Bitcoin’s persistent popularity is reigniting portfolio debates among European wealth managers. With infrastructure improving and regulatory frameworks maturing, more firms are considering a small crypto allocation, typically one to five percent, as part of a diversified, long-term strategy.
The idea is not new, and in some corners institutional interest is accelerating. At the Digital Asset Summit 2025, a few weeks ago in New York, ARK Invest chief executive officer Cathie Wood told 2,500 institutional investors that digital assets are now a fiduciary responsibility. Her message: with better infrastructure and clearer regulation, ignoring crypto may no longer be justifiable.
Access without custody
Jan Altmann, speaking from Frankfurt, told Investment Officer that wealth managers want access without operational risk. Altmann, who helped launch Germany’s ETF market decades ago and is now director of investment strategy at Bitwise Europe, pointed to exchange-traded products as a turning point.
“ETPs solve the wallet problem,” he said, referring to the exchange-traded products backed by cryptocurrencies. “You don’t need to take delivery of the asset. It’s like gold ETPs: exposure without custody headaches.”
Exchange-traded products listed on Frankfurt and other European exchanges have become the preferred vehicle. As of March 2025, there are 159 listed crypto ETPs in Europe, with a combined 13.5 billion dollars in assets under management, according to Bloomberg. Bitcoin accounts for 7.9 billion, with Ethereum, Solana and index products also gaining traction. Inflows have remained positive this year.
Safe implementation focus
Issuers such as CoinShares, 21Shares, Bitwise and VanEck offer products on Deutsche Börse, with custody, compliance and reporting integrated into traditional banking infrastructure.
“Institutional investors are not chasing performance. They’re asking how to implement exposure safely, and how to explain it to clients.”
Jan Altmann, Bitwise
“Institutional investors are not chasing performance,” said Altmann. “They’re asking how to implement exposure safely, and how to explain it to clients.”
Blackrock recently reinforced this trend with a newly launched bitcoin ETP for European investors. The physically backed product is listed on European exchanges, issued via a Swiss SPV and custodied by Coinbase. It mirrors gold ETC structures: each note represents direct ownership of bitcoin, held in cold storage — offline, in secure digital facilities.
Small allocation benefits
Quantitative research supports small crypto exposures. A VanEck portfolio simulation tested over 160 allocation mixes and found that adding 3 percent bitcoin and 3 percent Ethereum to a 60/40 portfolio nearly doubled the Sharpe ratio. Monthly rebalancing was key to managing volatility.
Bitwise’s internal modelling shows similar results in the one to five percent range, depending on client risk appetite. Altmann says crypto behaves less like tech and more like an uncorrelated growth sleeve — similar to real assets.
“Asset managers have the fiduciary duty to form an opinion about this asset class.”
Cathie Wood, ARK Invest
“At the end of the day, do a frequent rebalancing,” Altmann advised. “Rebalancing should ideally be monthly — or at least value-driven. Make sure your crypto component doesn’t grow to 20 percent of the portfolio. It has to be watched.”
“Over a long term, it has been super beneficial to have a small component of crypto in your overall portfolio,” he said.
Regulation and adoption
The market remains fragile. Yet, according to Fidelity’s June 2024 Institutional Digital Assets Study, 67 percent of global institutional investors see a role for digital assets. In Europe, 30 percent said their view of crypto improved over the past year, and only 15 percent cited regulation as a top concern — far less than in the United States.
Top reasons cited include upside potential, low correlation and technological innovation. Main barriers remain volatility (48 percent), market manipulation and security risks. Among younger wealth holders and advisers, acceptance is rising.
“This isn’t about hype anymore. It’s about implementation,” Altmann said.
Frankfurt leads
Regulatory clarity is key to crypto’s institutionalisation. Frankfurt has quietly emerged as a European gateway. “It’s a very German solution,” Altmann said. “Institutional-grade, Mifid-compliant, and operationally clean.” German-listed crypto ETPs are fully backed, traded on regulated exchanges, and built for long-term investing with optional rebalancing.
Luxembourg, by contrast, remains more cautious. Regulator CSSF does not allow crypto ETPs in Ucits funds which slows down the development, Altmann said. However, the asset class is permitted in less-regulated alternative investment funds.
“There’s interest, but regulators are hesitant,” he noted. “Luxembourg isn’t a digital market yet — and that’s slowing things down.”
Portfolios over price
At the Digital Asset Summit, Wood reaffirmed her 1.5 million dollar bitcoin forecast by 2030. But most European allocators are less focused on price and more on portfolio structure. For them, crypto is a tool, not a bet.
“We believe the deregulation we’re seeing here in the United States will be critical for institutions moving into this new asset class,” said Wood. “Asset managers have the fiduciary duty to form an opinion about this asset class.”
