Smart contract platforms like Ethereum, Solana and Cardano are building decentralized infrastructure for everything from decentralized finance (DeFi) to non-fungible tokens (NFTs), each with unique trade-offs in scalability, security and network design. Meanwhile, Polkadot is advancing 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 these sectors carries its own risk-return profile, adoption curve and regulatory trajectory. Treating them as interchangeable, or worse, ignoring them altogether, is similar to reducing global equity investing to a single tech stock. It is not just outdated — it is strategically inefficient.

Diversification in crypto is not about avoiding risk, but rather, capturing the full spectrum of innovation. In a multi-chain, multi-thesis 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 seeking broad, systematic exposure without having to dive into tokenomics, validator uptime or network upgrades.

Just as equity investors rely on benchmarks such as the S&P 500 or MSCI indices, diversified crypto indices allow investors to access the market passively — with scale, structure and simplicity. No guesswork, no token-picking, no need for constant rebalances. Just clean, rules-based exposure to the evolving crypto landscape.

– Dovile Silenskyte, Director of Digital Assets Research, WisdomTree

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Ask an Expert

Q. Why is diversification important in crypto?

A. Among over 20,000 listed cryptocurrencies, bitcoin now accounts 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 tracking asset class performance, while products like exchange-traded funds (ETFs) and separately managed accounts (SMAs) can provide exposure to multiple cryptocurrencies at once, potentially 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 the world in January 2025. Of the investors surveyed, 87% plan to increase overall allocations to crypto in 2025, spanning a variety of options such as exchange-traded products (ETPs), investments in digital asset companies, stablecoins, futures and thematic mutual funds. Per the survey, 55% hold spot crypto through ETPs, with 69% of those who plan to own spot crypto planning to do so using registered vehicles.

Q. Does a broad-based benchmark exist in crypto?

A. There are broad benchmarks in digital assets. At CoinDesk Indices, we launched the CoinDesk 20 Index in January 2024, to capture the performance of top digital assets and act as a gateway to measure, trade and invest in the ever-expanding crypto asset class. Designed with liquidity and diversification in mind, the CoinDesk 20 has generated an unprecedented $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

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