[Virtual Assets] Will you lose money if it's not an index fund?... Bitwise issues a warning

Chasing Individual Coins Is a Dangerous Gamble… “Only God Knows Who Will Survive”

The future of major cryptocurrencies like Bitcoin, Ethereum, and Solana looks bright, but there is a growing consensus that selecting the true winners within that space is nearly impossible. Matt Hugen, Chief Investment Officer of global asset management firm Bitwise, clearly pointed out the limitations of an investment strategy that involves picking individual coins directly.

“The market size is almost certain to grow tenfold or twentyfold. The problem is predicting which project will be the ultimate winner in that market,” he said, adding, “Doing so requires almost supernatural levels of insight.”

This is because countless variables are intertwined, including regulatory policy changes, the execution capability of development teams, macroeconomic conditions, and even luck. It means that relying on just one or two factors is impossible for a definitive judgment.

In a Market with 100,000x Growth, Hollow Returns Are Possible

The scenario presented by Bitwise is astonishing. It assumes that when the U.S. Securities and Exchange Commission(SEC) mentions the implementation of an “on-chain financial system,” the digital asset market could theoretically expand up to 100,000 times.

However, Hugen issued a serious warning. “Even if the market grows 100,000 times, investors who pick the wrong assets will not benefit from that growth at all,” he said. This means they could end up riding a falling star.

This is not just a simple concern. Historically, during various cycles, the overall market has risen significantly, but many investors who bet only on specific assets have suffered losses.

“I Will Buy the Entire Market”… Bitwise’s Wise Choice

Hugen’s alternative was clear. Instead of an alpha(Alpha) strategy aiming for a jackpot with individual coins, he recommended a beta(Beta) strategy that follows the overall market trend.

“My approach is simple. I buy the entire market,” he revealed, allocating his core portfolio into a market-cap-weighted index fund. This strategy diversifies individual risks while riding the overall upward trend of the asset class.

This statement came right after Bitwise’s 10 Crypto Index ETF(BITW) was officially listed on NYSE Arca(NYSE Arca). BITW is a basket product that includes the top 10 promising cryptocurrencies by market cap, such as Bitcoin(BTC), Ethereum(ETH), Ripple(XRP), and Solana(SOL).

In an Era of Regulatory Easing, Stock Picking Is Too Risky

With regulations easing and institutional funds pouring in, Hugen’s message offers a clear lesson. Instead of trying to guess who the winner will be, the most prudent survival strategy is to invest in index funds that encompass all the top verified assets.

If predicting the future of individual coins is impossible, it makes more sense to share in the overall growth of the market.