Weekly Challenge: The Digital Asset Power Hour

Financial professionals stand to benefit greatly from blocking off just one hour per week to learn about a digital asset, such as one of 500 included in CoinDesk's Digital Asset Classification Standard.

AccessTimeIconMar 1, 2023 at 9:42 p.m. UTC
Updated May 9, 2023 at 4:09 a.m. UTC
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Understandably, crypto regulation is getting a lot of attention. But for investors looking to allocate capital over a longer horizon, focusing too much on tracking legislation and industry legal woes may be a distraction to long-term success.

So what’s an investor to do when news headlines are luring us in with who Securities and Exchange Commission Chair Gary Gensler is after or what Kevin O’Leary thinks of the SEC? Start a weekly challenge, of course!

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  • I call it the Weekly Digital Asset Power Hour.

    You’re reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

    I know a lot of financial professionals who block off time for “research” (aka reading news). The challenge is to dedicate at least one of those hours per week to learning about a digital asset. CoinDesk’s Digital Asset Classification Standard has 500 assets waiting for you. (If this at all sounds boring, remind yourself that Warren Buffett has long done this with 10-Ks – oof.)

    The more you understand the use cases of individual assets, the better you can diversify beyond bitcoin (BTC) and Ethereum’s ether (ETH), whether that be selecting individual assets or taking an index approach. The data suggests that it may also give you a competitive edge.

    For example, Bitwise recently surveyed financial advisers. One of the questions made me hesitate. The question was: Which areas of the crypto market do you find most interesting?

    Crypto Market Interest

    As I looked at the answers, noting BTC and ETH’s dominance with Web3 and the metaverse way behind, I could not help but think, “Are the advisers really answering the question as it’s worded?” Bitcoin is the largest digital asset, but most interesting? I think they were subconsciously actually answering this: What part of crypto do you understand best? Humans tend not to be interested in things we don’t understand, especially when technical. (Don’t ask me to explain how my iPhone works. I am not interested.)

    A follow-up question reinforced my inkling. Most advisers are getting their crypto education from traditional media, which focuses on BTC, ETH, regulation and the latest news on the Sam Bankman-Fried saga.

    Crypto education percentage

    Why does this matter? It suggests some of the most sophisticated investors – financial advisers – lack broad knowledge of digital assets.

    Jennifer Murphy, the CEO of Runa Digital Assets, wrote in a previous version of this newsletter: “Long-term investors would do well to make sure their portfolios include the potential wealth creators that will disproportionately drive market returns in the coming decades.”

    The “potential wealth creators” are the crypto use cases that will survive and thrive over the next decade. And one could argue that assets other than BTC and ETH may be larger wealth creators given that being newer means they have a longer growth runway.

    For example, take the once buzzworthy metaverse, part of CoinDesk Indices’ Culture & Entertainment sector. Far less attention is now being paid to the metaverse and its underlying digital assets. Yet, recent data from Statista reports that the metaverse could have $490 billion in market revenue by 2030, up from $45 billion in 2022.

    Metaverse chart

    The metaverse is vast and evolving. Brands like Starbucks and the NBA are testing digital experiences. BlackRock just launched a metaverse exchange-traded fund (ETF). Venture capital firms like Pantera and a16z are still throwing millions of dollars at metaverse startups, funding the industry's growth.

    There are 50 assets in CoinDesk Indices’ Metaverse industry group, all with different use cases. Not a bad place to start your digital asset power hour. Cheers.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Kelly Chambers

    Kelly Chambers has over a decade of experience in traditional finance and crypto investing. He currently works with FinTechs, RIAs, and Web3 startups, providing financial content strategy and writing services through his content consultancy KellyTheWriter.com.


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