Buying Bitcoin hoping for quick gains is speculation. Buying companies that build blockchain infrastructure might be investing. That's the thesis from Taimur Hyat, PGIM's Chief Operating Officer who oversees $1.4 trillion in assets.
His argument: cryptocurrency moves in lockstep with equities during market stress, offering none of the diversification investors seek from alternative assets. But blockchain technology and its supporting companies? That's where long-term value lies.
Why Hyat dismisses direct crypto
The correlation argument is straightforward. During market stress—inflation concerns, Fed tightening—crypto prices fall alongside stocks. Holding crypto doesn't provide the buffer investors expect.
Hyat argues many investors wrongly assume they must buy tokens to gain exposure to the crypto ecosystem. On Bloomberg's QuickTake Stock broadcast, he said investors can capture value from the innovation sparked by digital currencies without owning those currencies. His preferred route: private-permission blockchains, the surrounding infrastructure, and companies deploying smart contracts.
The picks-and-shovels approach
Hyat's alternative: invest in blockchain infrastructure. This includes companies building private-permission blockchains for enterprise use, smart contract platforms, and the supporting technology stack.
The thinking mirrors the gold rush analogy. During the 1849 California gold rush, most prospectors lost money. The ones who reliably profited sold picks, shovels, and levies to miners.
Blockchain infrastructure companies profit regardless of which specific cryptocurrency wins—or whether crypto broadly rises or falls.
The ETF problem
Ironically, blockchain infrastructure ETFs have performed worse than Bitcoin itself. The Invesco Alerian Galaxy Blockchain Users ETF (BLKC) dropped more than 40% this year. Amplify's BLOK fell more than 44%. Bitcoin fell roughly 35%.
This raises questions: is now a buying opportunity, or does the infrastructure thesis collapse in bear markets?
The metaverse question
Beyond blockchain, Hyat sees metaverse and virtual reality as emerging opportunities. Companies like Meta Platforms Inc. (formerly Facebook) have invested heavily despite near-term losses.
Hyat likens the current metaverse landscape to the early internet era—a period with many failed ventures but eventual trillion-dollar winners. He hasn't named which companies he believes will emerge victorious but views the space as too valuable to ignore.
Why it matters
The picks-and-shovels thesis is intellectually coherent but hard to execute cleanly. Pure-play blockchain infrastructure is rare—many "blockchain stocks" have marginal involvement or rebranded to catch hype. This is where investors must be careful.
Private-permission blockchains are different. Enterprise blockchain adoption is growing in supply chain management, trade finance, and identity verification. These markets exist and expand independent of cryptocurrency speculation. Unlike tokens, enterprise blockchain revenues are auditable and recurring.
The current ETF underperformance could signal two things: excessive valuation during the 2021 crypto boom now compressing, or genuine weakness in the infrastructure thesis. For now, the honest answer is "unclear." What is clearer: waiting for stabilization reduces risk without sacrificing the underlying opportunity.
Who should care
| Investor type | Relevance |
|---|---|
| Institutional allocators | High—diversification thesis matters most at scale |
| Crypto-native traders | Low—infra exposure doesn't match return profiles |
| Long-term equity investors | Medium—enterprise blockchain adoption is real but slow |
| Retirement accounts | Low—volatility and timeline uncertainty are misaligned |
Bottom line
The blockchain infrastructure thesis is more defensible than direct crypto investment for long-horizon investors seeking diversification. But timing matters—current ETF losses suggest patience before committing capital. Focus on companies with tangible blockchain revenue rather than those merely associated with the technology.
Frequently asked questions
Is PGIM saying to avoid cryptocurrency entirely?
Not necessarily. They're suggesting institutional investors focus on blockchain technology companies rather than holding tokens directly. Individual investors may have different risk tolerances and goals.
What are permission blockchains?
Private or permission blockchains restrict who can participate in the network. Enterprise blockchain typically uses this model. Public blockchains (like Bitcoin or Ethereum) allow anyone to participate.
Why have blockchain ETFs underperformed crypto?
Blockchain infrastructure companies trade on stock markets, making them subject to general market sentiment and valuation compression. They don't benefit from the same speculative surges as tokens.
Should retail investors buy blockchain stocks?
Only if they understand what they're buying. Many "blockchain stocks" have minimal blockchain revenue. Research specific company exposure before investing.
Is the metaverse investment thesis credible?
VR and metaverse technology is real and growing, but timeline and winners remain uncertain. Treating current investments as long-term bets rather than quick gains is more realistic.