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The future of crypto: Why smart investors are backing the ecosystem

Are you a crypto enthusiast who’s already taken the plunge into the world of digital currencies? Want to enhance your crypto portfolio? Here’s why backing the entire crypto or digital asset ecosystem could position you for growth.

6 min read

What is the crypto ecosystem, anyway?

The crypto ecosystem is much bigger than you might think. It's not just about cryptocurrencies and the exchanges they trade on. An entire world of technology and services makes the crypto revolution possible. And it’s not just companies that build crypto rails or blockchain platforms that could see growth as digital assets become more deeply integrated into the financial system. Let's break it down:

  • Blockchain technology: Building the backbone of crypto or the tech that makes digital currencies work
  • Miners and validators: Firms providing the energy and/or capital required to validate transactions and secure various blockchains
  • Exchanges and trading platforms: Where you buy and sell your favorite coins
  • Security and custody solutions: Seeking to keep your digital assets safe
  • Payment processors: Making it easier to use crypto in the real world
  • Fintech innovators: Think crypto banks, decentralized finance platforms, and more
  • Hardware manufacturers: Creating the physical technology, like semiconductors, needed for mining and security
  • Regulatory and compliance tools: Helping the crypto world stay compliant and play by the rules
     

Why care about the broader ecosystem

When you invest in the crypto ecosystem, you're not just investing in another coin. You’re helping to build the entire foundational technology that makes all cryptocurrencies, including bitcoin and ether, stronger and more useful. It's like investing in the whole forest—not just a single tree.

Even if you don’t own crypto tokens directly, many crypto-related companies and exposures offer compelling growth potential and investment opportunities that remain underrepresented in large-cap growth.

Stronger ecosystem, brighter tomorrow for crypto

As the digital asset ecosystem grows, your existing crypto investments may potentially grow more valuable. Here's how:

  1. Improvements to blockchain technology could lead to the development of more blockchain-based applications, expanding the use cases for crypto.
  2. More blockchain-based applications may result in greater demand for the cryptocurrencies that enable activity on the blockchain.
  3. Greater demand for these cryptocurrencies may drive prices higher, creating more value for investors.
  4. Greater value creation for investors may drive more capital to the ecosystem leading to new developments and expanded use cases.

It's a virtuous loop. Your ecosystem investments help your coin investments, and vice versa.

 

Finding stability in a stormy sea

Whether or not you’re already a crypto investor, it’s no surprise that cryptocurrencies can be a wild ride. 

While investing in crypto has become more widespread, it’s still historically been more volatile than traditional asset classes.Investing in enabling technologies and the ecosystem overall may give you exposures to new value-adding services beyond crypto. After all, companies that make up the broader ecosystem cut across a breadth of industries and sizes. 

Quick quiz

What is the foundational technology that underlies a cryptocurrency like bitcoin?

Right! Blockchain technology is the digital ledger technology that enables the immutable record-keeping underlying cryptocurrency.

Not quite. While AI and cloud computing may help accelerate advancements in digital assets, blockchain is the digital ledger technology that enables the immutable record-keeping underlying cryptocurrency.

How can you invest in the crypto ecosystem?

When investing in the digital asset ecosystem, it’s important to know your options.

The do-it-yourself approach: Do your own research and analysis

If you love doing your own research and diving deep into the details of individual companies, technologies, and industry regulations, this route might be for you. You can:

  1. Research companies and investment vehicles that make up the broader crypto and blockchain ecosystem.
  2. Analyze financial reports and technology developments of potential investment prospects.
  3. Keep up with the regulatory landscape for cryptocurrencies and digital assets.
  4. Manage buying and selling of individual securities via your own brokerage account.

DIY Pros:

  • Full control over your investments
  • By researching investments, you can gain knowledge on assessing companies
  • More individual customization of your portfolio

DIY Cons:

  • Time-intensive research required
  • Higher risk if you're not well-diversified
  • Constant monitoring needed to keep pace
  • You’ll have to regularly rebalance on your own

 

Professional management: Invest in crypto and blockchain ETFs

If you want exposure to the ecosystem without having to manage investments on your own, exchange traded funds (ETFs) could be a game-changer for you:

  1. Research crypto and blockchain or digital assets funds focused on the broader crypto ecosystem or value chain.
  2. Check the fund’s holdings to ensure they align with your investment goals.
  3. Understand the fund’s fees and expenses before investing and compare funds that offer similar exposure.
  4. Buy ETF shares through your regular brokerage account.

Of course, you can always work with a financial advisor, who can help conduct the research. They also can help you buy and sell as efficiently as possible.

ETF Pros:

  • Diversification: One ETF can provide exposure to dozens of companies
  • Expert management: Fund managers do the research and portfolio rebalancing for you
  • Risk management: Your investment is spread across many companies, industries, and market caps
  • Cost-effective: ETFs tend to be cost effective ways to gain diverse exposures. The median expense ratio of an ETF is 0.56
  • Keep pace: ETF managers can add new promising companies as they emerge

ETF Cons:

  • No control over the ETF’s underlying holdings
  • Research required to choose the right ETF

While ETFs may make it easier to invest in the crypto ecosystem relative to selecting individual stocks or tokens, it's still valuable to spend time learning about the ecosystem’s major players and trends. This knowledge can help you choose the right investments for your goals and understand how the digital asset ecosystem’s growth may impact the value of your crypto holdings.

Your role in shaping the future of crypto

The bottom line is, by investing in the crypto ecosystem, you're doing more than diversifying your portfolio. You're actively supporting the entire digital assets revolution.

Think of it as tending to the soil of an entire crypto garden, instead of just a single plant. Those who support the entire crypto ecosystem, beyond just the coins themselves, may potentially reap the biggest rewards.

Whether you choose the DIY route or the ETF lane, investing in the crypto ecosystem could lead to growth.

With the passage of the GENIUS Act─the first US legislation on crypto asset─and more regulatory clarity on market structure of digital assets on the horizon, investors are beginning to think of digital asset exposure as a core holding. In fact, 86% of institutions have exposure to digital assets or plan to make digital asset allocations in 2025.3 Blockchain and digital asset adoption could drive growth across the entire value chain—from crypto-native companies to traditional financial services.

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