The language is missing

The Blind Spot in Your Portfolio? (Part 2 of 4)

A relatively young asset class is attracting growing institutional attention. Why many wealth managers remain hesitant. And what has changed in the meantime.

Why many wealth managers have hesitated so far

In Part 1, we asked why digital assets are still only rarely included in professional portfolios despite growing institutional attention. The caution shown by many wealth managers is by no means irrational. Quite the opposite.

Anyone responsible for preserving wealth over the long term cannot afford to chase every new market trend.

Three reasons have led many professional investors to keep the subject deliberately at arm's length for a long time.

The first is obvious: volatility. Few other asset classes have experienced such extreme price movements in such a short period as Bitcoin and other digital assets. For wealth managers whose core responsibility is the long-term preservation of capital, such a market initially appears difficult to reconcile with their investment principles.

The second reason is regulatory uncertainty. In the early stages, there were no clear legal frameworks, institutional custody arrangements or robust market standards. For professional investors operating in highly regulated environments, this was a significant obstacle.

There is also a third and often underestimated factor: reputational risk. Wealth managers depend on trust. Every investment decision must be justifiable not only in terms of return and risk, but also to clients, regulators and the organisation itself. In a market long shaped by speculative narratives and sharply fluctuating valuations, restraint was therefore often the more professional decision.

Yet this is precisely where the picture is beginning to change.

With MiCAR, the European Markets in Crypto-Assets Regulation, a comprehensive European legal framework for digital assets has existed for the first time since 2024. What was long regarded as a regulatory no-man's-land is now a supervised market.

The institutional landscape has also shifted. The approval of Bitcoin ETFs in the United States in January 2024 was not a signal of speculation. It was a regulatory endorsement. Within a matter of months, hundreds of billions of dollars flowed into these vehicles. Not primarily from retail investors, but from institutional investors subject to the same due-diligence obligations as professional wealth managers.

The structural objections of the past therefore carry less weight today.

And yet many experienced wealth managers remain hesitant. No longer for the same reasons as before, but for another reason that is rarely stated openly.

The language is missing.

Anyone who has spent twenty years thinking in the categories of traditional portfolio theory - risk, return, correlation, drawdown and liquidity - has developed a precise toolkit for assessing new investment ideas. That toolkit works for equities. For bonds. For alternatives.

For digital assets, the translation has so far been missing.

Without that translation, two reflexes arise, both of which lead in the wrong direction. The first is outright rejection, on the grounds that the asset class is incompatible with professional standards. The second is unstructured exposure: a direct investment without a framework, without a systematic process and without risk control.

Neither does justice to reality. Outright rejection ignores the fundamental changes in the institutional environment. Unstructured exposure contradicts every principle that distinguishes professional wealth management from speculation.

The real challenge is therefore not a question of courage, nor is it a question of confidence in the asset class. It is a question of translation.

Digital assets do not require a new investment philosophy. They require the same philosophy, applied to new terrain. And that translation is possible, using the same principles that have underpinned professional wealth management for decades.

---

Read Part 3 to see how digital assets can be incorporated into the logic of professional portfolio construction, and why risk management, systematic processes and transparency remain the decisive principles here as well.

Marketing communication. This article is for information purposes only and constitutes neither investment advice nor an offer or solicitation to acquire financial instruments.