{"id":116679,"date":"2025-06-02T15:36:12","date_gmt":"2025-06-02T19:36:12","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/technology\/digital-assets-101-back-to-basics\/"},"modified":"2025-06-12T13:02:18","modified_gmt":"2025-06-12T17:02:18","slug":"digital-assets-101-back-to-basics","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/technology\/digital-assets-101-back-to-basics\/","title":{"rendered":"Digital assets 101: Back to basics"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a037dd851407'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-7\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer bbg-spacer--lg\"\n    >\n<\/div><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"small\"><strong><span style=\"font-size: 14px; letter-spacing: 1px; color: #0062dd;\">ARTICLE<\/span><\/strong><\/p>\n\n<\/div>\n<div\n    class=\"bbg-spacer bbg-spacer--sm\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">Digital assets 101: Back to basics<\/h1>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 50px !important\"\n    >\n<\/div>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/markets\/\" rel=\"category tag\">\n                    Markets\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/technology\/\" rel=\"category tag\">\n                    Technology\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/trading\/\" rel=\"category tag\">\n                    Trading\n                <\/a>\n            <\/li>\n            <\/ul>\n<\/p>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-5\"\n    style=\"\"\n    >\n    <div id=\"\" class=\"wpb_content_element bbg-single-image align-left\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"799\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/384722723.jpg\" class=\"bbg-single-image__image attachment-full\" alt=\"A bitcoin token on top of banknotes\" title=\"A bitcoin token on top of banknotes\" \/>\n        \n            <\/figure>\n<\/div>\n\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a037dd8607f9'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-6 bbg-column--m-width-6\"\n    style=\"\"\n    >\n    <p>    <p class=\"bbg-metadata bbg-metadata--date\">June 2, 2025<\/p>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><strong>Bloomberg Professional Services<\/strong><\/p>\n\n<\/div>\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2 bbg-column--valign-middle bbg-column--m-width-2 bbg-column--s-padding-right-2\"\n    style=\"\"\n    >\n    <div class=\"bb-tts\"\n\tdata-selector=\"main\"\n\tdata-label=\"Speak this page\"\n\tdata-custom-play=\"Play\"\n\tdata-custom-pause=\"Pause\"\n\tdata-custom-stop=\"Stop\"\n\tdata-overlay=\"false\"\n\tdata-invert=\"false\"\n\tdata-no-time=\"false\"\n\tdata-no-button-text=\"false\"\n\tdata-one-button=\"true\"\n\tdata-one-style=\"true\"\n\tdata-hide-stop=\"true\"\n\tdata-voice=\"Gordon\"\n\tdata-pitch=\"1\"\n\tdata-speed=\"1\"\n\tdata-align=\"flex-start\"\n>\n<\/div>\n\n\n<\/div><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a037dd864603'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p class=\"p1\"><em>This article was written by Jigna Gibb, Head of Commodities and Digital Assets Indices at Bloomberg. <\/em><\/p>\n<p class=\"p1\"><span class=\"TrackChangeTextInsertion TrackedChange SCXW189975985 BCX0\"><span class=\"TextRun SCXW189975985 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW189975985 BCX0\">As digital assets and cryptocurrencies gain mainstream traction, more investors are entering <\/span><\/span><\/span><span class=\"TrackChangeTextInsertion TrackedChange SCXW189975985 BCX0\"><span class=\"TextRun SCXW189975985 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW189975985 BCX0\">the space<\/span><\/span><\/span><span class=\"TrackChangeTextInsertion TrackedChange SCXW189975985 BCX0\"><span class=\"TextRun SCXW189975985 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW189975985 BCX0\">, balancing long-term potential with near-term volatility.<\/span><\/span><\/span> <span class=\"EOP TrackedChange CommentStart CommentHighlightPipeRest PointComment CommentHighlightRest SCXW189975985 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p>Overall, while crypto asset flows have been steadily growing, currently at $145bn, recent outflows of $500mn in a single day highlight the fickle nature of some of these allocations. Like a new language or a new piece of technology, there is a lot of information to learn in this still evolving space of digital assets. In this article, we aim to demystify the acronyms, cover the basics, explore the use of indices for digital assets and assess recent flows to this emerging asset class.<\/p>\n<h2><span class=\"TrackChangeTextInsertion TrackedChange SCXW150087324 BCX0\"><span class=\"TextRun MacChromeBold SCXW150087324 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun CommentStart CommentHighlightPipeRest CommentHighlightRest SCXW150087324 BCX0\">Demistyfying <\/span><\/span><\/span><span class=\"TextRun MacChromeBold SCXW150087324 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun CommentHighlightRest SCXW150087324 BCX0\">fundamentals<\/span><span class=\"NormalTextRun CommentHighlightRest SCXW150087324 BCX0\"> of digital assets <\/span><\/span><span class=\"EOP CommentHighlightPipeRest SCXW150087324 BCX0\" data-ccp-props=\"{&quot;134233117&quot;:false,&quot;134233118&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:1,&quot;335551620&quot;:1,&quot;335559685&quot;:0,&quot;335559737&quot;:0,&quot;335559738&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h2>\n<p><span class=\"TextRun SCXW38290797 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW38290797 BCX0\">D<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">igital asset<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">s<\/span> <span class=\"NormalTextRun SCXW38290797 BCX0\">refer <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">to<\/span> <span class=\"NormalTextRun SCXW38290797 BCX0\">a<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\"> range of items that have value that can be created and stored digitally \u2013 these include cryptocurrencies and tokenized assets. <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">There are many reasons behind the growing attention on digital assets <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">and how to <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">size allocations <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">in a multi-asset portfolio; both these topics are <\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">discussed in \u201c<\/span><\/span><a class=\"Hyperlink SCXW38290797 BCX0\" href=\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/the-power-of-a-crypto-allocation-with-an-institutional-perspective\/\" target=\"_blank\" rel=\"noreferrer noopener\"><span class=\"TextRun Underlined SCXW38290797 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW38290797 BCX0\" data-ccp-charstyle=\"Hyperlink\">The Power of<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\" data-ccp-charstyle=\"Hyperlink\"> A<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\" data-ccp-charstyle=\"Hyperlink\"> Crypto Allocation<\/span><\/span><\/a><span class=\"TextRun SCXW38290797 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW38290797 BCX0\">\u201c<\/span> <span class=\"NormalTextRun SCXW38290797 BCX0\">article<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">.<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\"> Typical rationales include diversification, USD alternative<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">s<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">, store of <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW38290797 BCX0\">value<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\"> and momentum investing.<\/span><span class=\"NormalTextRun SCXW38290797 BCX0\">\u00a0<\/span><\/span><span class=\"EOP SCXW38290797 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p>Crypto assets are decentralized digital currencies meaning that individuals could make payments across the globe without the involvement of a trusted intermediary such as a bank or government entity. Transactions are recorded on the blockchain, which is an unregulated, open-source, software system or ledger. The security of the coins is encrypted versus backed by a government or agency. Another way to conceptualize each digital asset is that they operate like a small company with different profiles and backgrounds &#8211; which are summarized in the table of Exhibit l. A distinguishing feature is the consensus mechanism &#8211; this is the process in the crypto network to validate transactions. Early adapters, like Bitcoin, use &#8220;proof of work&#8221; (PoW) whilst newly founded tokens use &#8220;proof of stake&#8221; (PoS). The key differences are energy required to mine the token, speed of certification and scalability.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"2188\" height=\"878\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png\" class=\"bbg-single-image__image attachment-full\" alt=\"Exhibit 1: Overview summary of select digital assets\" title=\"Exhibit-1-Overview-summary-of-select-digital-assets\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 2188w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 1536w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 2048w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-1-Overview-summary-of-select-digital-assets.png 192w\" sizes=\"auto, (max-width: 2188px) 100vw, 2188px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none row-padding--bottom-none bbg-row--margin-top-compact bbg-row--margin-bottom-compact bbg-row--full-bg-bleed\" data-anchor='row-6a037dd86b91a'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\tbackground: 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           <h3 class=\"bbg-card__title\">Share your interests to receive Indices news, research, and event invitations directly to your inbox.<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Sign up<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_2802806739746525493\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/explore\/indices-insights-tailored-to-your-interests\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-6a037dd873a2f'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Here are some common terms: Forks occur when a blockchain protocol splits into two paths. There are hard forks which are split in the blockchain slicing out new from old path and soft forks such as a system upgrade which ensure compatibility between old and new paths. Staking is a method to enhance the returns by earning rewards while participating in the blockchain&#8217;s security. Stablecoins, like Tether, are cryptocurrencies that have their value pegged to fiat currencies or gold.<\/p>\n<h2 class=\"p1\"><span class=\"TextRun MacChromeBold SCXW96079207 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW96079207 BCX0\">Policy tailwinds for digital assets<\/span><\/span><\/h2>\n<p>With the opening of the global regulatory environment led by the US, the SEC approved Bitcoin and Ethereum ETFs in 2024, asset flows in cryptocurrencies have risen quickly, as seen in Exhibit 2. This was further accelerated by a pro-crypto US administration. At the start of March this year, the US government announced plans to hold a reserve of digital assets including Bitcoin, Ethereum, Ripple, Solana and Cardano, which further spiked prices. We have seen regulatory shifts across the globe with the SEC launching its crypto task force, the UK initiating the digital pound lab to design its Central Bank Digital Currency (CBDC), and the Markets in Crypto-Assets (MiCA) regulations in Europe. These regulations are further legitimizing the use of digital assets.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1167\" height=\"696\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png\" class=\"bbg-single-image__image attachment-full\" alt=\"Exhibit 2: Investment flows and higher prices have resulted in increasing Crypto ETF AuM\" title=\"Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 1167w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 100w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Exhibit-2-Investment-flows-and-higher-prices-have-resulted-in-increasing-Crypto-ETF-AuM.png 181w\" sizes=\"auto, (max-width: 1167px) 100vw, 1167px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Investors can directly hold crypto assets in a digital wallet; however, indices offer flexibility and allow access via established investment formats such as ETFs. Currently, Bloomberg offers single component indices on Bitcoin {BITCOIN Index}, Ethereum {ETHEREUM Index}, and Solana {BSOLANA Index}.<\/p>\n<h2>How digital asset indices and baskets can change crypto-asset exposure?<\/h2>\n<p>For many investors the biggest hurdle for taking the leap into a crypto allocation is the asset class volatility &#8211; the long-term volatility of Bitcoin has been ~ 100%. More recently the 1-year volatility has been steadily moving lower to about half as adoption picks up. There are a couple of ways to reduce this volatility such as employing a <a href=\"https:\/\/blinks.bloomberg.com\/news\/stories\/R42I0HDWLU6B\">target volatility<\/a> scheme, blending with stable assets such as Gold and the USD or combining a basket of crypto assets, hence, baskets offer an alternative format to access digital assets for many investors.<\/p>\n<p>Often, Bitcoin is referred to as digital gold, and so it is natural to think of combining <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/commodities\/bitcoin-versus-gold-the-heavyweights-duel\/?linkId=667123106\">Bitcoin and Gold together<\/a>. The Bloomberg Bitcoin and Gold Equal-Weighted Index {BBIG Index} is an equal-weighted basket. The Bloomberg USD, Bitcoin and Gold Equal-Weighted Index {BBUG Index} combines Bitcoin, Gold and US Dollar indices equally. With exposure to Bitcoin&#8217;s potential upside returns, gold&#8217;s historic stability and the US Dollar&#8217;s defensive characteristics, Bitcoin and Gold indices could alter the risk\/return profile of these assets on their own.<\/p>\n<p>Bloomberg has launched crypto asset baskets on Bitcoin and Ethereum: equal-weight{XBTXETEW Index} and market cap-weighted {XBTXETMC Index}. Overall, Bitcoin and Ethereum complement each other well, in the same way that Gold and Silver do in the precious metals sector. Both cryptos are fundamentally designed to have different objectives; Bitcoin is seen as a store of value and Ethereum has broader use-cases and appeals for greater trading activity. Overall, Bitcoin and Ethereum account for more than ~60-70% of the crypto market cap and are the most mature and widely adopted blockchains. The equal-weighted basket would have balanced 50:50 exposure to both components, whereas the market cap-weighted would be tilted 90:10 to Bitcoin:Ethereum, with monthly rebalancing of weights. Therefore the market cap-weighted index would be much more heavily geared towards Bitcoins risk and return profile over Ethereum.<\/p>\n<p>In 2018, Bloomberg partnered with Galaxy to offer broad-basket indices. The Bloomberg Galaxy Crypto Index {BGCI Index} based on the largest market-cap weighted cryptocurrencies, rebalanced monthly. Other Alternatives the components in the index are Bitcoin, Ethereum, Solana, Avalanche, Polkadot, Chainlink, Litecoin, Stellar and Sui Network; where the top three represent 88% weight ofthe basket. The Bloomberg Galaxy DeFi Index {DEFI Index} is a modified market cap-weighted of decentralized financial services on blockchain benchmark. The index aims to be diversified and representative of the broader DeFi market and as of May-25, index components include Uniswap, Aave, lnjectivev Protocol, Maker and Curve DAO Token.<\/p>\n<h2 class=\"p1\"><span class=\"NormalTextRun SCXW215916221 BCX0\">From <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW215916221 BCX0\">HODLIing<\/span><span class=\"NormalTextRun SCXW215916221 BCX0\"> to ETF <\/span><span class=\"NormalTextRun CommentStart CommentHighlightPipeRest CommentHighlightRest SCXW215916221 BCX0\">holding<\/span><\/h2>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:100%\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"1492\" height=\"972\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png\" class=\"bbg-single-image__image attachment-full\" alt=\"Asset Allocation Split by ETF AuM (%)\" title=\"Asset Allocation Split by ETF AuM (%)\" srcset=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png 1492w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png 552w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png 800w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png 768w, https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Screenshot-2025-06-02-at-12.27.05%E2%80%AFPM.png 166w\" sizes=\"auto, (max-width: 1492px) 100vw, 1492px\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><span class=\"TextRun SCXW166298098 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW166298098 BCX0\">The crypto community\u2019s practice of <\/span><\/span><span class=\"TrackedChange SCXW166298098 BCX0\"><span class=\"TextRun SCXW166298098 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SpellingErrorV2Themed SCXW166298098 BCX0\">HODLing<\/span><\/span><\/span><span class=\"TextRun SCXW166298098 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW166298098 BCX0\"> signals strong belief in long-term value despite market swings. It remains to be seen if ETF investors are embracing the same approach.<\/span><\/span><span class=\"TextRun SCXW166298098 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"> <span class=\"NormalTextRun CommentStart CommentHighlightPipeRest CommentHighlightRest SCXW166298098 BCX0\">When<\/span><span class=\"NormalTextRun CommentHighlightPipeRest SCXW166298098 BCX0\"> considering ETF assets, as shown <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">in Exhibit 4<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">, <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">there is no surprise that <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">t<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">raditional assets like <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">Equities<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> and<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> Fixed Income <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">have a majority share <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">at ~95%<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">,<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">whereas<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">Alternatives including Digital Assets, Commodities and Real Estate<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> make up the rest. Within <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">the <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">Alternatives<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> segment<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">, the Digital Assets ETFs <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">have grown <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">quickly<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> but they still <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">only <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">represent<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> 1% of <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">t<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">otal <\/span><span class=\"NormalTextRun SpellingErrorV2Themed SCXW166298098 BCX0\">AuMs<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">.<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> Hence, there is still <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">potential<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">for <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">flows<\/span><\/span> <span class=\"TextRun SCXW166298098 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW166298098 BCX0\">in<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">to<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">this <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">developing<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> asset class.<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">Historically <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">when nascent technology <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">is<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> launched<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">, there <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">has been<\/span> <span class=\"NormalTextRun SCXW166298098 BCX0\">a gestation period which <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">can<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> be volatile. With more institutional adoption and governments on board, there is potential for <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">Digital Assets to experience greater stability with <\/span><span class=\"NormalTextRun SCXW166298098 BCX0\">more investment <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW166298098 BCX0\">flows<\/span><span class=\"NormalTextRun SCXW166298098 BCX0\"> into this space.<\/span><\/span><span class=\"EOP SCXW166298098 BCX0\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:0,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-none bbg-row--full-bg-bleed\" data-anchor='row-6a037dd87ed4c'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <div class=\"bbg-accordion transparent\">\n\t<input type=\"checkbox\"  id=\"bbg-accordion-toggle-6a037dd880e8f\">\n\t<div class=\"bbg-accordion-parent\" data-accordion-toggle aria-expanded=\"false\">\n\t\t<label class=\"bbg-accordion-label\" for=\"bbg-accordion-toggle-6a037dd880e8f\">\n\t\t\t\t<h5 class=\"bbg-accordion-title\" data-label=\"Disclaimer\">\n\t\tDisclaimer\n\t<\/h5>\n\n\t\t\t\t\t<\/label>\n\t<\/div>\n\t<div class=\"bbg-accordion-content\">\n\t\t<div class=\"bb-wysiwyg\">\n\t<p style=\"font-size: 16px !important; line-height: 24px;\">The data and other information included in this publication is for illustrative purposes only, available &#8220;as is&#8221;, non-binding and constitutes the provision of factual information, rather than financial product advice. 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