Digital assets often outperform traditional markets, driven by institutional adoption and tokenized products.
Digital assets have posted market-leading returns in eight of the past eleven years, cementing their status as a legitimate asset class, according to a recent report by global investment firm Franklin Templeton, which manages over $1.6 trillion in assets.
The report outlines eight reasons why now may be the ideal time for investors to consider crypto, from strong historical returns to growing institutional adoption. Since Bitcoin’s (BTC) launch in 2009, the digital asset market has grown to nearly $4 trillion in total market capitalization. Ethereum (ETH) alone generated more than $10 billion in transaction fees over the past seven years, “faster than many of today’s tech company giants,” the report notes.
Bitcoin and Ethereum also show low correlations with traditional assets, indicating their potential as portfolio diversifiers. Bitcoin has a correlation of 0.41 with the S&P 500, 0.40 with the NASDAQ 100, and 0.06 with gold. Ethereum has slightly higher equity correlations, at 0.48 with both the S&P 500 and NASDAQ 100, while its correlation with gold is slightly negative at -0.04.
The report further notes that cumulative inflows into Bitcoin and Ethereum exchange-traded products (ETPs) have exceeded $35 billion, marking the “fastest-growing ETP launch in history.” Digital assets have also frequently outperformed traditional investments such as stocks, bonds, and commodities.
“Digital assets have quickly shown how they can make a positive contribution to risk/return dynamics within a diversified portfolio,” the report reads, adding that investors have generally been well compensated for the increased risk they’ve been willing to take when investing in BTC.
The report comes as other areas of blockchain, including decentralized finance (DeFi) and tokenized real-world assets (RWA), have recorded explosive growth this year. The total value locked (TVL) in DeFi has risen to $165 billion from $127 billion in January. Meanwhile, the RWA sector is approaching an all-time high of $34 billion in total on-chain value, according to data from RWAxyz.
Franklin Templeton itself has also fueled some of this growth by recently expanding its Benji Technology Platform to BNB Smart Chain (BSC), the flagship network of the BNB ecosystem.
The platform, which powers tokenized real-world assets – including the Franklin OnChain U.S. Government Money Fund (BENJI) with nearly $732 million in on-chain assets – broadens access to its tokenized products for both institutional and retail investors, The Defiant reported on Sept. 24.