Download the 09.05.25 Dynamic Portfolio Perspectives for advisors’ use with clients
By Dynamic’s Asset Management Team
Crypto may be moving beyond speculation and into mainstream portfolios. But what does that mean for your clients? In this post, we explore Bitcoin’s evolution and how advisors can think about crypto as part of a balanced investment strategy, all with insights from Grayscale Investments, a pivotal player in Bitcoin’s evolution.
Cryptocurrency has long sparked strong reactions from investors — excitement, skepticism and plenty of questions in between. While some clients still see it as a speculative gamble, others increasingly view it as a legitimate piece of a diversified portfolio.
As an advisor, you’re in a unique position. You can help clients move beyond the headlines and understand crypto in context: its history, its risks and the new opportunities that have emerged as the market matures.
Dynamic’s Chief Investment Officer Kostya Etus, CFA®, recently spoke with Zach Pandl, managing director and head of research at Grayscale Investments, which has been on the frontlines of Bitcoin’s transformation.
Watch the full conversation, “Cryptocurrency: Its Evolution & Role in Asset Allocation.”
Pandl provided keen insights on how Bitcoin’s story has evolved, why the approval of spot Bitcoin ETFs in 2024 was a turning point, and what it means for client portfolios going forward.
From Speculation to Mainstream Conversation
Bitcoin’s early years were defined by volatility and uncertainty. Prices surged and crashed, and the market often felt more like speculation than investment. For many clients, this cemented the perception of crypto as too risky or unreliable.
But like other asset classes in their infancy — technology stocks in the 1990s, for example — volatility was part of the process. Over time, infrastructure, regulation and institutional adoption have started to stabilize the landscape.
Pandl said what’s driving demand today isn’t just technology, it’s macroeconomics. With U.S. debt levels at historic highs and persistent deficits, investors are looking for hedges against long-term risks.
“Crypto no longer is a small curiosity in the global financial system,” Pandl said.
“It’s a meaningful chunk … a midsize alternatives asset class.”
The Watershed Moment: Approval of Spot Bitcoin ETFs
In January 2024, the U.S. Securities and Exchange Commission (SEC) approved the listing and trading of spot Bitcoin exchange-traded funds (ETFs) for the first time.
For advisors, this was an important step because it gave clients regulated, exchange-listed access to Bitcoin through a familiar investment vehicle. No digital wallets, no crypto exchanges, just an ETF that can be held alongside equities, bonds and other funds.
This decision didn’t just expand access; it marked a turning point in the SEC’s stance toward U.S. cryptocurrency markets.
Grayscale’s Role in the Shift
Grayscale Investments played a central role in Bitcoin’s evolution. For years, Grayscale managed one of the largest Bitcoin investment vehicles, the Grayscale Bitcoin Trust. When the SEC denied its request to convert that trust into a spot ETF, Grayscale challenged the decision in federal court.
In 2023, the court ruled that the SEC’s rejection was “arbitrary and capricious.” That legal victory paved the way for the SEC’s January 2024 approval of spot Bitcoin ETFs. Without Grayscale’s persistence, this milestone could have been years away.
Bitcoin as Digital Gold
At its core, Bitcoin is best thought of as a digital commodity. With a fixed supply of 21 million coins, it shares some characteristics with gold as a scarce, store-of-value asset.
“Bitcoin is its own unique thing, a true innovation,” explained Pandl. “The best metaphor is digital gold.”
In asset allocation terms, Pandl noted that similar to gold, Bitcoin is less correlated with traditional asset classes such as stocks and bonds and supports overall portfolio diversification.
What This Means for Client Portfolios
So how should advisors frame Bitcoin’s place in a portfolio today?
- Not a core holding — For most clients, Bitcoin remains a satellite allocation, not a replacement for traditional assets.
- Diversification potential — A modest allocation may provide exposure to a non-traditional asset class with different risk/return drivers than equities or bonds.
- Inflation and currency hedge — Some clients see Bitcoin as a potential store of value in an inflationary or dollar-weakening environment.
- Accessibility through ETFs — Spot ETFs eliminate many of the barriers that previously made crypto impractical for most investors.
Pandl noted cryptocurrencies provide diversification benefits that can be maximized by taking a long-term view. He suggests buying and holding Bitcoin for 10 to 15 years instead of speculatively trading it.
The Takeaway for Advisors
Crypto is no longer just a fringe idea or speculative play. With the SEC’s approval of spot Bitcoin ETFs, Bitcoin has entered a new stage of legitimacy in U.S. markets.
For advisors, this doesn’t mean recommending Bitcoin for every client. But it does mean being prepared to answer questions, explain the evolution and help clients understand how a small allocation might fit into their broader financial plan.
Invest with intention.
At Dynamic, we can help you provide proactive guidance for your clients on cryptocurrencies, taking a flexible, personalized approach to growth investing. Let’s talk about how we can support your clients’ success.
Contact Dynamic’s Asset Management team at (877) 257-3840, ext. 4 or assetmanagement@dynamicadvisorsolutions.com.
Disclosures
For advisor use only. This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.
This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.
All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.
Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.
To the extent that this material concerns tax matters, it is not intended to be used by a taxpayer as tax advice. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
Trading (buying/selling) in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks and risk of losing principal or all of your investment. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system.
Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.
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