Crypto-assets

The discussion starts with bitcoin

If you build an investment view on crypto-assets, the starting point is bitcoin, for three reasons: its market position (the central reference point for digital assets), its economic logic (a scarce, programmatically limited supply) and its return history (exceptionally strong, but with extreme drawdowns). The question is not just whether bitcoin has returned a lot, but how it can be owned sensibly as part of a real portfolio.

Taking bitcoin as the starting point is not an opinion. It follows from its unique position: it is the reference point for digital assets, with the clearest economic logic and the longest return history. If you can't justify the investment case for bitcoin to yourself, other crypto-assets (which are smaller, younger and more dependent on bitcoin's cycle) are even harder to justify. That is why a sensible approach is to build an understanding of bitcoin first, and only then consider whether some other crypto adds anything genuine.

The anatomy of bitcoin: what you own

Bitcoin is a decentralized, global network without a central issuer: no single party controls the protocol or the supply. The supply is written into the protocol: at most 21 million, of which almost 20 million had been mined by January 2026. The last one is expected to be created around 2140. This programmatic scarcity is concrete: unlike a currency, bitcoin can't be “printed”.

Its value is not based on cash flow or dividends but on three factors: use as a store of value, the network effect and scarcity relative to demand. There is no P/E ratio, and you can't do a cash flow analysis. That doesn't make bitcoin bad, but it makes it different, and understanding that is the starting point. The spot ETFs approved in January 2024 drew tens of billions of dollars of new money during their first year and integrated bitcoin into traditional wealth management.

Ether is a different exposure

Ether is not a cheaper version of bitcoin but a different investment with a different logic. Ethereum is a programmable blockchain platform (smart contracts). Ether is its fuel, and every action on the network costs a transaction fee paid in ether. In 2022 the network moved to proof-of-stake: investors lock up their ether as collateral and receive a staking reward of ~3–5% p.a. (before costs/taxes). It is not a dividend but a reward for validation work. Bitcoin is a scarcity and adoption asset. Ether is a network, usage and staking asset.

Separating ether from bitcoin matters, because they are often sold as the same “crypto” even though their source of value is different. Bitcoin's value rests on scarcity and adoption as a store of value. Ether's value rests on use of the network, competition with other platforms and staking dynamics. This makes ether a more complex and more technology-dependent exposure, closer to a growth company than a store of value. As an investor, you need to know which logic you are buying, and not assume that ether will “follow bitcoin”.

Five ways to own it: the instrument decides

The same market view can be implemented with several instruments, but the instrument determines what you actually own:

• Direct spot ownership: the purest price exposure. It requires an understanding of custody and tax tracking.
• Exchange-traded ETPs / ETCs / ETFs: you own a security that tracks the underlying asset, and it fits into an ordinary securities portfolio. For many, the most practical first step.
• Index and basket products: they spread single-asset risk, but bring in more altcoin-specific uncertainty.
• Futures and derivatives: institutional, but the hardest for a private investor. The curve structure and rolling have an effect.
• Indirect equity exposure: for example a bitcoin treasury company. Company risk, debt and valuation can matter more than the bitcoin price.

The range of instruments shows that “I own bitcoin” is not enough of a description. The method determines the risk. Direct spot ownership gives the purest exposure but requires you to manage custody. An ETP moves custody to a regulated custodian. A treasury company brings company and debt risk, which can outweigh the bitcoin price. For most people, an exchange-traded ETP is the most practical first step, because it fits into an ordinary securities portfolio and solves custody. But it is still important to know that it is one instrument among many, not “bitcoin” as such.

Cyclicality and the risk budget

You can't understand crypto without cyclicality: liquidity conditions, risk appetite, regulatory news, ETP flows and halving cycles move the market strongly. Crypto-assets are especially sensitive to changes in global liquidity and often react more strongly than stocks, both down and up. That is why a good long-term return and a good ownership experience are not the same thing. Many people sell at exactly the worst phase of the cycle if their allocation was too large. Think of crypto as a risk budget, not as an amount of a product.

Understanding cyclicality matters more in crypto than in almost any other asset class, because the moves are so large. Bitcoin's 10-year return has been ~57% a year, but its drawdowns have been as deep as −80%. In other words, a strong long-term return and a tolerable ownership experience are not the same thing. Many people sell right at the bottom of the cycle if their allocation was too large to bear. That is why it makes sense to size crypto as a risk budget: ask how large a fall in your whole portfolio you can withstand, and derive the weight of crypto from that, not from the expected return.

Custody and counterparty risk: the forgotten dimension

In crypto, custody is a separate decision. Custodial: a third party holds the private keys. It is practical but exposes you to counterparty risk. Self-custody: the owner holds the keys themselves (a hardware wallet). It removes counterparty risk but exposes you to your own carelessness. The FTX bankruptcy in 2022 taught a lesson: the problem was not bitcoin (the blockchain worked) but the exchange's own crisis of trust and liquidity. With custodial storage, a regulated service provider is critical. An ETP structure moves custody to a familiar, regulated custodian, which is one reason why it is the most natural first step for many.

Custody is a separate and underrated risk dimension in crypto that a stock investor doesn't face. The collapse of FTX in 2022 was not bitcoin's fault (the blockchain worked) but the exchange's own crisis of trust and liquidity, which took customers' assets with it. The lesson is that “who holds the keys” is as important a question as the price: self-custody removes counterparty risk but shifts the responsibility to your own diligence, while a regulated custodian (for example through an ETP) is for most people the safest way to avoid exactly this kind of loss.

Weight and taxation

• The share of crypto-assets in a portfolio is always the investor's own decision. A suitable share depends on your situation, goals and risk tolerance, and with high-risk investments you have to be prepared for the possibility of losing all the capital invested.

Taxation (Finland): exchanging one crypto for another is a realization event. Remember the FIFO principle, the deemed acquisition cost (20% / 40%) and that staking rewards are taxable income as soon as you receive them. From tax year 2026, service providers report the information directly to the Finnish Tax Administration.

Setting the weight in advance is the single most important risk management decision in crypto, and taxation is part of the overall picture. A share decided in advance can help you avoid both getting carried away at the top and panic selling at the bottom. In taxation, remember that exchanging one crypto for another is a realization event and that staking rewards are income as soon as you receive them: details a stock investor easily forgets.

Custody and counterparty risk

In crypto, custody is a separate decision that a stock investor doesn't face. Custodial: a third party holds the private keys. It is practical but exposes you to counterparty risk. Self-custody: the owner holds the keys themselves (a hardware wallet). It removes counterparty risk but exposes you to your own carelessness (a lost key = lost assets).

The FTX bankruptcy in 2022 taught something essential: the problem was not bitcoin (the blockchain worked) but the exchange's own crisis of trust and liquidity. With custodial storage, a regulated service provider is critical. An ETP structure moves custody to a familiar, regulated custodian, which is one reason why it is the most natural first step for many. “Who holds the keys” is as important a question as the price.

Taxation and regulation

In Finland, crypto taxation has features that a stock investor easily forgets. Exchanging one crypto for another is a realization event. Tax is due even if you don't convert to money. Remember the FIFO principle, the deemed acquisition cost (20%/40%) and that staking rewards are taxable income as soon as you receive them. From tax year 2026, service providers report the information directly to the Finnish Tax Administration.

On the regulatory side, MiCA brings common EU rules for issuers and service providers, which improves consumer protection and transparency. It doesn't, however, remove the risk of the asset class: crypto is still extremely volatile and is not covered by the deposit guarantee scheme. Regulation makes the field safer and easier to analyze, but it doesn't make crypto a low-risk investment.

Common mistakes with crypto

Typical mistakes: too large an allocation, which leads to panic selling at the bottom of the cycle; starting with altcoins instead of bitcoin, which increases single-asset risk; using leverage on an asset that is already volatile (almost certain ruin); neglecting custody (losing the keys or using an unregulated exchange); and forgetting the tax consequences (a crypto-to-crypto exchange is taxable).

The deepest mistake is treating crypto as the foundation of a portfolio or a get-rich-quick machine. Bitcoin is the oldest and most liquid crypto-asset, and many people get to know crypto-assets through it. The share of crypto-assets in a portfolio is always the investor's own decision, and its size is a risk management decision: it is not about the amount of a product but about the risk budget.

How to approach crypto: a checklist

Your approach to crypto comes down to a few principles:

• Bitcoin: the oldest and most liquid crypto-asset, and many people get to know crypto-assets through it.
• Share: the share of crypto-assets in a portfolio is the investor's own decision, and you can set it in advance according to your risk tolerance.
• Risk budget: think about the effect of a drawdown on the whole portfolio, not about the amount of a product.
• Custody: “who holds the keys?” An ETP moves custody to a regulated custodian.
• No leverage: leveraged crypto is almost certain ruin because of the volatility.
• Taxation: a crypto-to-crypto exchange is a realization. A staking reward is income as soon as you receive it.

Crypto is extremely volatile and high risk. You can lose your entire investment, and it is not covered by the deposit guarantee scheme. As a small, considered satellite, bitcoin can be justified. It is not suitable as the foundation of a portfolio or as a get-rich-quick vehicle.

This content is for information purposes only and should not be construed as investment advice or a recommendation. Investing always involves the risk of losing capital. The value of financial instruments and investments can go up or down, and past performance is no guarantee of future returns.