In the lead-up to the Digital Assets Summit 2025, Hedgeweek® sat down with Lisa Tyshchenko, Associate Director at CoinShares, to discuss the future of digital assets and what’s needed to bring them into the mainstream.
What are the biggest misconceptions institutional investors still have about digital assets?
Based on my conversations with institutional investors, I consistently hear five recurring misconceptions:
First, bitcoin moves like tech stocks. While bitcoin occasionally moves in sync with tech stocks, long-term data tells a different story. Since 2020, the average correlation has only been around 30% – meaning crypto can offer genuine portfolio diversification.
Second, you need to invest a large percentage of bitcoin in a portfolio. Even a small allocation, as little as 4%, can improve a portfolio’s Sharpe ratio and enhance overall returns. Historically, a 4% allocation rebalanced quarterly has added less than 100 basis points of volatility to a traditional 60/40 portfolio since 2017.
Third, there is no global adoption. In countries with weak currencies, hyperinflation, or strict capital controls, like Argentina, Nigeria, or Lebanon, bitcoin is often used as a way to protect savings. In these markets, people buy bitcoin less for speculative reasons and more for savings and protection.
Fourth, bitcoin is too volatile: Ten years ago, bitcoin’s volatility was extreme – around 150%. In 2017, 30-day annualised volatility even reached 170%. Today, it’s below 40%. In fact, over the past month, it has averaged just 30%. On a 30-day annualised basis for 2025, both the S&P 500 and Nasdaq are more volatile than bitcoin.
Finally, institutions aren’t involved: That’s a common misconception. According to the latest 13F SEC filings, institutions now hold 26% of US bitcoin ETFs. Millennium Management holds $1.6bn, Brevan Howard $1bn (likely using a basis trade strategy – long spot, short futures), Goldman Sachs $1.8bn (primarily on behalf of clients), and Abu Dhabi’s Sovereign Fund $411m, taking a clear directional bet. Strategies vary – from arbitrage to long-term conviction – but institutional involvement is real and growing.
What needs to happen for digital assets to truly go mainstream in traditional portfolios?
We’ve seen a clear evolution: first it was the tech-savvy investors crowd, then came centralised exchanges, and now we’re entering the ETF era, with institutions like hedge funds and sovereign wealth funds gaining exposure.
So, what needs to happen next?
Education – Progress is being made, especially with players like BlackRock now adding 1-2% allocations to model portfolios, but many decision-makers remain hesitant. Education needs to reach the boardroom level.
Infrastructure – A lot needs to be done here. We need more banks to offer regulated crypto custody, with ETFs and Hedge Funds available directly through banking platforms. Today, many investors are blocked from allocating due to outdated internal policies or compliance restrictions particularly in Europe.
Regulation – At the government level, national frameworks must evolve. The US Executive Order on digital assets was a positive step, but practical adoption by states and institutions is still early.
Last but not least, many institutions still perceive bitcoin as too volatile. While volatility has declined steadily, they need to see this trend sustained over time to feel comfortable. As institutional participation increases, we expect volatility to continue trending downward – making digital assets more viable for mainstream portfolios.
Looking ahead, which digital asset strategies or products are gaining the most traction – and how are investor preferences evolving?
While hedge fund strategies investing across tokens are evolving, they’ve largely underperformed compared to bitcoin over the past three years. Many investors still prefer bitcoin for its simplicity, strong performance, and role as an alternative asset – alongside gold, real estate, and private equity – within diversified portfolios.
Of the $177bn global crypto ETP market, more than $152bn – over 80% – is allocated to bitcoin. Ethereum follows with $14.3bn, while multi-asset ETPs hold around $6.7bn, signalling a gradual shift toward diversification. Solana and XRP together account for just $2.7bn.
Sophistication is growing, however. Currently, most non-bitcoin crypto ETPs are only available in markets like Europe, Canada, and Brazil. However, if the SEC approves ETFs for other digital assets later this year, it could mark a major turning point – unlocking access for US investors and accelerating institutional diversification beyond bitcoin.
From where you’re sitting, how ready are banks today to support hedge funds and institutional players in digital assets?
Banks are definitely observing – some are even exploring partnerships, but when it comes to serving hedge funds with the level of sophistication they need – they’re not there yet. The main challenges are: no 24/7 trading infrastructure; limited access to token variety; outdated compliance frameworks, and lack of digital-native prime brokerage.
There’s interest, but not infrastructure. A foot in the door, but no firm step forward. Right now, most of the capital allocation comes from high-net-worth individuals or family offices who already understand the ecosystem and can move faster.
Beyond spot ETFs, which institutional-grade digital asset products will significantly impact portfolio construction over the next 12 months?
I expect growing interest in active strategies that respond to market momentum – blending traditional assets like equities with tactical allocations to crypto, gold, or bitcoin. These approaches give managers the flexibility to overweight or underweight exposure based on market conditions.
We’re also seeing a rise in more exotic strategies, such as covered calls on crypto-related equities. For example, one fund allocates 90% to MicroStrategy stock and uses the remaining 10% for weekly covered calls – aiming to generate fixed income, especially when the underlying stock underperforms.
These types of strategies are gaining traction because they allow investors to extract yield and enhance returns from the crypto ecosystem – even in flat or declining markets.
How are you helping investors to shift the narrative?
Education is the first and most important step to start investing in digital assets. That’s why, together with CoinShares, Europe’s largest digital asset manager, we have spent the past few years organising roadshows, workshops, and investor education events. Most clients come with the misconceptions mentioned above, but when you present real data and take the time to explain it, the narrative starts to shift.
