Understanding crypto exposure: what and how you invest

When you invest in crypto, “exposure” means what assets you choose and how you choose to hold them. You might focus on a single cryptocurrency, or spread your investment across multiple coins. Then, there’s at least two methods to gain exposure, by purchasing on a crypto exchange or by investing in products like ETFs that track their prices. Each path has its own benefits and drawbacks.

What you invest in

Exposure via individual coins

This means putting your money into a single cryptocurrency, such as Bitcoin or Ethereum. This targeted approach offers the chance to benefit fully if that specific coin performs strongly. It can also be easier to follow one asset’s market trends and developments. However, it also carries higher risk: your entire performance depends on one project’s success, and if it underperforms, there is no cushion from other assets. This is like betting on your favorite sports team: you know exactly who you’re supporting, and if they win big, so do you. It’s simple to follow one coin’s news and price, but it’s also risky: if that asset has a bad season, your whole portfolio takes the hit. Choosing this route requires a good understanding of the technology, market forces, and potential risks of that coin.

Pros:

• Targeted exposure to the asset you believe in most.

• Potential for high gains if that specific coin performs strongly.

• Easier to track and understand one asset’s price movements.

Cons:

• Higher risk: your results depend entirely on one asset’s performance.

• Requires more research into that coin’s technology, market, and risks.

• No diversification to cushion against underperformance

Exposure via multiple coins

This means investing in several cryptocurrencies, either in equal proportions or weighted toward certain ones. This diversified approach spreads risk, as the underperformance of one coin can be offset by gains in another, much like owning shares in different companies across different industries. It also allows you to capture growth from different areas of the crypto market, such as payments, smart contracts, or blockchain infrastructure. On the downside, managing several assets can be more complex, requiring more time, research, and tracking. Gains in one area can also be diluted if another part of the basket performs poorly.

Pros:

• Diversification reduces the impact of any single coin performing poorly.

• Potential to capture growth from multiple areas of the crypto market.

• Can balance high-risk and lower-risk coins in one portfolio.

Cons:

• More complex to track and manage.

• Gains in one asset may be offset by losses in another.

• Requires broader research to understand multiple projects.

How you invest

Buying coins or via a spot ETF

Once you know whether you want to hold a single asset or a basket, the next step is deciding how to invest. You can buy the actual cryptocurrencies directly through an exchange, which gives you full ownership on the blockchain. This means you will need to set up a wallet and securely manage your private keys: lose them, and you lose access to your funds. For some, this direct control is appealing; for others, it’s a responsibility they’d rather avoid.

An alternative is to gain exposure through a regulated product such as a spot ETF. This is more like having a bank hold your gold for you: you own a claim on it, but someone else takes care of the security. You can buy and sell it easily through your regular brokerage account. This removes the need to manage wallets or keys, but it also means you can’t use the cryptocurrency directly: for example, to send payments or interact with decentralised applications. On top of that, if you want to diversify with a basket of assets, crypto Index ETFs offer a way
to directly obtain multi-asset crypto exposure, providing broad access
to the digital-asset ecosystem
or specific sub-sectors (thematic investing) through a single product.

How you should decide

Your crypto exposure depends on two main choices: what you invest in—one coin or many—and how you invest—directly or via a fund. Direct ownership offers control and flexibility, but comes with added responsibility for security and storage. ETFs provide simplicity, diversification, and professional custody, making them a strong option for beginners or those who prefer a hands-off approach. The best choice depends on your goals, your comfort with technology, and how much time you want to spend managing your investments.