Crypto investment for the long term

Investing in crypto is often associated with short-term speculation and high volatility. However, experienced investors understand that sustainable wealth building requires a long-term perspective. Rather than chasing quick gains, successful crypto investors build diversified portfolios gradually over time. This article explains how to apply long-term investment principles to digital assets through crypto ETPs.

Why invest in crypto over the long term?

Taking a long-term view makes significant sense for cryptocurrency investment. While headlines and price swings can be distracting, crypto investment is better understood as a multi-year endeavour that rewards patience and discipline.

Cryptocurrency moves in cycles

You might have heard of bull and bear markets. These terms describe opposing market phases. In bull periods, prices rise and markets expand. In bear periods, prices fall and markets contract.

Crypto has experienced several major cycles throughout its history. Bitcoin rose from $4,000 to $20,000 during a three-month rally in late 2017, followed by a prolonged decline to under $3,000. Another bull market occurred in 2020-2021, with prices surging from $5,000 to over $60,000, before falling back below $20,000 in 2022. Most recently, Bitcoin reached new all-time highs above $120,000 in mid-2025, demonstrating its continued cyclical nature. Remember that past performance is never indicative of future results.

What's the lesson? Major cryptocurrencies like Bitcoin have proven they can recover from significant downturns. Investors who bought at market peaks suffered substantial short-term losses, while those who accumulated during downturns or invested consistently over time were better positioned for recovery. However, predicting cycle tops and bottoms is extremely difficult. Investing smaller amounts regularly over the long term—a strategy called dollar-cost averaging—can help smooth out these variations and reduce the impact of poor timing.

Cryptocurrencies continue experiencing growing adoption

Bitcoin was unveiled in 2009, Ethereum in 2015. Both have seen remarkable growth in adoption over the past decade. By 2025, global Bitcoin ownership reached approximately 560 million people, significantly ahead of earlier projections. This growth was accelerated by the approval of spot Bitcoin ETFs in the United States and other jurisdictions in 2024, which made Bitcoin accessible as a "one-click" investment for millions of traditional investors and institutions.

According to CoinShares research, Bitcoin adoption is projected to reach 1.16 billion owners by 2029, representing continued expansion from its current user base. The introduction of regulated investment products has transformed Bitcoin from a niche digital asset into a mainstream investment option available through traditional brokers and wealth management platforms.

The technology and infrastructure keep expanding

The cryptocurrency ecosystem continues to evolve rapidly. Blockchain technology has proven its ability to adapt and improve. Transaction speeds have increased, costs have decreased in many cases, and new applications continue to emerge.

Ethereum's transition to proof-of-stake in September 2022 (known as "The Merge") reduced the network's energy consumption by approximately 99%. Since then, further upgrades have improved scalability and efficiency. The growth of Layer 2 solutions, which collectively hold over $10.4 billion in total value locked as of late 2025, demonstrates ongoing infrastructure development. Another instance is a network like Solana, which solves scalability issues. 

The real-world asset tokenisation market exploded to $33.91 billion in 2025, representing 70% growth, with major financial institutions like BlackRock launching tokenized treasury products. This institutional adoption signals crypto's expanding role in traditional finance.

Low barrier to entry: capitalise on small initial crypto investments

There is no "minimum" amount required to invest in crypto through ETPs. Investors can start with modest amounts—potentially as little as the cost of a single ETP share—and benefit from long-term value appreciation while building their position gradually over time.

Diversification strategy: you don't have to go all-in on crypto to reap rewards

Crypto's volatility and low correlation to traditional assets make it a compelling candidate for portfolio diversification. Even modest allocations can potentially improve overall portfolio performance without dramatically increasing risk.

How to invest in crypto: timing matters

Ideally, investors would buy when prices are low and sell at market peaks. However, identifying these inflection points in advance is extremely challenging. Fortunately, systematic investment strategies can help navigate this uncertainty.

Research the fundamentals

Learn everything you can about the cryptocurrencies you want to invest in. Review historical performance, understand the underlying technology, assess the development team and governance structure, and examine adoption metrics. This information is readily available through reputable sources, though gathering and analyzing it requires time and effort. Proper research is not a step you can skip for informed decision-making.

Dollar-cost averaging and systematic investment: sticking to your plan

Dollar-cost averaging (DCA) is a proven investment strategy. It involves buying a fixed amount on a regular schedule—for example, $100 in Bitcoin every week or month—regardless of price fluctuations. This method is sometimes called a "systematic investment plan" when you allocate a predetermined portion of your income for investment purposes.

When you follow a DCA approach, you invest consistently whether Bitcoin is in a bull or bear market. You maintain the predetermined investment amount, with the goal of smoothing your average cost over time. This method can help lower the average cost per investment, reduce portfolio volatility, and prevent poorly-timed lump sum investments made during market peaks.

A 2025 CoinShares survey found that among investors using systematic approaches, 89% planned to increase their crypto exposure over time, demonstrating confidence in long-term accumulation strategies.

Think holistically about your portfolio

Investing in cryptocurrency—whether through dollar-cost averaging or other approaches—must be part of a comprehensive, diversified investment strategy. Design your portfolio based on your financial objectives, time horizon, and risk tolerance.

A word of caution: even over the long term, your capital is at risk, and you might not recover losses. This reality underscores why portfolio diversification is essential.

Diversifying with crypto over the long term: the evidence

CoinShares has conducted extensive research analyzing how different crypto allocations affect portfolio performance. Using data from 2020 to 2025 with quarterly rebalancing, the research tested four portfolio strategies, each adding a modest 5% crypto allocation to a diversified base portfolio:

Results: The 5% basket of crypto allocation portfolio delivered the strongest performance

Key findings (historical analysis, 2020–2025):

Based on CoinShares’ historical analysis covering the period from 2020 to 2025, the following observations were made when adding a 5% crypto allocation to a diversified portfolio and applying quarterly rebalancing. These findings describe past outcomes only and do not predict future results.

Historical return impact: Adding just 5% crypto exposure nearly doubled annualized returns in all scenarios. The Bitcoin 5% allocation model improved returns from 4.8% to 8.2%, while the 5% of selected crypto allocation diversified approach reached 9.4%—representing a 96% performance improvement over the base portfolio.

Observed volatility behaviour: Despite crypto's reputation for volatility, overall portfolio volatility remained remarkably stable. The Bitcoin 5% allocation actually decreased volatility slightly to 12.2% from 12.3%, while the broader crypto allocations increased it by only 0.2 percentage points to 12.5%.

Risk-adjusted outcomes: The Sharpe ratio—which measures return per unit of risk—improved substantially across all crypto portfolios. The “Index” model achieved a 0.75 Sharpe ratio compared to 0.39 for the base portfolio, demonstrating that crypto allocations delivered better returns for each unit of risk taken.

Drawdowns during stressed periods: Maximum drawdowns increased modestly, from -24.1% to between -25.7% and -26.6%. This 1.6 to 2.5 percentage point increase in worst-case scenarios is relatively contained given the substantial performance improvements.

Portfolio behaviour and correlation: All crypto-enhanced portfolios maintained high correlation (94-96%) to the base portfolio, indicating that the 5% allocation modified rather than transformed the portfolio's overall behavior and risk profile.

Role of rebalancing: Regular quarterly rebalancing proved critical to success. Trimming crypto positions when they grew too large and buying when they shrank helped lock in gains while maintaining consistent exposure aligned with the 5% target allocation.

Summary

Based on this 2020-2025 analysis, a 5% crypto allocation has historically enhanced returns and improved risk-adjusted performance while maintaining acceptable risk levels for balanced investors. These results are specific to the period analysed and should not be interpreted as indicative of future performance or outcomes under different market conditions.

Crypto ETPs: your long-term investment allies

If you're convinced that long-term investing is the right strategy, how should you actually implement crypto exposure in your portfolio?

ETPs (Exchange-Traded Products) are securities that trade on regulated exchanges, offering exposure to various assets—including digital assets. Crypto ETPs provide several advantages that make them especially attractive for long-term oriented investors.

Ease of use

ETPs can be purchased through your existing bank or broker, and traded like any traditional security. There's no need to navigate unregulated exchanges, manage complex wallet infrastructure, or worry about private key security.

Seamless portfolio integration

ETPs are natively integrated into your investment portfolio alongside your other holdings. This integration enables convenient portfolio management, especially when following dollar-cost averaging strategies. It also allows for straightforward rebalancing—if you've decided to maintain a 5% allocation to digital assets, for example, you can easily adjust your holdings during quarterly or annual rebalancing.

In many jurisdictions, crypto ETPs held in certain account types may also offer tax advantages compared to direct cryptocurrency holdings.

Transparency and institutional-grade custody

CoinShares Physical ETPs are backed by physically-held portfolios of digital assets secured through institutional-grade custody solutions, ensuring the funds accurately reflect their underlying asset values. As of Q2 2025, CoinShares reported over $6.1 billion in assets under management, representing 35% year-over-year growth.

All holdings and transactions are fully transparent and independently audited, providing investors with the peace of mind that comes from regulated, professionally managed products.

Regulatory compliance

With the approval of the Markets in Crypto-Assets (MiCA) regulation in Europe and spot Bitcoin ETFs in the United States, crypto ETPs now operate within comprehensive regulatory frameworks. This regulatory clarity has accelerated institutional adoption, with global crypto ETP inflows reaching $47.2 billion in 2025.

Investing for the future

Investing always involves both opportunities and risks. This reality applies to all asset classes, including cryptocurrencies. Adopting a long-term perspective can help mitigate some short-term risks, provided you research the market thoroughly and maintain discipline when making decisions.

If you prefer a more passive approach, investing regularly into your chosen crypto ETP can be a rewarding strategy that compounds over time without requiring active trading or market timing.

CoinShares offers Physical ETPs covering a variety of cryptocurrencies, including Bitcoin, Ethereum, and other major digital assets. Check the CoinShares ETP catalogue for detailed information about performance, fees, and product specifications.