## [# The State of Crypto ](/sections/features/state-crypto)
# The State of Crypto
Even if you don’t like crypto, you or your clients can benefit from having it in a portfolio.
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[By Sumit Roy ](/authors/sumit-roy)
May 22, 2023
Edited by: Lisa Barr
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You don’t have to like crypto to benefit from having it in an investment portfolio. That’s the takeaway from the “State of Crypto” panel on the first day of the Inside ETFs conference in Hollywood, Florida.
But the panel, featuring Don Friedman, president of the Digital Assets Council of Financial Professionals, and Bill Cannon, head of portfolio management at Valkyrie, gave investors plenty of reasons to like crypto, especially with prices down significantly from their highs.
Friedman and Cannon were both bullish on ether and bitcoin, the two most popular cryptocurrencies, which currently make up around two-thirds of the total crypto market cap.
“We’re big proponents of ethereum because we believe in tokenization,” said Friedman. “Everything from driver’s licenses to passports to owning real estate—all that is going to be digitized; it’s going to be tokenized.”
Ethereum is a smart contract platform that allows anyone to create tokens, or digital representations of nearly anything.
This gives regular investors the opportunity to invest in assets that never existed before, including music catalogues of famous artists like Bruce Springsteen, said Friedman.
Also bullish on ethereum was Cannon, whose firm Valkyrie filed for an ether futures ETF last week. But he explained that he likes bitcoin “a little bit more” because it’s more established.
Cannon was particularly enthusiastic about Ordinals, the NFT project built on the bitcoin blockchain that gives the original crypto asset a use case beyond digital payments and value storage.
**Looking Beyond the Downturn**
Neither Friedman nor Cannon was fazed by the downturn in crypto prices since their highs in late-2021.
“In 2022, the Nasdaq was down more than 30% and the S&P 500 was down more than 20%. I don’t believe many advisors were telling their clients to run for the hills and get out of those asset classes. In terms of bitcoin, it’s a similar thing,” said Friedman.
Cannon likened the crypto downturn to the bursting of the Nasdaq bubble in the early 2000. Prices cratered, but eventually recovered to new highs, he said.
Both panelists suggested that investors ignore the short-term noise and focus on the long-term benefits that come with an allocation to crypto, including diversification and asymmetric upside.
“If you believe in a diversified portfolio, there are things in your portfolio that most likely you don’t like, but it lowers volatility and increases the likelihood of long-term gains,” Friedman said.
He said he recommends a 1% allocation to crypto. That way, even if prices “go to zero,” \[investors\] are not going to be hurt much.
“But if it goes up and to the right, it’s going to have a materially positive impact on \[a\] portfolio,” he added.
As for advisors, crypto’s appeal goes beyond its risk/reward characteristics. It could be a marketing opportunity.
“It differentiates you from the other advisors. Eighty-two percent of advisors are being asked by clients about bitcoin, and 62% of clients said they would leave their advisors if they were unable to answer questions about bitcoin.”
“It’s not about recommending bitcoin, it’s about being able to talk about it intelligently,” Friedman said.
**Many Investment Options**
For investors who want crypto in their portfolio, Friedman and Cannon emphasized that there wasn’t one “best” option to get exposure.
In addition to buying crypto assets directly through a crypto broker like Coinbase, there are futures, ETFs, separately managed accounts and private placements.
“You don’t have to change your style and you don’t have to buy the native coin itself. \[In fact\], we encourage people not to buy the native coin in a lot of cases because of private keys and all the headaches and confusion that come with that,” said Friedman.
“Plus, if you go through one of these other vehicles, if you’re an advisor, now you can collect your assets under management fee because it’s in one of these vehicles within your purview,” he added.
Cannon agreed that investing in the native coin wasn’t appropriate for most investors. He said that the [**Valkyrie Bitcoin Strategy ETF (BTF)**](/BTF) gives investors the advantage of investing through a regulated investment vehicle at a regulated exchange, using regulated futures at the CME.
He also offered up crypto equity ETFs like the [**Valkyrie Bitcoin Miners ETF (WGMI)**](/WGMI) as an option for getting exposure to the space.
WGMI is the best-performing nonleveraged U.S.-listed ETF of the year, with a gain of 134%.
*Contact Sumit Roy @sumit.roy*
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
Related Topics [Crypto](http://www.etf.com/topics/cryptocurrency)
[Bitcoin](http://www.etf.com/topics/bitcoin)