Digital assets are transforming finance. But owning Bitcoin alone might mean missing half the opportunity.
The blockchain revolution needs infrastructure. While Bitcoin and Ethereum capture headlines, the companies building exchanges, mining operations, and payment rails are creating enormous value. Edison Investment Research’s latest analysis reveals why blockchain equities deserve a place alongside cryptocurrencies in forward-thinking portfolios.
What’s happening now?
The digital asset landscape has matured dramatically. Donald Trump’s executive order strengthening America’s digital finance position. The GENIUS Act providing stablecoin clarity. Hong Kong rolling out crypto-friendly regulations. Spot Bitcoin ETFs attracting nearly $150 billion in the US.
This regulatory clarity is unleashing institutional adoption at scale. But here’s what many investors miss: the success of digital assets directly benefits listed blockchain companies. When Bitcoin rises, miners generate higher revenues. When trading volumes spike, exchanges profit. When stablecoins grow, payment providers win.
Smart investors are recognizing that blockchain equities and digital assets work better together. They’re complementary, not competing, investments.
The case for diversification within digital assets
Holding Bitcoin is like owning digital gold – valuable, but limited. The blockchain ecosystem is far broader. DeFi protocols are creating new financial systems. Tokenization platforms are digitizing real-world assets. Stablecoin infrastructure is revolutionizing payments.
Listed blockchain equities provide exposure to these diverse opportunities through traditional investment vehicles. They offer something cryptocurrencies can’t: operational leverage, dividend potential, and business model diversification.
Think of it this way: owning both Bitcoin and Bitcoin mining stocks gives you direct asset appreciation plus leveraged operational exposure. It’s the same principle as holding gold while owning gold miners – complementary strategies that enhance overall returns.
Stablecoins: The trillion-dollar bridge
Stablecoin volumes exploded to $1.03 trillion monthly, up from $80 billion five years ago. They now represent a value equivalent to 1.02% of total US money supply. PayPal, Stripe, and MercadoLibre are launching their own versions.
This growth directly benefits blockchain payment companies. Banxa’s (CVE:BNXA) Zafer Qureshi notes: “Firms that offer compliant payment rails to facilitate these use cases by leveraging stablecoins will be at the forefront of the evolution happening in the payments space.”
While holding stablecoins provides stability, owning equity in stablecoin infrastructure companies offers growth potential. These companies generate significant interest income on traditional assets they hold to back the issued stablecoins (eg US treasuries). They now start monetising certain transaction flows and elements of their network infrastructures. Moreover, as transaction volumes increase, these companies generate rising fee income – something simply holding USDC or USDT can’t provide.
Mining stocks: Leveraged Bitcoin plays with a twist
Bitcoin miners exemplify the complementary relationship between tokens and equities. When Bitcoin rises, miners benefit disproportionately. Their revenues increase while many costs remain fixed, creating operational leverage.
But miners offer something Bitcoin can’t: business model evolution. Many are expanding into hosting operations, AI computing, and energy services. They’re generating multiple revenue streams while maintaining Bitcoin exposure.
This diversification protects investors during crypto winters while providing amplified upside during bull markets. It’s why sophisticated investors often hold both Bitcoin and mining stocks – maximizing opportunity across market cycles.
Tokenization: The next frontier
Real-world asset tokenization has tripled to $34.6 billion this year. BlackRock’s tokenized money market fund holds $2.8 billion. Franklin Templeton’s has $852 million. McKinsey projects a $2-4 trillion market by 2030.
Paul Huelsmann of Finexity Group (MUN:FXT) sees two models emerging: “Direct asset tokenization excels in speed and accessibility, while security-based tokenization supports regulatory alignment and market stability.” Both create opportunities for blockchain infrastructure companies.
While investors can buy tokenized assets directly, owning equity in tokenization platforms provides exposure to the entire ecosystem’s growth. These companies benefit from increasing tokenization volumes regardless of which specific assets gain traction.
Exchanges and platforms: Profiting from adoption
Cryptocurrency exchanges demonstrate the power of the picks-and-shovels approach: revenues scale with trading activity and volatility, not strictly with price direction. Bull markets tend to bring retail back, boosting blended take rates; during downturns, activity shifts toward institutions and derivatives while spot volumes often contract. Either way, volatility drives volume. They profit from trading volumes regardless of price direction. Bull markets bring retail enthusiasm. Bear markets see institutional accumulation. Volatility drives volume either way.
Listed exchange operators offer transparent financials, regulatory compliance, and often dividends – benefits unavailable from simply holding exchange tokens. Exchange operators are building moats through licenses, technology, and customer relationships that create lasting value beyond crypto cycles.
DeFi meets TradFi
Decentralized finance protocols have $147 billion in total value locked. But the real opportunity might be in companies bridging DeFi and traditional finance. These businesses are creating institutional-grade infrastructure for digital assets.
Companies like Advanced Blockchain invest across the ecosystem, providing diversified exposure to DeFi innovation. They offer professional management, due diligence, and portfolio construction – valuable services as the sector matures.
The portfolio approach
Edison’s analysis suggests investors should think holistically about digital asset allocation. Core holdings of Bitcoin and Ethereum provide direct exposure to the asset class. Blockchain equities add operational leverage, income generation, and business model diversification.
Consider this allocation framework:
- Digital assets for pure price appreciation and income-generating network participation (eg staking)
- Mining stocks for leveraged Bitcoin exposure with operational upside coupled with revenue from hosting services for other miners and High-Performance Computing
- Exchange equities for volume-based revenue regardless of price direction and fees from complementary services
- Payment providers to capture stablecoin and cross-border payment growth
- Infrastructure plays for exposure to emerging opportunities like tokenization and DePIN
This approach maximizes opportunity while managing risk through diversification.
Why the combination works
Digital assets and blockchain equities have different risk-return profiles that complement each other.
Cryptocurrencies offer 24/7 liquidity and direct ownership. Equities provide business fundamentals, cash flows, and traditional investor protections.
During crypto bull markets, both benefit – tokens appreciate while companies see increased revenues. During bear markets, strong blockchain companies can continue growing through market share gains, new product launches, and strategic acquisitions. This resilience balances portfolio volatility.
The correlation isn’t perfect, creating diversification benefits. Regulatory changes might impact tokens and equities differently. Business execution can drive equity performance independent of crypto prices. Multiple paths to returns reduce portfolio risk.
The institutional validation
Major institutions are embracing both approaches. Some hold Bitcoin directly while others invest in blockchain infrastructure companies. For instance, Scottish Mortgage (LSE:SMT) invested in Blockchain.com, while Molten Ventures (LSE:GROW) invested in Ledger. This dual strategy reflects sophisticated understanding of the ecosystem’s dynamics.
The recent surge in blockchain equity investments alongside crypto allocations validates this complementary approach. Institutions recognize that capturing the full opportunity requires both direct and indirect exposure.
Bottom line: Better together
The digital asset revolution is too big for any single investment approach. Holding only cryptocurrencies means missing the infrastructure opportunity. Owning only blockchain equities means lacking direct network exposure.
Smart investors are building complete digital asset portfolios. They own Bitcoin for digital gold exposure. They hold blockchain equities for operational leverage and income. They diversify across sectors to capture the ecosystem’s full potential.
With clearer regulations, institutional adoption, and real use cases emerging, the opportunity is massive. The question isn’t whether to own digital assets or blockchain equities.
It’s how to own both strategically.
This article is a summary of the first report in a five-part series on Digital Assets and Cryptocurrencies from Edison Group. Edison themes aims to identify the big issues likely to shape company strategy and portfolios in the years ahead.