The recent success of Bitcoin ETFs has prompted discussions about the future direction of the cryptocurrency investment landscape. While speculation exists about which coin might follow Bitcoin into the ETF world, asset managers are increasingly looking beyond individual coins to provide investors with diverse portfolio construction options.
At the Wyoming Blockchain Symposium, Cynthia Lo Bessette, head of digital asset management at Fidelity Investments, emphasized the need to educate investors about the broader crypto ecosystem, focusing on portfolio construction and creating exposures representing different sectors within the industry.
Steve Kurz, global head of asset management at Galaxy, highlighted their partnership with State Street to develop active trading products. He pointed out the significant expansion of crypto-linked securities, including futures, options, and crypto ETFs, enabling the development of active strategies. While not the traditional path, this presents a unique opportunity to raise crypto awareness and education.
Diversification Beyond Single Coins
Diversifying crypto portfolios beyond focusing on individual coin products is gaining importance for asset managers. With numerous Bitcoin ETFs available in the U.S., offering similar features, exploring alternative investment products becomes crucial for future profitability. Hedge funds, liquid token funds, and venture funds are among the models being tested.
Traditionally, investors have been advised to allocate a small percentage (1%-5%) of their portfolios to Bitcoin to manage risk and volatility. However, the emergence of diverse crypto-linked securities provides asset managers an opportunity to challenge this standard and offer more innovative strategies.
